changtian plastic & chemical limited

This document is important. If you are in any doubt as to theaction you should take, you should consult your legal, financial,tax or other professional adviser.

We have made an application to the Singapore Exchange SecuritiesTrading Limited (“SGX-ST”) for permission to deal in, and for quotationof, the ordinary shares of S$0.05 each (the “Shares”) in the capital ofthe Company already issued (including the Vendor Shares, as definedherein), the new Shares which are the subject of this Invitation (the“New Shares”) and the new Shares which may be issued upon theexercise of the options to be granted under the Changtian EmployeeShare Option Scheme (the “Option Shares”). Such permission will begranted when we have been admitted to the Official List of SGX-ST.The dealing in and quotation of the Shares will be in Singaporedollars.

Acceptance of applications will be conditional upon, inter alia,permission being granted by the SGX-ST, to deal in, and for quotationof, all of the existing issued Shares (including the Vendor Shares), theNew Shares and the Option Shares. If completion of the Invitationdoes not occur because the SGX-ST’s permission is not granted orfor any other reasons, monies paid in respect of any applicationaccepted will be returned to you at your own risk, without interestor any share of revenue or other benefit arising therefrom and youwill not have any claims whatsoever against us, the Vendors, theManager, the Underwriter or the Placement Agent.

The SGX-ST assumes no responsibility for the correctness of any ofthe statements made or opinions expressed or reports contained inthis Prospectus. Admission to the Official List of the SGX-ST is

ADHESIVETAPES

�RELEASEPAPERS

�BOPAFILM

�2-A2MPS

not to be taken as an indication of the merits of the Invitation,our Company and our subsidiaries, our Shares, the New Shares, theVendor Shares and the Option Shares.

A copy of this Prospectus has been lodged with and registered by theMonetary Authority of Singapore (the ‘’Authority’’). The Authorityassumes no responsibility for the contents of the Prospectus.Registration of the Prospectus by the Authority does not imply thatthe Securities and Futures Act (Chapter 289) of Singapore, or any otherlegal or regulatory requirements, have been complied with. TheAuthority has not, in any way, considered the merits of the Shares(including the Vendor Shares), the New Shares or the OptionShares, as the case may be, being offered for investment.

A copy of this Prospectus has been or will, as soon as reasonablypracticable, be filed with the Registrar of Companies in Bermuda. TheBermuda Monetary Authority has given its consent to the issue of theNew Shares and the sale of the Vendor Shares pursuant to the Invitationon the terms referred to in this Prospectus. In accepting this Prospectusfor filing and in granting such consent, the Registrar of Companies inBermuda and the Bermuda Monetary Authority accept no responsibilityfor the financial soundness of our Group (as defined herein) or anyproposal or for the correctness of any of the statements made oropinions expressed herein or any of the other documents referred toin this Prospectus.

Investing in our Shares involves risks which are described in thesection “Risk Factors” in this Prospectus. No Shares will be allottedon the basis of this Prospectus later than six months after thedate of registration of this Prospectus by the Authority.

Invitation in respect of 215,000,000 Invitation Shares of S$0.05 each comprising160,000,000 New Shares and 55,000,000 Vendor Shares as follows:

(a) 5,000,000 Offer Shares at S$0.47 each by way of public offer; and(b) 210,000,000 Placement Shares at S$0.47 each by way of placement,

payable in full on application.

CHANGTIAN PLASTIC & CHEMICAL LIMITED

18 Xinsheng RoadXinyang Industrial ZoneHaicang DistrictXiamen City, Fujian ProvincePeople’s Republic of China 361026

T 86-592-6517000F 86-592-6519700

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OVERVIEW

> We are principally engaged in the manufacture and sale ofadhesive tapes, release papers, biaxially-oriented polyamide(BOPA) film and 2-Acrylamido-2-methyl propane sulfonic acid (2-A2MPS).

> Our adhesive tapes, release papers and BOPA film are sold underour brand name and our 2-A2MPS products are soldunder our brand name .

> Our Group’s manufacturing facilities are based in Xiamen City,Fujian Province.

OUR BUSINESS

Adhesive Tapes

> We manufacture and sell a wide range of adhesive tapes forindustrial, commercial and consumer uses. Our adhesivetapes are sold mainly to customers in the packaging, food andbeverage, electronics, construction and shoe making industries.

Release Papers

> We manufacture and sell two types of release papers: glassinesilicone coated release papers and CCK release papers. Ourrelease papers are used as a protective backing on adhesivetapes or other adhesive material to protect these materials fromlosing their adhesiveness.

BOPA film

> We manufacture and sell BOPA film, a film used widely forpackaging perishable food and odour-sensitive products, andwhich may be used under a wide range of temperatures forapplications from refrigeration to vapour sterilisation. OurBOPA film is mainly sold to customers in the food and beverageindustry.

2-A2MPS

> We manufacture and sell 2-A2MPS in white crystal powder form,mainly to customers in the oil industry and water treatmentindustry. Our 2-A2MPS is one of the raw materials used in themanufacture of water-soluble polymers, which are used inindustrial processes, and also in the production of consumerproducts such as acrylic fibre-based textiles, personal care

products, adhesives, paper and packaging materials.

FIN

AN

CIA

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LIG

HT

S Revenue (RMB million)

0

100

200

300

400

500

600

Net Profit (RMB million)

0

20

40

60

80

100

120

140

160

3 monthsended 31

March2006

3 monthsended 31

March2007

FY2004 FY2005 FY2006

223

412

540

117151

CAGR56%

30%

Revenue By Product Segments

FY2006

3 months ended 31 March 2007

BOPA Film

Release Papers

2-A2MPS

Adhesive Tapes

BOPA Film

Release Papers

2-A2MPS

Adhesive Tapes

50%

24%

19%

7%

44%

22%

27%


CH

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PL

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& C

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95

149

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43%

CAGR84%

7%

(Incorporated as an exempted company in Bermuda on 29 March 2007)(Company registration number: 39836)

Manager

3 monthsended 31

March2006

3 monthsended 31

March2007

FY2004 FY2005 FY2006PROPECTUS DATED 30 OCTOBER 2007(REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE ON 30 OCTOBER 2007)

Underwriter and Placement Agent

(Company registration number: 197000447W)

(Company registration number: 200404514G)





ADHESIVETAPES

�RELEASEPAPERS

�BOPAFILM

�2-A2MPS










T 86-592-6517000F 86-592-6519700

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OVERVIEW




OUR BUSINESS

Adhesive Tapes


Release Papers


BOPA film


2-A2MPS



FIN

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CIA

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IGH

LIG

HT


0

100

200

300

400

500

600


0

20

40

60

80

100

120

140

160

3 monthsended 31

March2006

3 monthsended 31

March2007

FY2004 FY2005 FY2006

223

412

540

117151

CAGR56%

30%


FY2006


BOPA Film

Release Papers

2-A2MPS

Adhesive Tapes

BOPA Film

Release Papers

2-A2MPS

Adhesive Tapes

50%

24%

19%

7%

44%

22%

27%


CH

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& C

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Manager

3 monthsended 31

March2006

3 monthsended 31

March2007





PROSPECTS

Adhesive tapes

> Sustained demand underpinned by the positive economic development in the PRC

Release Papers

> Opportunities to expand product range by adding a new release paper product offering – the UV PEcured release film

> Production process of UV PE cured release film is less expensive and incurs less wastage> Significant market potential for UV cured PE release film produced in the PRC, in view of lower cost

base with quality assurance as compared to the overseas manufacturers

BOPA film

> Rising affluence of the population and the increasing pace of lifestyle in the PRC will lead to arise in consumer preference for convenience foods

> BOPA film is an ideal element in food packaging – better appearance, longer shelf life of products,minimises loss of aroma and has better packaging strength

> Currently, our BOPA film sales are limited by our production capacities• Our Directors believe that there are opportunities for growth in our BOPA film segment and

we will seek to expand our production capacity

2-A2MPS

> More industries are adopting the use of 2-A2MPS as a raw material, including the textile(spinning and dyeing), plastic, paper manufacturing, coating materials, waste water treatmentand oil and gas extraction industries

> Currently only selling our 2-A2MPS product to customers in the oil industry and water treatmentindustry as we are limited by our production capacity

> Output of 2-A2MPS in the PRC is insufficient to meet the increasing demand• Based on our Directors’ market understanding, the usage of 2-A2MPS by various industries in

the PRC will increase by 20% to 30% annually, thereby driving the growth in this segment

Strong brand recognition

> Built up substantial brand goodwill and trackrecord for and brand names overthe years

> Recognition is synonymous with our track recordand market reputation in the industry, andassociated with the quality and reliability of ourproducts

Wide range of products

> Four main products targeted at different industries,each with a wide range of applications

> BOPA film is widely used in various forms ofpackaging and 2-A2MPS is an important chemicalproduct in many different industries

Established track record and customer base

> Built up customer base from approximately233 in FY2004 to approximately 286 in FY2006

> Sales to repeat customers accounted for morethan 98.7% of total revenue in FY2006

> Reliability and long-term relationships withcustomers are testimony to our reputation andtrack record

Competitive pricing

> Developed own glue formula for adhesive tapesand release papers, thereby achieving costefficiency which translates to competitive prices

> We are one of a few 2-A2MPS producers in thePRC, and we believe we are able to provide morecompetitively priced quality 2-A2MPS

Experienced management team

> Yang Qingjin, our Chairman and Executive Director,has been in the adhesive tapes and release papersindustry for more than 20 years

> Each of our Executive Directors has more than 5years of experience in the industries related to ourGroup’s products

ADHESIVETAPES

�RELEASEPAPERS

�BOPAFILM

�2-A2MPS

COMPETITIVESTRENGTHS


ADHESIVETAPES

�RELEASEPAPERS

�BOPAFILM

�2-A2MPS

BUSINESSSTRATEGIES

AND FUTUREPLANS

Expansion of BOPA film production capacity

> Install one additional BOPA film production line, to increase production capacity from 5,400 tonnesto 10,800 tonnes per annum• Production to commence in third quarter of 2008

Expansion of range of release papers

> Commission and install a UV cured release film production line, with a production capacity of 3,000tonnes per annum• Production to commence in fourth quarter of 2008

Expansion of 2-A2MPS production capacity

> Install one additional 2-A2MPS production line, to increase production capacity from 1,500 tonnesto 3,000 tonnes per annum• Production to commence in fourth quarter of 2008

CONTENTS

CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

PURCHASE BY OUR COMPANY OF OUR OWN SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 12

ATTENDANCE AT GENERAL MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

TAKE-OVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

SELLING RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

DETAILS OF THE INVITATION

LISTING ON THE SGX-ST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

INDICATIVE TIMETABLE FOR LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . 22

EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

PROSPECTUS SUMMARY

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

COMPETITIVE STRENGTHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

OUR STRATEGIES AND FUTURE PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

OUR FINANCIAL PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

WHERE YOU CAN FIND US. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

THE INVITATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

USE OF PROCEEDS AND LISTING EXPENSES

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

LISTING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

MANAGEMENT AND UNDERWRITING AND PLACEMENT ARRANGEMENTS . . . . . . . . . . 32

RISK FACTORS

RISKS RELATING TO OUR BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

RISKS RELATING TO THE PRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

RISKS RELATING TO INVESTMENT IN OUR SHARES . . . . . . . . . . . . . . . . . . . . . . . . 40

i

INVITATION STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

SELECTED GROUP COMBINED FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 47

REVIEW OF PAST OPERATING PERFORMANCE AND FINANCIAL POSITION

BASIS OF PRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

REVIEW OF RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

REVIEW OF PAST PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

LIQUIDITY AND CAPITAL RESOURCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS . . . . . . . . . . . . . . . . . . . . 67

FOREIGN EXCHANGE EXPOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

EXCHANGE CONTROLS

PRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

BERMUDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

GENERAL INFORMATION ON OUR GROUP

SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

VENDORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

MORATORIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

RESTRUCTURING EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

GROUP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

HISTORY AND BUSINESS

HISTORY AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

BUSINESS OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

OUR PRODUCTION PROCESSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

PRODUCTION FACILITIES AND PRODUCTION CAPACITY . . . . . . . . . . . . . . . . . . . . . 97

QUALITY CONTROL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

SAFETY CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

PRODUCT DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

INVENTORY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

SALES AND MARKETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

ii

MAJOR CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

MAJOR SUPPLIERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

COMPETITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

COMPETITIVE STRENGTHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

PROPERTIES AND FIXED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

STAFF TRAINING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

GOVERNMENT REGULATIONS, LICENCES AND PERMITS. . . . . . . . . . . . . . . . . . . . . 110

PROSPECTS AND FUTURE PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

ORDER BOOKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

DIRECTORS, MANAGEMENT AND STAFF

OUR MANAGEMENT STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

REMUNERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

SERVICE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

CHANGTIAN EMPLOYEE SHARE OPTION SCHEME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

INTERESTED PERSON TRANSACTIONS

PAST INTERESTED PERSONS TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

PRESENT ONGOING INTERESTED PERSONS TRANSACTIONS . . . . . . . . . . . . . . . . 137

REVIEW PROCEDURES FOR ONGOING AND FUTURE INTERESTED PERSONTRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

CONFLICTS OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

INTERESTS OF EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

INTERESTS OF UNDERWRITERS OR FINANCIAL ADVISERS. . . . . . . . . . . . . . . . . . . 140

CORPORATE GOVERNANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

GENERAL AND STATUTORY INFORMATION

INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . 143

SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

STATEMENT BY OUR DIRECTORS AND THE VENDORS . . . . . . . . . . . . . . . . . . . . . . 148

DOCUMENTS AVAILABLE FOR INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

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APPENDIX A — REPORT FROM THE JOINT REPORTING ACCOUNTANTS ON THEAUDITED COMBINED FINANCIAL INFORMATION OF THE GROUPFOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2004, 31DECEMBER 2005 AND 31 DECEMBER 2006 . . . . . . . . . . . . . . . . . . . A-1

APPENDIX B — REVIEW REPORT FROM THE JOINT REPORTING ACCOUNTANTSON THE UNAUDITED COMBINED FINANCIAL INFORMATION OF THEGROUP FOR THE THREE MONTHS ENDED 31 MARCH 2007 . . . . . . B-1

APPENDIX C — TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

APPENDIX D — SUMMARY OF CONSTITUTION OF OUR COMPANY . . . . . . . . . . . . . D-1

APPENDIX E — SUMMARY OF BERMUDA COMPANY LAW . . . . . . . . . . . . . . . . . . . . E-1

APPENDIX F — SUMMARY OF RELEVANT PRC LAWS AND REGULATIONS . . . . . . . F-1

APPENDIX G — RULES OF THE CHANGTIAN EMPLOYEE SHARE OPTION SCHEME. G-1

APPENDIX H — TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION ANDACCEPTANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1

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CORPORATE INFORMATION

BOARD OF DIRECTORS : Yang Qingjin (Chairman and ExecutiveDirector)

Chen Yongfu (Deputy Chairman andExecutive Director)

Wong Chit Fu (Executive Director)Yan Yilin (Executive Director)Chan Yin David (Independent Director)Lee Liang Ping (Independent Director)Liao Quanwen (Independent Director)

BERMUDA RESIDENTREPRESENTATIVE

: Myles Flint1

COMPANY SECRETARY : Garland Ince1, RN (Pysch)

BERMUDA ASSISTANT RESIDENTREPRESENTATIVE ANDASSISTANT COMPANYSECRETARY

: Appleby Services (Bermuda) Ltd.1

Canon’s Court22 Victoria StreetHamilton HM 12Bermuda

REGISTERED OFFICE : Canon’s Court22 Victoria StreetHamilton HM 12Bermuda

PRINCIPAL PLACE OF BUSINESS : 18 Xinsheng RoadXinyang Industrial ZoneHaicang DistrictXiamen City, Fujian ProvincePeople’s Republic of China 361026

BERMUDA PRINCIPALREGISTRAR AND TRANSFERAGENT

: The Bank of Bermuda LimitedBank of Bermuda Building6 Front StreetHamilton HM 11Bermuda

REGISTRAR FOR THE INVITATIONAND SINGAPORE SHARETRANSFER AGENT

: Boardroom Corporate & Advisory Services Pte. Ltd.(formerly known as Lim Associates (Pte) Ltd)3 Church Street#08-01 Samsung HubSingapore 049483

MANAGER : Boulton Capital Asia Pte. Limited20 Cecil Street#19-03 Equity PlazaSingapore 049705

1 Myles Flint, Garland Ince and Appleby Services (Bermuda) Ltd will resign as Bermuda Resident Representative, CompanySecretary and Bermuda Assistant Resident Representative and Assistant Company Secretary respectively upon the listingof the Shares on the SGX-ST, whereupon Appleby Services (Bermuda) Ltd will be appointed as the Bermuda ResidentRepresentative and Chan Pak Kin Ken, CPA will be appointed as Company Secretary and Sin Kwok Chui Malon, CPA willbe appointed as Assistant Company Secretary.

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UNDERWRITER AND PLACEMENTAGENT

: UOB Kay Hian Private Limited80 Raffles Place #30-01UOB Plaza 1Singapore 048624

SOLICITORS TO THE INVITATION : Rajah & Tann4 Battery Road, #26-01Bank of China BuildingSingapore 049908

SOLICITORS TO THE MANAGER,UNDERWRITER AND PLACEMENTAGENT

: Shook Lin & Bok LLP1 Robinson Road#18-00 AIA TowerSingapore 048542

LEGAL ADVISER TO THECOMPANY ON BERMUDA LAW

: Appleby5511 The Center99 Queen’s Road CentralHong Kong

LEGAL ADVISER TO THECOMPANY ON PRC LAW

: Jingtian & Gongcheng15th Floor, The Union Plaza20 Chaoyangmenwai StreetChaoyang DistrictBeijing 100020People’s Republic of China

JOINT REPORTINGACCOUNTANTS

: Grant ThorntonCertified Public Accountants13th Floor, Gloucester TowerThe Landmark15 Queen’s Road CentralHong Kong

Partner-in-charge: Lo Ngai Hang

Foo Kon Tan Grant ThorntonCertified Public Accountants47 Hill Street #05-01Singapore Chinese Chamber of Commerce &Industry BuildingSingapore 179365

Partner-in-charge: Wong Kian Kok

AUDITORS : Grant ThorntonCertified Public Accountants13th Floor, Gloucester TowerThe Landmark15 Queen’s Road CentralHong Kong

Partner-in-charge: Lo Ngai Hang

RECEIVING BANK : The Bank of East Asia Limited137 Market StreetBank of East Asia BuildingSingapore 048943

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PRINCIPAL BANKER : Industrial and Commercial Bank of China, HaicangBranchNo. 95, Canghong RoadHaicang Living AreaXiamen CityPeople’s Republic of China

VENDORS : CIM VIII LimitedP.O. Box 957Offshore Incorporations CentreRoad Town TortolaBritish Virgin Islands

Goodwise Investments Limited2nd Floor Abbott BuildingRoad Town TortolaBritish Virgin Islands

Hong Kong Investments Group Limited2nd Floor Abbott BuildingRoad Town TortolaBritish Virgin Islands

Longold Group Limited2nd Floor Abbott BuildingRoad Town TortolaBritish Virgin Islands

3

DEFINITIONS

In this Prospectus and the accompanying Application Forms and, in relation to Electronic Applications,the instructions appearing on the screens of the ATMs or the IB websites of the relevant ParticipatingBanks, the following definitions apply where the context so admits:

Our Group Companies

“Changtian Plastic & Chemical”or the “Company”

: Changtian Plastic & Chemical Limited, incorporated inBermuda on 29 March 2007 as an exempted company withlimited liability

“Changtian Enterprise” : Xiamen Changtian Enterprise Co., Ltd., a wholly foreign-owned enterprise

established in the PRC and wholly-owned by our Company

“Group” : Our Company and our subsidiaries following the completionof the Restructuring Exercise

“Jumbo Glories” : Jumbo Glories Limited, a company incorporated in the BVIand wholly-owned by our Company

Other Companies and Government and Regulatory Bodies

“Authority” : The Monetary Authority of Singapore

“Boulton Capital” or “ Manager” : Boulton Capital Asia Pte. Limited

“CDP” : The Central Depository (Pte) Limited

“CIM VIII” : CIM VIII Limited, a company incorporated in the BVI

“East Fortune” : East Fortune Development Limited, a companyincorporated in the BVI and wholly-owned by Yip Man King

“Eastline Investments” : Eastline Investments Holding Limited, a companyincorporated in the BVI and wholly-owned by Yang Qingjin,our Chairman and Executive Director

“Goodwise Investments” : Goodwise Investments Limited, a company incorporated inthe BVI and wholly-owned by Chen Yongfu, our DeputyChairman and Executive Director

“Hong Kong Investments” : Hong Kong Investments Group Limited, a companyincorporated in the BVI and wholly-owned by Cheung ChiMang

“ISO” : International Organization for Standardization. A worldwidefederation of national standards bodies from more than 140countries, whose mission is to develop industrial standardsthat facilitate international trade. The work of preparingInternational Standards is normally carried out through ISOtechnical committees

“Longold Group” : Longold Group Limited, a company incorporated in the BVIand wholly-owned by Chuang Chin Fang

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“Rowview” : Rowview Limited, a company incorporated in the BVI andequally owned by Chen Baohua, the wife of Yang Qingjin(our Chairman and Executive Director) and the sister ofChen Yongfu (our Deputy Chairman and Executive Director)

“SAFE” : State Administration of Foreign Exchange of the PRC

“SCCS” : Securities Clearing & Computer Services (Pte) Ltd

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Underwriter”, “PlacementAgent” or “UOB Kay Hian”

: UOB Kay Hian Private Limited

“Xiamen Brightforever” : Xiamen Brightforever Plastic Industrial Co., Ltd., a limited liability company with

foreign investment incorporated in the PRC

“Xiamen Changtian” : Xiamen Changtian Plastic & Chemical Co., Ltd., a limited liability company

incorporated in the PRC

“Xiamen Xin Guan” : Xiamen Xin Guan Trading Co., Ltd. ,formerly known as Xiamen Xin Guan Group Limited

General

“Application Forms” : The official printed application forms to be used for thepurpose of the Invitation and which form part of thisProspectus

“Application List” : The list of applications for subscription for the InvitationShares

“Associate” : In relation to an entity, means:

(a) in a case where the entity is a substantial shareholder,controlling shareholder, substantial interest-holder orcontrolling interest-holder, its related corporation,related entity, associated company or associatedentity; or

(b) in any other case:

(i) a director or an equivalent person;

(ii) where the entity is a corporation, a controllingshareholder of the entity;

(iii) where the entity is not a corporation, a controllinginterest-holder of the entity;

(iv) a subsidiary, a subsidiary entity, an associatedcompany, or an associated entity; or

(v) a subsidiary, a subsidiary entity, an associatedcompany, or an associated entity, of thecontrolling shareholder or controlling interest-holder, as the case may be, of the entity; and

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In relation to an individual, means:

(a) his immediate family;

(b) trustee of any trust of which the individual or anymember of the individual’s immediate family is:

(i) a beneficiary; or

(ii) where the trust is a discretionary trust, adiscretionary object,

when the trustee acts in that capacity; or

(iii) any corporation in which he and his immediatefamily (whether directly or indirectly) haveinterests in voting shares of an aggregate of notless than 15% of the total votes attached to allvoting shares

The terms “associated company”, “associated entity”,“controlling interest holder”, “controlling shareholder”, “relatedcorporation”, “related entity”, “subsidiary”, “subsidiary entity”and “substantial interest-holder” shall have the samemeanings ascribed to them respectively in the Securities andFutures (Offers of Investments) (Shares and Debentures)Regulations 2005

“ATM” : Automated teller machine of a Participating Bank

“Audit Committee” : The audit committee of our Company as at the date of thisProspectus

“Bermuda Companies Act” : The Companies Act 1981 of Bermuda, as amended,supplemented or modified from time to time

“BVI” : British Virgin Islands

“Bye-laws” : The bye-laws of our Company, as amended, supplemented ormodified from time to time

“Combined Financial Information” : The Reports from the Joint Reporting Accountants on theAudited Combined Financial Information of the Group for theFinancial Years Ended 31 December 2004, 31 December2005 and 31 December 2006 and Unaudited CombinedFinancial Information of the Group for the Three MonthsEnded 31 March 2007 as set out in Appendix A and AppendixB respectively of this Prospectus

“Controlling Shareholder” : In relation to a corporation, means:

(a) a person who has an interest in the voting rights of thecorporation and who exercises control over thecorporation; or

(b) a person who has an interest in the voting shares ofthe corporation of an aggregate of not less than 30%of the total votes attached to all voting shares in thecorporation, unless he does not exercise control overthe corporation

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“CPF” : Central Provident Fund

“Directors” : The directors of our Company as at the date of thisProspectus

“Electronic Applications” : Applications for the Offer Shares made through an ATM orthe IB website of one of the relevant Participating Banks inaccordance with the terms and conditions of thisProspectus

“entity” : Has the meaning as set out in Section 2 of the SFA

“EPS” : Earnings per share

“ESOS” : The Changtian Employee Share Option Scheme, adoptedby our Company on 24 September 2007, the terms of whichare set out in Appendix G of this Prospectus

“Executive Directors” : The executive Directors of our Company as at the date ofthis Prospectus

“Executive Officers” : The executive officers of our Company as at the date of thisProspectus

“FY” : Financial year ended or, as the case may be, ending 31December

“Hong Kong” : The Hong Kong Special Administrative Region of the PRC

“IB” : Internet Banking

“Independent Directors” : The independent Directors of our Company as at the date ofthis Prospectus

“Invitation” : The invitation by our Company and the Vendors to thepublic to subscribe for and/or purchase the InvitationShares, subject to and on the terms and conditions of thisProspectus

“Invitation Shares” : The 215,000,000 Shares which are the subject of theInvitation, comprising 160,000,000 New Shares and55,000,000 Vendor Shares

“ISO 9001:2000” : The third edition of ISO 9001 to cancel and replace thesecond edition (ISO 9001:1994) together with ISO9002:1994 and ISO 9003:1994

“Issue Price” : S$0.47 for each Invitation Share

“Latest Practicable Date” : 14 September 2007, being the latest practicable date priorto the lodgement of this Prospectus with the Authority

“Listing Manual” : Listing Manual of the SGX-ST, as amended, supplementedor modified from time to time

“Market Day” : A day on which the SGX-ST is open for trading in securities

“NAV” : Net asset value

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“New Shares” : The 160,000,000 new Shares which our Company invitesapplications to subscribe for pursuant to the Invitation,subject to and on the terms and conditions of thisProspectus

“Nominating Committee” : The nominating committee of our Company as at the date ofthis Prospectus

“Non-executive Directors” : The non-executive Directors of our Company as at the dateof this Prospectus

“NTA” : Net tangible assets

“Offer” : Offer by our Company and the Vendors to the public tosubscribe for and/or purchase the Offer Shares at the IssuePrice, subject to and on the terms and conditions of thisProspectus

“Offer Shares” : 5,000,000 of the Invitation Shares which are the subject ofthe Offer

“Options” : The options which may be granted pursuant to the ESOS

“Option Shares” : The new Shares (not exceeding 15% of the issued sharecapital of our Company on the date preceding the grant ofan Option) which may be allotted and issued upon theexercise of the Options

“Participating Banks” : DBS Bank Ltd (including POSB) (“DBS”); Oversea-ChineseBanking Corporation Limited (“OCBC”); and UnitedOverseas Bank Limited and its subsidiary, Far EasternBank Limited (the “UOB Group”)

“PAT” : Profit after taxation

“PBT” : Profit before taxation

“PER” : Price earnings ratio

“Period Under Review” : The period which comprises FY2004, FY2005, FY2006 andthe three months ended 31 March 2007

“Placement” : The placement by the Placement Agent on behalf of ourCompany and the Vendors of the Placement Shares at theIssue Price, subject to and on the terms and conditions ofthis Prospectus

“Placement Shares” : 210,000,000 of the Invitation Shares which are the subjectof the Placement

“PRC” or “China” : People’s Republic of China, which for the purposes of thisProspectus, excludes Hong Kong and Macau SpecialAdministrative Regions of the PRC, and Taiwan

“Pre-Invitation Investors” : CIM VIII, Longold Group, Hong Kong Investments and EastFortune

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“Remuneration Committee” : The remuneration committee of our Company as at the dateof this Prospectus

“Restructuring Exercise” : The restructuring exercise of our Group undertaken inconnection with the Invitation, as described in the section“Restructuring Exercise” of this Prospectus

“Securities Account” : Securities account maintained by a Depositor with CDP butdoes not include a securities sub-account

“SFA” or “Securities and FuturesAct”

: Securities and Futures Act (Chapter 289) of Singapore, asamended, supplemented or modified from time to time

“Shares” : Ordinary shares of S$0.05 each in the capital of ourCompany

“Shareholders” : Registered holders of our Shares

“Singapore Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended,supplemented or modified from time to time

“Singapore Take-over andMerger Laws and Regulations”

: Sections 138, 139 and 140 of the Securities and Futures Actand the Singapore Code on Take-overs and Mergers

“State” or “PRC Government” : The central government of the PRC, including all politicalsubdivisions (including provincial, municipal and otherregional or local government entities) and instrumentalitiesthereof

“Substantial Shareholder” : A person who has an interest or interests in one or morevoting Shares in our Company; and the total votes attachedto those share(s) represents not less than 5% of the totalvotes attached to all the voting shares in our Company

“USA” : The United States of America

“Vendors” : CIM VIII, Goodwise Investments, Hong Kong Investmentsand Longold Group and “Vendor” means each or any ofthem

“Vendor Shares” : The 55,000,000 issued and fully paid-up Shares for whichthe Vendors invite applications to purchase in the Invitation,subject to and on the terms and conditions of thisProspectus

“WFOE” : Wholly foreign-owned enterprise

Currencies

“HK$” : Hong Kong dollar(s)

“RMB” and “RMB cents” : Renminbi and Renminbi cent(s) respectively

“S$” or “$” and “cents” : Singapore dollar(s) and Singapore cent(s) respectively

“US$” : United States dollar(s)

9

Units

“µm” : Micrometres

“mm” : Millimetres

“sq m” : Square metres

“tonnes” : Metric tonnes

“%“ or “per cent” : Per centum

Any reference in this Prospectus and the Application Forms and, in relation to Electronic Applications, theinstructions appearing on the screen of the ATMs of the Participating Banks, to any statute or enactmentis a reference to that statute or enactment for the time being amended or re-enacted. Any word definedunder the Singapore Companies Act, the Bermuda Companies Act, the SFA or any statutory modificationthereof and used in this Prospectus and the Application Forms and Electronic Applications shall have themeaning assigned to it under the Singapore Companies Act, the Bermuda Companies Act, the SFA or suchstatutory modification, as the case may be.

Any reference in this Prospectus and the Application Forms and, in relation to Electronic Applications, theinstructions appearing on the screen of the ATMs of the Participating Banks, to Shares being allotted to anapplicant includes allotment to CDP for the account of that applicant.

Any reference to a time of day in this Prospectus shall be a reference to Singapore time unless otherwisestated.

The expressions “we”, “us”, “our”, “ourselves”, or other grammatical variations thereof shall, unlessotherwise stated, mean our Company and our subsidiaries.

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed tothem respectively in Section 130A of the Singapore Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa and words importingthe masculine gender shall, where applicable, include the feminine and neuter genders and vice versa.References to persons shall include corporations.

Certain names with Chinese characters have been translated into English names. Such translations areprovided solely for the convenience of investors and may not have been registered with the relevant PRCauthorities and should not be construed as representations that the English names actually represent theChinese names and/or characters.

Any discrepancies between the amounts listed and the totals thereof in the tables and the figures includedherein are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmeticaggregation of the figures that precede them.

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GLOSSARY OF TECHNICAL TERMS

The glossary contains an explanation of certain terms used in this Prospectus in connection with ourGroup and our business. The terms and their assigned meanings may not correspond to standardindustry or common meanings, as the case may be, or usage of these terms.

“2-A2MPS” : 2-Acrylamido-2-methyl propane sulfonic acid, a kind of vinylmonomer that contains sulfonic acid gene. Any reference inthis Prospectus to “2-A2MPS” is a reference to suchacronym and is not intended to refer to any specific orsimilar product

“acrylonitrile” : A chemical compound with the formula CH2CHCN, whichmolecular structure consists of a vinyl group linked to anitrile

“BOPA” : Biaxially-oriented polyamide

“BOPET” : Biaxially-oriented polyethylene terephthalate (polyester)

“BOPP” : Biaxially-oriented polypropylene

“butyl acrylate” : An acrylic acid ester for manufacturing polymers

“CCK paper” : Clay coated kraft paper

“Corona treating” : A process of increasing the surface tension of a material byexposing it to an electrical discharge

“CPP “ : Casting polypropylene

“glassine paper” : Glazed, transparent paper that is grease proof and resistantto the passage of air

“isobutylene” : A chemical compound with the formula C4H8, used as a rawmaterial for the production of our 2-A2MPS

“monomer” : A molecule or chemical compound composed of simplemolecules from which polymers, synthetic resins orelastomers can be created

“PA6” : A type of polyamide resin, commonly known as nylon 6,used as a raw material in the manufacture of our BOPA film

“PE” : Polyethylene

“polymer” : A chain of small molecules joined together in a repeatedfashion to form a larger molecule of specific properties

“polyvinyl acetate” : A vinyl polymer used in paints and adhesives

“silicone oil” : Oil consisting of methyl silicone polymers, used primarily forlubrication and as insulating and hydraulic fluid

“UV cured release film” : UV-treated silicone coated release film

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PURCHASE BY OUR COMPANY OF OUR OWN SHARES

Under the laws of Bermuda, a company may, if authorised by its memorandum of associationor bye-laws, purchase its own shares. Our Company has such power to purchase our ownShares according to paragraph 7(iii) of our Memorandum of Association. Such power topurchase our own Shares shall, subject to the Bermuda Companies Act and our Memorandumof Association (and, if applicable, the rules and regulations of the SGX-ST and other regulatoryauthorities) be exercisable by our Directors upon such terms and subject to such conditions asthey think fit, in accordance with Bye-law 7(B).

Under the laws of Bermuda, such purchases may be effected out of the capital paid-up on thepurchased Shares or out of the funds of our Company otherwise available for dividend or distributionor out of proceeds of a fresh issue of Shares made for that purpose. Any premium payable on such apurchase over the par value of the Shares to be purchased must be provided for out of the funds of ourCompany otherwise available for dividend or distribution or out of our Company’s share premiumaccount before the Shares are purchased. Any amount due to a Shareholder on a purchase by ourCompany of our own Shares may (i) be paid in cash, (ii) be satisfied by the transfer of any part of theundertaking or property of our Company having the same value; or (iii) be satisfied partly under (i) andpartly under (ii). Further, such purchase may not be made if, on the date on which the purchase is tobe effected, there are reasonable grounds for believing that our Company is, or after the purchasewould be, unable to pay our liabilities as they become due. Shares purchased by our Company will betreated as cancelled and our Company’s issued, but not our authorised, capital will be diminishedaccordingly.

For further details of the power of our Company to purchase our own Shares, please see the section“Purchase by the company of its own shares and warrants” in paragraph (d) of Appendix E —“Summary of Bermuda company law” of this Prospectus.

Our Company presently has no intention of purchasing our own Shares after the listing. However, if wedecide to do so later, we will seek Shareholders’ approval in accordance with the laws of Bermuda, ourBye-laws and the rules of the SGX-ST. Our Company will make prompt public announcement of anysuch share purchase and has given an undertaking to the SGX-ST to comply with all requirements thatthe SGX-ST may impose in the event of any such share purchase.

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ATTENDANCE AT GENERAL MEETINGS

Under the Bermuda Companies Act, only persons who agree to become members of a company andwhose names are entered on the register of members of such company are considered members, withrights to attend and vote at general meetings. Accordingly, Depositors holding Shares through the CDPwould not be recognised as members of our Company, and would not have a right to attend and to voteat general meetings of our Company. In the event that Depositors wish to attend and vote at generalmeetings of our Company, CDP will have to appoint them as proxies, pursuant to the Bye-laws and theBermuda Companies Act. The proxy form appointing Depositors as the proxies of CDP would beenclosed with the Shareholders’ circular which would contain a notice convening the relevant generalmeeting. The proxy form would need to be completed by CDP as Shareholder and deposited within thespecified time frame, to enable such Depositor to attend and vote as a proxy at the relevant generalmeeting of our Company.

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TAKE-OVERS

There are presently no requirements under any Bermuda laws or regulations on take-over offers for ourShares which would be applicable to us. However, pursuant to the Securities and Futures Act, sections138, 139 and 140 of the Securities and Futures Act and the Singapore Code on Take-overs andMergers (collectively the “Singapore Take-over and Merger Laws and Regulations”) apply to take-overoffers of companies which are incorporated outside Singapore and all or any of the shares of which arelisted for quotation on a securities exchange (as defined in the Securities and Futures Act). Accordingly,the Singapore Take-over and Merger Laws and Regulations will apply to take-over offers for ourCompany for so long as our Shares are listed on a securities exchange, which includes the SGX-ST.

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SELLING RESTRICTIONS

This Prospectus does not constitute an offer, solicitation or invitation to subscribe for and/or purchasethe Invitation Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is notauthorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No actionhas been or will be taken under the requirements of the legislation or regulations of, or of the legal orregulatory authorities of, any jurisdiction, except for the filing and/or registration of this Prospectus inSingapore and Bermuda in order to permit a public offering of the Invitation Shares and the publicdistribution of this Prospectus in Singapore. The distribution of this Prospectus and the offering of theInvitation Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions.Persons who may come into possession of this Prospectus are required by us, the Vendors, theManager, the Underwriter and the Placement Agent to inform themselves about, and to observe andcomply with, any such restrictions.

Selling Restrictions in Hong Kong

This Prospectus does not constitute an offer to the public in Hong Kong to subscribe for the InvitationShares.

This Prospectus has not been and will not be registered with the Registrar of Companies in Hong Kong.Accordingly, except as mentioned below, this Prospectus may not be issued, circulated or distributedin Hong Kong.

A copy of this Prospectus may, however, be distributed by the Placement Agent or its designatedsubplacement agents to a limited number of prospective applicants for the Placement Shares in HongKong in a manner which does not constitute an offer of the Placement Shares to the public in HongKong or an issue, circulation or distribution in Hong Kong of a prospectus for the purposes of theCompanies Ordinance (Chapter 32 of the Laws of Hong Kong). The offer of the Placement Shares ispersonal to the person named in the accompanying Application Form, and application for thePlacement Shares will only be accepted from such person. An application for the Placement Shares isnot invited from any persons in Hong Kong other than a person to whom a copy of this Prospectus hasbeen issued by the Placement Agent or its designated sub-placement agents, and if made, will not beaccepted, unless the applicant satisfies the Placement Agent or its respective designated sub-placement agents that he is a person whose ordinary business is to buy or sell shares, whether asprincipal or agent.

No person to whom a copy of this Prospectus is issued may issue, circulate or distribute this Prospectusin Hong Kong or make or give a copy of this Prospectus to any other person, other than their legal,financial, tax or other appropriate advisers who are subject to a duty of confidentiality to such person.

The Placement Agent has agreed with our Company that it (and each of their respective designatedsub-placement agents, if any) has not offered or sold, and will not offer or sell, in Hong Kong, by meansof any document, any of our Shares other than to a person whose ordinary business is to buy or sellshares, whether as principal or agent, or in circumstances which do not constitute an offer of thePlacement Shares to the public within the meaning of the Companies Ordinance (Chapter 32 of theLaws of Hong Kong).

This Prospectus may not be issued in Hong Kong other than to a person whose ordinary business isto buy or sell shares, whether as principal or agent.

Selling Restrictions in the PRC

This Prospectus does not constitute an offer, solicitation or invitation to subscribe for and/or purchasethe Invitation Shares or any other securities of our Company in the PRC. Under the laws of the PRC,such offer, solicitation or invitation to PRC citizens is unlawful. The distribution of this Prospectus andthe offering of the Invitation Shares in the PRC are not permitted under the laws of the PRC.

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DETAILS OF THE INVITATION

LISTING ON THE SGX-ST

We have applied to the SGX-ST for permission to deal in, and for quotation of, all our Shares alreadyissued (including the Vendor Shares), the New Shares and the Option Shares on the Official List of theSGX-ST. Such permission will be granted when our Company has been admitted to the Official List ofthe SGX-ST. Acceptance of applications for the Invitation Shares will be conditional upon permissionbeing granted by the SGX-ST to deal in, and for the quotation of, all our issued Shares (including theVendor Shares), the New Shares and the Option Shares. If the said permission is not granted, moniespaid in respect of any application accepted will be returned to you at your own risk, without interest orany share of revenue or other benefit arising therefrom, and you will not have any claim against us, theVendors, the Manager, the Underwriter or the Placement Agent.

The SGX-ST assumes no responsibility for the correctness of any of the statements made, reportscontained or opinions expressed in this Prospectus. Admission to the Official List of the SGX-ST is notto be taken as an indication of the merits of the Invitation, our Company, our subsidiaries or our Shares(including the Vendor Shares), the New Shares or the Option Shares.

No shares shall be allotted on the basis of this Prospectus later than six months after the date ofregistration of this Prospectus by the Authority.

A copy of this Prospectus has been lodged with and registered by the Authority. The Authority assumesno responsibility for the contents of the Prospectus. Registration of the Prospectus by the Authoritydoes not imply that the Securities and Futures Act, or any other legal or regulatory requirements, havebeen complied with. The Authority has not, in any way, considered the merits of the Shares (includingthe Vendor Shares), the New Shares or the Option Shares, as the case may be, being offered forinvestment.

We are subject to the provisions of the Securities and Futures Act and the Listing Manual regardingcorporate disclosure. In particular, if after this Prospectus is registered but before the close of theInvitation, we become aware of:

(a) a false or misleading statement in this Prospectus;

(b) an omission from this Prospectus of any information that should have been included in it underSection 243 of the Securities and Futures Act; or

(c) a new circumstance that has arisen since this Prospectus was lodged with the Authority whichwould have been required by Section 243 of the Securities and Futures Act to be included in thisProspectus, if it had arisen before this Prospectus was lodged,

that is materially adverse from the point of view of an investor, we may lodge a supplementary orreplacement prospectus with the Authority pursuant to Section 241 of the Securities and Futures Act andwill file a copy of such prospectus with the Registrar of Companies in Bermuda.

Where prior to the lodgement of the supplementary or replacement prospectus, applications have beenmade under this Prospectus to subscribe for and/or purchase the Invitation Shares and:

(a) where the Invitation Shares have not been issued and/or transferred to the applicants, ourCompany (as well as on behalf of the Vendors) shall:

(i) within two days (excluding any Saturday, Sunday or public holiday) from the date of thelodgement of the supplementary or replacement prospectus, give the applicants notice inwriting of how to obtain, or arrange to receive, a copy of the supplementary or replacementprospectus, as the case may be, and provide the applicants with an option to withdraw theirapplications; and take all reasonable steps to make available within a reasonable period, thesupplementary or replacement prospectus, as the case may be, to the applicants who have

16

indicated that they wish to obtain, or who have arranged to receive, a copy of thesupplementary prospectus or replacement prospectus;

(ii) within seven days from the date of lodgement of the supplementary or replacementprospectus, give the applicants the supplementary or replacement prospectus, as the casemay be, and provide the applicants with an option to withdraw their applications; or

(iii) treat the applications as withdrawn and cancelled, in which case the applications shall bedeemed to have been withdrawn and cancelled, and within seven days from the date oflodgement of the supplementary or replacement prospectus, pay the applicants all moniesthe applicants have paid on account of their applications for the Invitation Shares; or

(b) where the Invitation Shares have been issued to the applicants, our Company shall (as well as onbehalf of the Vendors) either:

(i) within seven days from the date of lodgement of the supplementary or replacementprospectus, give the applicants the supplementary or replacement prospectus, as the casemay be, and provide the applicants with an option to return to our Company the InvitationShares, which they do not wish to retain title in; or

(ii) treat the issue of the Invitation Shares as void, in which case the issue shall be deemed voidand our Company shall within seven days from the date of lodgement of the supplementaryor replacement prospectus, return all monies paid in respect of any application, withoutinterest or a share of revenue or benefit arising therefrom; or

(c) where the Invitation Shares have been transferred to the applicants, our Company shall (as wellas on behalf of the Vendors) either:

(i) within seven days from the date of lodgement of the supplementary or replacementprospectus, give the applicants the supplementary or replacement prospectus, as the casemay be, and provide the applicants with an option to return to our Company the InvitationShares, which they do not wish to retain title in; or

(ii) treat the sale of the Invitation Shares as void and if documents purporting to evidence titleto the Invitation Shares have been issued to the applicants, our Company shall (as well ason behalf of the Vendors) within seven days from the date of lodgement of thesupplementary or replacement prospectus inform the applicants to return such documentsto our Company within 14 days from that date; and within seven days from the date of receiptof those documents (if applicable) or the date of lodgement of the supplementary orreplacement prospectus, whichever is later, return to the applicants, all monies theapplicants have paid for the Invitation Shares, without interest or share of revenue or benefitarising therefrom.

An applicant who wishes to exercise his option under paragraph (a)(ii) to withdraw his application shall,within 14 days from the date of lodgement of the supplementary or replacement prospectus, notify ourCompany of this, whereupon our Company (as well as on behalf of the Vendors) shall, within seven daysfrom the receipt of such notification, pay to him all monies paid by him on account of his application forthose Shares without interest or a share of revenue or benefit arising therefrom, at the applicant’s risk.

An applicant who wishes to exercise his option under paragraph (b)(i) and (c)(i) to return the InvitationShares issued and/or transferred to him shall, within 14 days from the date of lodgement of thesupplementary or replacement prospectus, notify our Company of this and return all documents, if any,purporting to be evidence of title to those Invitation Shares, to our Company, whereupon our Company (aswell as on behalf of the Vendors) shall, subject to compliance with the Bermuda Companies Act, withinseven days from the receipt of such notification and documents, if any, pay to him all monies paid by himfor those Shares, without interest or a share of revenue or benefit arising therefrom, at the applicant’s riskand the issue of those Shares shall be deemed to be void.

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Under the Securities and Futures Act, the Authority may, in certain circumstances issue a stop order (the“Stop Order”) to our Company, directing that no Shares or no further Shares to which this Prospectusrelates, be allotted, issued or sold. Such circumstances will include a situation where this Prospectus (i)contains a statement, which in the opinion of the Authority is false or misleading, (ii) omits any informationthat should be included in accordance with the Securities and Futures Act, (iii) does not, in the opinion ofthe Authority comply with the requirements of the Securities and Futures Act or (iv) if the Authority is of theopinion that it is in the public interest to do so.

Where applications to subscribe for and/or purchase the Invitation Shares to which this Prospectus relateshave been made prior to the Stop Order, and:

(a) where the Invitation Shares have not been issued and/or transferred to the applicants, theapplications shall be deemed to have been withdrawn and cancelled and our Company shall (aswell as on behalf of the Vendors) within 14 days from the date of the Stop Order, pay to theapplicants all monies the applicants have paid on account of their applications for the InvitationShares; or

(b) where the Invitation Shares have been issued to the applicants, the Securities and Futures Actprovides that the issue of our Shares shall be deemed to be void and our Company (as well ason behalf of the Vendors) is required to, within 14 days from the date of the Stop Order, pay to theapplicants all monies paid by them for the Invitation Shares; or

(c) where the Invitation Shares have been transferred to the applicants, the sale of the InvitationShares shall be deemed to be void and if documents purporting to evidence title have been issuedto the applicants, our Company shall (as well as on behalf of the Vendors) within seven days fromthe date of the Stop Order, inform all applicants to return such documents to our Company within14 days from that date; and within seven days from the date of receipt of such documents (ifapplicable) or the date of the Stop Order, whichever is later, pay to the applicants, all monies theapplicants have paid for the Invitation Shares.

If our Company is required by applicable Singapore laws to cancel issued Invitation Shares and repayapplication monies to applicants (including instances where a stop order under the Securities and FuturesAct is issued), subject to compliance with the Bermuda Companies Act, our Company (as well as on behalfof the Vendors) will purchase the Invitation Shares at the Issue Price. Information relating to the purchaseof Shares by our Company is set out in the section “Purchase by our Company of our own Shares” of thisProspectus.

Where monies are to be returned to applicants for the Invitation Shares, it shall be paid to the applicants’without interest or share of revenue or other benefit arising therefrom, and at the applicants’ own risk andapplicants will not have any claim against our Company, the Vendors, the Manager, the Underwriter or thePlacement Agent.

The Bermuda Monetary Authority has given its consent to the issue of the New Shares and the sale of theVendor Shares pursuant to the Invitation on the terms referred to in this Prospectus. A copy of thisProspectus has been or will, as soon as reasonably practicable, be filed with the Registrar of Companiesin Bermuda. The Bermuda Monetary Authority in granting such permission and the Registrar of Companiesin Bermuda in accepting this Prospectus for filing accepts no responsibility for the financial soundness ofour Group or any proposal or for the correctness of any of the statements made or opinions expressed inthis Prospectus or any other documents.

This Prospectus has been seen and approved by our Directors and the Vendors, and they individually andcollectively accept full responsibility for the accuracy of the information given in this Prospectus andconfirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the factsstated and the opinions expressed in this Prospectus are fair and accurate in all material respects as at thedate of this Prospectus and that there are no material facts the omission of which would make anystatements in the Prospectus misleading. This Prospectus constitutes full and true disclosure of all material

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facts about the Invitation, our Company, our subsidiaries and our Shares (including the Vendor Shares, theNew Shares and the Option Shares).

The Invitation Shares are offered for subscription and/or purchase solely on the basis of the informationcontained and the representations made in this Prospectus.

Neither our Company, our Directors, the Vendors, the Manager, the Underwriter and the Placement Agent,nor any other parties involved in the Invitation is making any representation to any person regarding thelegality of an investment in our Shares by such person under any investment or other laws or regulations.No information in this Prospectus should be considered as being business, legal or tax advice. Eachprospective investor should consult his own professional or other advisers for business, legal or tax adviceregarding an investment in our Shares.

No person has been or is authorized to give any information or to make any representation not containedin this Prospectus in connection with the Invitation and, if given or made, such information orrepresentation must not be relied upon as having been authorized by us, the Vendors, the Manager, theUnderwriter or the Placement Agent. Neither the delivery of this Prospectus and the Application Forms northe Invitation shall, under any circumstances, constitute a continuing representation or create anysuggestion or implication that there has been no change in our affairs or in the statements of fact orinformation contained in this Prospectus since the Latest Practicable Date. Where such changes occur, wemay make an announcement of the same to the SGX-ST and will comply with the requirements of theSecurities and Futures Act. All applicants should take note of any such announcement and, upon releaseof such an announcement, shall be deemed to have notice of such changes. Save as expressly stated inthis Prospectus, nothing herein is, or may be relied upon as, a promise or representation as to our futureperformance or policies.

This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon byany persons other than the applicants in connection with their application for the Invitation Shares for anyother purpose. This Prospectus does not constitute an offer, solicitation or invitation to subscribefor and/or purchase, Invitation Shares in any jurisdiction in which such offer, solicitation orinvitation is unlawful or is not authorized or to any person to whom it is unlawful to make suchoffer, solicitation or invitation.

Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability,during office hours from:

Boulton Capital Asia Pte. Limited20 Cecil Street

#19-03 Equity PlazaSingapore 049705

UOB Kay Hian Private Limited80 Raffles Place #30-01

UOB Plaza 1Singapore 048624

and from members of the Association of Banks in Singapore, members of the SGX-ST and merchantbanks in Singapore. A copy of this Prospectus is also available on the SGX-ST website http://www.sgx.comand the Authority’s OPERA website at http://masnet.mas.gov.sg/opera/sdrprosp.nsf.

The Application List will open at 10.00 a.m. on 6 November 2007 and will remain open until noonon the same day or for such further period or periods as our Directors and the Vendors may, inconsultation with the Manager, in their absolute discretion decide, subject to any limitation underall applicable laws. In the event a supplementary prospectus or replacement prospectus is lodged,the Application List will remain open for at least 14 days after the lodgement of the supplementaryor replacement prospectus.

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INDICATIVE TIMETABLE FOR LISTING

An indicative timetable is set out below for your reference:

INDICATIVE DATE/TIME EVENT

6 November 2007, 12.00 noon Close of Application List

7 November 2007 Balloting of applications, if necessary (in the event of over-subscription for the Offer Shares)

9 November 2007, 9.00 a.m. Commence trading on a “ready” basis

14 November 2007 Settlement date for all trades done on a “ready” basis on 9November 2007

The above timetable is only indicative as it assumes that the date of closing of the Application List is 6November 2007, the date of admission of our Company to the Official List of the SGX-ST is 9 November2007, the SGX-ST’s shareholding spread requirement will be complied with and the New Shares will beissued and fully paid-up prior to 9 November 2007.

The above timetable and procedure may be subject to such modifications as the SGX-ST may in itsdiscretion decide, including the commencement date of trading on a “ready” basis.

In the event of any changes in the closure of the Application List or the time period during which theInvitation is open, we will publicly announce the same:

(a) through a SGXNET announcement to be posted on the Internet at the SGX-ST websitehttp://www.sgx.com; and

(b) in a local English newspaper, such as The Straits Times or the Business Times.

Investors should consult the SGX-ST announcement of the “ready” listing date on the Internet (atthe SGX-ST website http://www.sgx.com), INTV or newspapers, or check with their brokers on thedate on which trading on a “ready” basis will commence.

We will provide details of the results of the Invitation through the channels in (a) and (b) above assoon as practicable after the closure of the Application List.

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CLEARANCE AND SETTLEMENT

Upon listing and quotation on SGX-ST, our Shares will be traded under the book-entry settlementsystem of CDP, and all dealings in and transactions of the Shares through SGX-ST will be effected inaccordance with the terms and conditions for the operation of Securities Accounts with CDP, asamended, supplemented or modified from time to time.

Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalfof persons who maintain, either directly or through depository agents, Securities Accounts with CDP.Persons named as direct securities account holders and depository agents in the depository registermaintained by CDP, will not be treated under our Bye-laws and the Bermuda Companies Act asmembers of our Company in respect of the number of Shares credited to their respective SecuritiesAccounts of such persons and will hold their Shares and exercise their rights through CDP.

Persons holding the Shares in Securities Account(s) with CDP may withdraw the number of Sharesthey own from the book-entry settlement system in the form of physical share certificates. Such sharecertificates will, however, not be valid for delivery pursuant to trades transacted on SGX-ST, althoughthey will be prima facie evidence of title and may be transferred in accordance with our Bye-laws. A feeof S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal ofmore than 1,000 Shares is payable upon withdrawing the Shares from the book-entry settlementsystem and obtaining physical share certificates. In addition, a fee of S$2.00 or such other amount asour Directors may decide, is payable to the share registrar for each share certificate issued and a stampduty of S$10.00 is also payable where our Shares are withdrawn in the name of the person withdrawingour Shares or S$0.20 per S$100 or part thereof of the last-transacted price where it is withdrawn in thename of a third party. Persons holding physical share certificates who wish to trade on SGX-ST mustdeposit with CDP their share certificates together with the duly executed and stamped instruments oftransfer in favour of CDP, and have their respective Securities Accounts credited with the number ofShares deposited before they can effect the desired trades. A fee of S$20.00 is payable upon thedeposit of each instrument of transfer with CDP.

Transactions in our Shares under the book-entry settlement system will be reflected by the seller’sSecurities Account being debited with the number of Shares sold and the buyer’s Securities Accountbeing credited with the number of Shares acquired. No stamp duty is currently payable for the Sharesthat are settled on a book-entry basis.

A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.04 per centof the transaction value subject to a maximum of $600 per transaction. The clearing fee, instrument oftransfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax of7.0 per cent.

Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement onCDP on a scripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST generallytakes place on the third Market Day following the transaction date, and payment for the securities isgenerally settled on the following business day. CDP holds securities on behalf of investors inSecurities Accounts. An investor may open a direct account with CDP or a sub-account with a CDPagent. The CDP agent may be a member company of the SGX-ST, bank, merchant bank or trustcompany.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

All statements contained in this Prospectus, statements made in press releases and oral statementsthat may be made by us or our officers, Directors or employees acting on our behalf, or the Vendors,that are not statements of historical fact, constitute ‘forward-looking statements’. You can identify someof these statements by forward-looking terms such as ‘expect’, ‘believe’, ‘plan’, ‘intend’, ‘estimate’,‘forecast’, ‘project’, ‘future’, ‘probable’, ‘possible’, ‘anticipate’, ‘may’, ‘will’, ‘would’, and ‘could’ or similarwords. However, you should note that these words are not the exclusive means of identifyingforward-looking statements. All statements regarding our expected financial position, businessstrategy, plans and prospects are forward-looking statements. These forward-looking statements,including statements as to our revenue and profitability, cost measures, planned strategy and any othermatters discussed in this Prospectus regarding matters that are not historical facts are only predictions.These forward-looking statements involve known and unknown risks, uncertainties and other factorsthat may cause our actual results, performance or achievements to be materially different from anyfuture results, performance or achievements expressed or implied by such forward-looking statements.

Given the risks and uncertainties that may cause our actual future results, performance orachievements to be materially different from that expected, expressed or implied by the forward-lookingstatements in this Prospectus, undue reliance must not be placed on these statements.

Neither our Company, the Vendors, the Manager, the Underwriter and the Placement Agent nor anyother person represents or warrants that our Group’s actual future results, performance orachievements will be as discussed in those statements. Our actual results may differ materially fromthose anticipated in these forward-looking statements as a result of the risks faced by us.

Our Company, the Vendors, the Manager, the Underwriter and the Placement Agent disclaim anyresponsibility to update any forward-looking statements or publicly announce any revisions to thoseforward-looking statements to reflect future developments, events or circumstances for any reason,even if new information becomes available or other events occur in the future. We are, however, subjectto the provisions of the Securities and Futures Act and the Listing Manual regarding corporatedisclosure, and may be required to lodge a supplementary or replacement document in respect offuture developments, events or circumstances that occur prior to the close of the Invitation and that arerequired to be disclosed pursuant to law.

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EXCHANGE RATES

The exchange rate between RMB and S$ as at the Latest Practicable Date was RMB4.969 to S$1.00.

The table below sets out the high and low exchange rates between RMB and S$ for each of the pastsix months prior to the Latest Practicable Date. The table below indicates how many RMB would taketo buy one S$.

Month RMB/S$ RateHigh Low

March 2007 5.286 5.034

April 2007 5.128 5.059

May 2007 5.103 4.989

June 2007 5.006 4.897

July 2007 5.029 4.972

August 2007 5.019 4.924

The following table sets forth, for each of the financial years/periods indicated, the average and closingexchange rates between RMB and S$. Where applicable, the exchange rates in this table are used forour Group’s financial information disclosed elsewhere in this Prospectus.

RMB/S$ RateAverage Closing

FY2004 4.898 5.072

FY2005 4.924 4.853

FY2006 5.019 5.088

The three months ended 31 March 2006 4.946 4.960

The three months ended 31 March 2007 5.068 5.093

The above exchange rates have been obtained with reference to exchange rates quoted fromBloomberg L.P. and should not be construed as representations that the RMB amounts actuallyrepresent such S$ amounts or could be converted into S$ at the rate indicated or at any other rate andvice versa(1).

Please refer to the section on “Exchange Control” of this Prospectus for a description of the exchangecontrols that exist in the PRC and Bermuda.

Note:

(1) We have not asked Bloomberg L.P. for their consent for the inclusion of the exchange rates quoted under this section andBloomberg L.P. is thereby not liable for these statements under sections 253 and 254 of the SFA. Our Company hasincluded the above exchange rates in their proper term and context in this Prospectus and has not verified the accuracy ofthese statements.

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PROSPECTUS SUMMARY

The information contained in this summary is derived from and should be read in conjunction with thefull text of this Prospectus. Prospective investors should carefully consider the information in thisProspectus, particularly the matters set out in the section “Risk Factors” of this Prospectus beforebuying our Shares. Terms defined elsewhere in this Prospectus have the same meanings when usedherein.

BUSINESS

We are principally engaged in the manufacture and sale of a range of products:

• Adhesive tapes — Our adhesive tapes are for industrial, commercial and consumer uses. Wehave a wide range of adhesive tapes which includes BOPP adhesive tapes, masking tapes,double-sided adhesive tapes, kraft paper adhesive tapes and aluminium tapes;

• Release papers — Our release papers are used as a protective backing on adhesive tapes orother adhesive materials to protect these materials from losing their adhesiveness. Our releasepapers include glassine silicone coated release papers and CCK release papers;

• BOPA film — Our BOPA film is a packaging film used widely for packaging perishable food andodour-sensitive products and may be used under a wide range of temperatures for applicationsfrom refrigeration to vapour sterilisation. Our BOPA film is mainly sold to customers in the food andbeverage industry; and

• 2-A2MPS — Our 2-A2MPS is one of the raw materials used in the manufacture of water-solublepolymers. Water soluble polymers are used in industrial processes, such as in oil and watertreatment, and also in the production of consumer products such as acrylic fibre-based textiles,personal care products, adhesives, paper and packaging materials. Our 2-A2MPS products aremainly sold to customers in the oil industry and water treatment industry.

Our adhesive tapes, release papers and BOPA film products are sold under our brand name and our2-A2MPS product is sold under our brand name .

Our manufacturing facilities are located in Xiamen City, Fujian Province, PRC. As at the Latest PracticableDate, our production capacity per annum for our products is (i) adhesive tapes — 324 million sq m; (ii)release papers — 120 million sq m; (iii) BOPA film — 5,400 tonnes; and (iv) 2-A2MPS — 1,500 tonnes.

For further details, please refer to the section “Our Business” of this Prospectus.

COMPETITIVE STRENGTHS

We believe our competitive strengths are as follows:

• We have built up substantial brand goodwill and track record for our and brandnames

• We produce a wide range of products

• We have an established track record and customer base

• We offer competitive pricing for our products

• We have an experienced management team

For further details of our competitive strengths, please refer to the section “Competitive Strengths” of thisProspectus.

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PROSPECTS

Our Directors expect that the PRC economy will continue to grow in the next few years. For theforeseeable future, our Directors believe that there will be sustained growth in the market demand forour products in the PRC due to the pace of growth and increasing industrialization within the PRC.Increasing spending power of PRC consumers will lead to increasing demand for consumer goods andservices.

We have a wide range of adhesive tapes with different applications catering to the needs of a wide baseof customers. Our release papers also have a wide range of applications and are used in the hygiene,medical, tapes, labels and fibre composites sectors. As such, our Directors believe that there will besustained demand for our adhesive tapes and release papers underpinned by the economic growth inthe PRC.

With respect to our BOPA film segment, our Directors believe that the current demand for BOPA film inthe PRC exceeds actual production capacity in the PRC. BOPA film is widely used as a packagingmaterial in many industries. In the PRC, with greater awareness for hygiene and food safety,consumers will demonstrate a preference towards packaging materials that will ensure freshness andpreserve the quality of products. As such, our Directors believe that there are growth opportunities inthe BOPA film segment.

2-A2MPS is a raw material widely applied in various areas such as in the production of chemicals usedin water treatment, textile dyes, oil and gas industry, coating material and paper manufacturing.Currently, as we are limited by our production capacity, we are only selling to customers in the oilindustry and water treatment industry. Our Directors believe that demand for our 2-A2MPS product willgrow, underpinned by continued growth in the oil and gas industry and our plans to broaden our reachto customers in other industries.

For further details of our prospects, please refer to the section “Prospects and Future Plans” of thisProspectus.

OUR STRATEGIES AND FUTURE PLANS

To capture the emerging business opportunities, we intend to adopt the strategy and future plans as setout below:

• expand our production capacity for BOPA film;

• expand our range of release papers to include UV cured release film;

• expand our production capacity for 2-A2MPS; and

• construct additional storage facilities.

For further details of our strategies and future plans, please refer to the section on “Prospects and FuturePlans” of this Prospectus.

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OUR FINANCIAL PERFORMANCE

The following tables present a summary of the financial highlights of our Group and should be read inconjunction with the Combined Financial Information set out in Appendix A and Appendix B of thisProspectus.

Selected items from the operating results of our Group

Audited Unaudited

(RMB’000) FY2004 FY2005 FY2006

Three monthsended

31 March 2006

Three monthsended

31 March 2007

Revenue 223,246 412,001 540,013 116,638 151,297

Gross profit 61,903 124,669 188,828 39,730 56,364

Gross profit margin 27.7% 30.3% 35.0% 34.1% 37.3%

Profit before income tax 52,047 112,221 175,098 36,089 51,654

Profit attributable to equity holders 44,199 95,141 148,942 30,756 43,901

EPS (RMB cents)(1) 8.84 19.03 29.79 6.15 8.78

Adjusted EPS (RMB cents)(2) 6.70 14.42 22.57 4.66 6.65

Notes:

(1) For comparative purposes, the EPS for the Period Under Review has been computed based on the profit attributable toequity holders and our pre-Invitation share capital of 500,000,000 Shares.

(2) The adjusted EPS for the Period Under Review has been computed based on the profit attributable to equity holders andour post-Invitation share capital of 660,000,000 Shares.

Selected items from the financial position of our Group(1)

(RMB’000)Audited as at

31 December 2006Unaudited as at31 March 2007

Non-current assets 33,812 32,876

Current assets 194,740 289,528

Current liabilities (71,102) (121,030)

Net current assets 123,638 168,498

Net assets 157,450 201,374

NAV per Share (RMB cents)(1) 31.49 40.27

Note:

(1) For comparative purposes, our NAV per Share as at 31 December 2006 and as at 31 March 2007 have been computedbased on our net assets and on our pre-Invitation share capital of 500,000,000 Shares.

WHERE YOU CAN FIND US

Our registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda and ourbusiness address is 18 Xinsheng Road, Xinyang Industrial Zone, Haicang District, Xiamen City, FujianProvince, PRC 361026. Our telephone number is 86–592-6517000 and our facsimile number is86–592-6519700. Our internet address is www.chang-tian.com.cn. Information contained in ourwebsite does not constitute part of this Prospectus.

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THE INVITATION

Size : The 215,000,000 Invitation Shares comprising 160,000,000New Shares and 55,000,000 Vendor Shares. The InvitationShares, upon allotment and issue, will rank pari passu in allrespects with our existing issued Shares.

Issue Price : S$0.47 for each Invitation Share.

The Offer : The Offer comprises an invitation by our Company and theVendors to the public in Singapore to subscribe for and/orpurchase the 5,000,000 Offer Shares at the Issue Price,subject to and on the terms and conditions of this Prospectus.

The Placement : The Placement comprises a placement of 210,000,000Placement Shares at the Issue Price, subject to and on theterms and conditions of this Prospectus.

Purpose of the Invitation : Our Directors believe that the listing of our Company and thequotation of our Shares on the SGX-ST will enhance ourGroup’s public image and enable our Group to raise fundsfrom the capital markets to finance our business expansion.The Invitation will also provide investors and members of thepublic with an opportunity to participate in the equity of ourCompany.

Listing Status : Prior to the Invitation, there had been no market for ourShares. Our Shares will be quoted on the SGX-ST, subject toadmission of our Company to the Official List of the SGX-STand permission for dealing in, and for quotation of, our Sharesbeing granted by the SGX-ST.

Risk Factors : Investing in our Shares involves risks which are described inthe section “Risk Factors” of this Prospectus.

Trading Currency : Our Shares will be quoted and traded in Singapore dollars onthe Main Board of the SGX-ST and traded under the book-entry settlement system of the CDP.

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PLAN OF DISTRIBUTION

The Invitation is for the New Shares and the Vendor Shares offered in Singapore by way of public offerand placement comprising 5,000,000 Offer Shares and 210,000,000 Placement Shares managed byBoulton Capital and underwritten by UOB Kay Hian.

The Issue Price is determined by us and the Vendors in consultation with the Manager, the Underwriterand the Placement Agent, based on market conditions and estimated market demand for our Sharesdetermined through a book building process. The Issue Price is S$0.47 for each Invitation Share andis payable in full on application.

Offer Shares

The Offer Shares are made available to the members of the public in Singapore for subscription and/orpurchase at the Issue Price. The terms and conditions and procedures for application and acceptanceare described in Appendix H of this Prospectus.

In the event of an under-subscription for the Offer Shares as at the close of the Application List, thatnumber of Offer Shares not subscribed for and/or purchased shall be made available to satisfy excessapplications for the Placement Shares to the extent there is an over-subscription for the PlacementShares as at the close of the Application List.

In the event of an over-subscription for the Offer Shares as at the close of the Application List and/orthe Placement Shares are fully subscribed for or over-subscribed as at the close of the Application List,the successful applications for the Offer Shares will be determined by ballot or otherwise as determinedby our Directors and approved by the SGX-ST.

Pursuant to the terms and conditions contained in the Management and Underwriting Agreementsigned between our Company, the Vendors, the Manager and the Underwriter dated 30 October 2007(the “Management and Underwriting Agreement”), our Company and the Vendors have appointedBoulton Capital to manage the Invitation and UOB Kay Hian to underwrite the Offer Shares.

Placement Shares

The Placement Shares are made available for subscription by retail and institutional investors who mayapply by way of application form. The terms and conditions and procedures for application andacceptance are described in Appendix H of this Prospectus.

Pursuant to the terms and conditions in the Placement Agreement signed between our Company, theVendors and the Placement Agent dated 30 October 2007 (the “Placement Agreement”), the PlacementAgent has agreed to subscribe for and/or procure subscribers and/or purchasers for the PlacementShares at the Issue Price.

Subscribers and or purchasers of the Placement Shares may be required to pay a commission of upto 1.0% of the Issue Price to the Placement Agent (subject to Singapore Goods and Services Tax of7.0%, if applicable).

In the event of an under-subscription for the Placement Shares as at the close of the Application List,that number of Placement Shares not subscribed for and/or purchased shall be made available tosatisfy excess applications for the Offer Shares to the extent that there is an over-subscription for theOffer Shares as at the close of the Application List.

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Subscription for and/or Purchase of the Invitation Shares

None of our existing Shareholders or Directors intends to subscribe for and/or purchase Shares in theInvitation.

None of our Company’s management or employees intend to subscribe for and/or purchase Shares inthe Invitation amounting to 5% or more of the Invitation Shares.

To the best of our knowledge, we are not aware of any person who intends to subscribe for and/orpurchase Shares in the Invitation amounting to 5% or more of the Invitation Shares. However, througha book-building process to assess market demand for our Shares, there may be person(s) who mayindicate an interest to subscribe for and/or purchase Shares amounting to 5% or more of the InvitationShares. If such person(s) were to make an application for Shares amounting to 5% or more of theInvitation Shares and subsequently be allocated or allotted such number of Shares, we will make thenecessary announcements at an appropriate time. The final allocation of Shares will be in accordancewith the shareholding spread and distribution guidelines as set out in Rule 210 (1) of the Listing Manual.

Further, no Shares shall be allocated or allotted on the basis of this Prospectus later than six monthsafter the date of registration of this Prospectus by the Authority.

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USE OF PROCEEDS AND LISTING EXPENSES

USE OF PROCEEDS

The aggregate net proceeds to be raised from the issue of the Invitation Shares (after deducting theestimated listing expenses) are estimated to be S$94.4 million (equivalent to approximately RMB469.1million).

The net proceeds to be raised from the issue of the New Shares (after deducting our share of theestimated listing expenses) are estimated to be approximately S$69.3 million (equivalent toapproximately RMB344.5 million) which we intend to use in the following manner:

(a) approximately S$26.0 million (equivalent to approximately RMB129.0 million(1)), for theinstallation of one additional production line for the production of BOPA film with an additionalproduction capacity of 5,400 tonnes per annum, resulting in an aggregate of 10,800 tonnes perannum;

(b) approximately S$12.7 million (equivalent to approximately RMB63.0 million(1)), for the installationof a new production line for the production of our new release paper, namely the UV cured releasefilm, with a production capacity of approximately 3,000 tonnes per annum;

(c) approximately S$6.0 million (equivalent to approximately RMB30.0 million(1)), for the installationof one additional production line for the production of 2-A2MPS with an additional productioncapacity of 1,500 tonnes per annum, resulting in an aggregate of 3,000 tonnes per annum;

(d) approximately S$3.0 million (equivalent to approximately RMB15.0 million(1)), for the constructionof additional storage facilities;

(e) approximately S$4.0 million (equivalent to approximately RMB20.0 million(1)), for the repaymentof a loan facility that was used for working capital purposes(2); and

(f) the balance for general working capital.

For further details of the above, please refer to the section “Prospects and Future Plans” of thisProspectus.

Pending the specific deployment of funds, the net proceeds may be placed as deposits with financialinstitutions or added to our working capital or used for investment in short-term money market or debtinstruments as may be determined by our Directors in their absolute discretion.

In the opinion of our Directors, no minimum amount must be raised by our Company pursuant to theInvitation. Although no minimum amount must be raised by our Company from the Invitation in order toprovide for the items above, such amount is proposed to be provided out of the issue of the New Sharesor in the event the Invitation is cancelled, out of funds generated from our operations, external borrowingsand other fund raising exercises. We may choose not to fully implement our plans.

Notes:

(1) Based on the exchange rate of S$1.00 to RMB4.969 as at the Latest Practicable Date.

(2) As at the Latest Practicable Date, we have an outstanding bank loan of RMB20.0 million with the Industrial Bank Co., Ltd., used for purposes of working capital. We intend to utilise approximately RMB20.0 million from the net proceeds

of the Invitation to repay this loan in full. Please refer to the section “Capitalisation and Indebtedness” of this Prospectus forfurther details.

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LISTING EXPENSES

The estimated amount of expenses incurred in connection with the Invitation to be borne by us,including listing fees payable to the SGX-ST and the Authority, professional fees comprisingmanagement fees, audit fees and legal fees, underwriting commission, placement commission,brokerage and all other incidental expenses in relation to the Invitation are approximately S$5.9 million.The following table sets out the breakdown of the use of proceeds and the estimated expensesincurred:

Estimated amount(S$’000)

As a percentage ofgross proceeds fromthe issue of the New

Shares (%)

Use of proceeds

Installation of one additional production line for theproduction of BOPA film 25,961 34.5

Installation of a new production line for the production ofUV cured release film 12,679 16.9

Installation of one additional production line for theproduction of 2-A2MPS 6,037 8.0

Construction of additional storage facilities 3,019 4.0

Repayment of a loan facility 4,025 5.4

General working capital 17,613 23.4

Total 69,334 92.2

Expenses to be borne by Company

Listing and processing fees 70 0.1

Professional fees 2,540 3.4

Underwriting commission, placement commission andbrokerage 2,256 3.0

Miscellaneous expenses 1,000 1.3

Total 5,866 7.8

The Vendors will bear a portion of the estimated listing expenses incurred in connection with the Invitation,comprising the underwriting commission, placement commission and brokerage, in the proportion that theVendor Shares bears to the total number of Invitation Shares, amounting to approximately S$0.8 million.

In the event that the estimated expenses listed above are in excess of the actual expenses incurred inconnection with the Invitation, such excess will be applied towards our working capital purposes.

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MANAGEMENT AND UNDERWRITING AND PLACEMENT ARRANGEMENTS

Pursuant to the Management and Underwriting Agreement, our Company and the Vendors appointedthe Manager to manage the Invitation, and the Underwriter to underwrite the Offer Shares. TheManager will receive management fees from our Company and the Vendors for its services renderedin connection with the Invitation.

Pursuant to the Management and Underwriting Agreement, the Underwriter has agreed to underwritethe Offer Shares for a commission of 2.75% of the Issue Price for each Offer Share, payable by ourCompany and the Vendors, in the proportion in which the number of Invitation Shares offered by eachpursuant to the Invitation bears to the total number of Invitation Shares. The Underwriter may, at itsdiscretion, appoint one or more sub-underwriters for the Offer Shares. Brokerage will be paid by ourCompany and the Vendors to the Underwriter, members of the SGX-ST, banks and merchant Banks inSingapore in respect of accepted applications made on Application Forms bearing their respectivestamps, or to Participating Banks in respect of successful applications made through ElectronicApplications at the rate of 0.25% of the Issue Price for each Offer Share.

Pursuant to the Placement Agreement, the Placement Agent has agreed to subscribe for and/orprocure subscriptions for the Placement Shares for a placement commission of 3.00% of the IssuePrice for each Placement Share, payable by our Company and the Vendors, in the proportion in whichthe number of Invitation Shares offered by each pursuant to the Invitation bears to the total number ofInvitation Shares. The Placement Agent may at its discretion, appoint one or more sub-placementagents for the Placement Shares. Subscribers of Placement Shares may be required to pay abrokerage of up to 1.0% of the Issue Price (subject to GST at the current rate of 7.0%, if applicable).

Save as aforesaid and under the section “Plan of Distribution” of this Prospectus, no commission,discount or brokerage, has been paid or other special terms granted within the two years preceding thedate of this Prospectus or is payable to any Director, promoter, expert, proposed Director or any otherperson for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions forany shares in or debentures of our Company.

The Management and Underwriting Agreement may be terminated by the Manager or the Underwriterat any time on or prior to the close of the Application List on the occurrence of certain events including,inter alia, any change, or any development involving a prospective change, in local, national orinternational, financial (including stock market, foreign exchange market, international bank or interestrates or money market), political, industrial, economic, legal or monetary conditions, taxations orexchange controls, which events or events shall, in the reasonable opinion of the Manager or theUnderwriter, as the case may be (exercised in good faith):

(a) result or be likely to result in a material adverse fluctuation or adverse conditions in the stockmarket in Singapore or elsewhere; or

(b) be likely to materially prejudice the success of the offer or subscription and/or purchase of theInvitation Shares (whether in the primary market or in respect of dealings in the secondarymarket); or

(c) make it materially impracticable, inadvisable, inexpedient or uncommercial to proceed with any ofthe transactions contemplated in the Management and Underwriting Agreement (as the case maybe); or

(d) be likely to have a material adverse effect on the business, trading position, operations orprospects of our Company or our Group as a whole; or

(e) be such that no reasonable underwriter would have entered into the Management andUnderwriting Agreement; or

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(f) make it uncommercial or otherwise contrary to or outside the usual commercial practices ofunderwriting in Singapore for the Underwriter to observe or perform or be obliged to observe orperform the terms of the Management and Underwriting Agreement.

Notwithstanding the above, the Management and Underwriting Agreement may be terminated by theManager or the Underwriter if, inter alia, at any time:

(a) up to the date of commencement of trading of our Shares on the Official List of the SGX-ST, a stoporder is issued by the Authority pursuant to Section 242 of the SFA; or

(b) after the registration of this Prospectus with the Authority but before the close of the ApplicationList, the Company fails and/or neglects to lodge a supplementary prospectus or replacementprospectus if required to do so pursuant to Section 243 of the SFA.

The Placement Agreement is conditional upon the Management and Underwriting Agreement not havingbeen terminated or rescinded pursuant to the provisions of the Management and Underwriting Agreementand may be terminated on the occurrence of certain events, including those specified above.

In the event that the Management and Underwriting Agreement is terminated, our Company and theVendors reserve the right, at the absolute discretion of our Directors, to cancel the Invitation.

Pursuant to the Management and Underwriting Agreement, our Company shall not, for a period of 12months from the date of listing of our Company on the SGX-ST, grant any Options under the ESOS orissue any new Shares without the prior written consent of the Underwriter (such consent not to beunreasonably withheld).

Save as disclosed in the section “Shareholders” of this Prospectus, we do not have any materialrelationships with any of the Manager, Underwriter or Placement Agent.

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RISK FACTORS

Prospective investors should carefully consider and evaluate the following considerations and all otherinformation contained in this Prospectus before deciding to invest in our Shares. If any of the followingconsiderations and uncertainties develop into actual events, our business, results of operations,financial condition and prospects could be materially and adversely affected. In such cases, the tradingprice of our Shares could decline due to any of these considerations and uncertainties, and you maylose all or part of your investment in our Shares.

To the best of the knowledge and belief of our Directors and the Vendors, all risk factors which arematerial to investors in making an informed judgment in our Company have been set out below.

RISKS RELATING TO OUR BUSINESS

Our operations are exposed to risks in relation to the handling of dangerous raw materials

The production of our 2-A2MPS product involves the handling and storage of certain dangerous rawmaterials such as acrylonitrile. Any improper handling or storage of these dangerous materials mayresult in fire and/or explosion which could result in an interruption to, or delay of, or require us to curtailour operations.

In February 2006, there was a minor explosion on our premises which resulted in a fire incident. Thisfire incident occurred when a disused tank containing traces of acrylonitrile ignited while we wereremoving certain disused piping and storage tank used for the storage of acrylonitrile. As the incidentoccurred in a segregated area on the premises of our production plant, there was limited damage andno personal injury caused. Please refer to the section “Safety Controls” of this Prospectus for furtherdetails.

There can be no assurance that we will be able to comply fully with the laws, regulations and policiesthat may be implemented by the relevant PRC authorities in relation to the handling of dangerousarticles, whether economically or at all. In addition, there can be no assurance that accidents arisingfrom the mishandling of dangerous articles will not occur in the future. Should we fail to comply with anyrelevant laws, regulations or policies or should any accident occur, our business and results ofoperations may be materially and adversely affected. We may also be subject to civil and/or criminalliabilities.

We might not be able to obtain relevant licences and permits from PRC governmentalauthorities to purchase, use and store acrylonitrile

We purchase acrylonitrile as a raw material used in the production of our 2-A2MPS product. In PRC,purchases of acrylonitrile, being a poisonous material under the List of PoisonousMaterials , is governed by the Administrative Rules of the Poisonous ChemicalsPurchase and Transportation Permits promulgated by theMinistry of Public Security of the PRC on 1 August 2005. According to suchregulations, Changtian Enterprise is required to apply to the Xiamen Municipal Department of PublicSecurity for a poisonous materials purchase permit each time that we purchase poisonousmaterials.

On 21 September 2006, we were fined RMB10,000 by the Xiamen Municipal Department of PublicSecurity Haicang Branch for not possessing the relevant permits when purchasingacrylonitrile. In addition, our employee Yang Junqing, the person-in-charge at the relevant time wasdetained for 5 days. Subsequent to this incident, Xiamen Jiuan Safety Examination and EvaluationOffice Co., Ltd issued a report which confirmed that we are incompliance with the requirements to purchase, use and store poisonous chemicals. We have sinceobtained such poisonous chemicals purchase permit and paid the RMB10,000 fine. Please refer to thesection “Government Regulations, Licences and Permits” of this Prospectus for further details.

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Further, on 11 May 2007, we have obtained confirmation from Xiamen Municipal Department of PublicSecurity that Changtian Enterprise is in compliance with the requirements and is qualifiedto purchase, use and store acrylonitrile. In addition, we are required to obtain a permit from the XiamenMunicipal Department of Public Security for each purchase of acrylonitrile that we make.If we are not able to comply with the necessary requirements for the purchase and storage ofacrylonitrile, production of our 2-A2MPS will be adversely affected. This will have a material adverseimpact on our business, results of operations and financial condition.

We may not be able to obtain patent protection for our 2-A2MPS production process

On 6 June 2007, we submitted a patent application to the State Intellectual Property Office of the PRCfor our 2-A2MPS production process. Based on a report by our patent

agent and as far as we are aware, we believe that our 2-A2MPS production process does not violateany existing registered patent right in the PRC. However, approvals for registration of patents are onlyreleased to the public 18 months after the application and thus our Company cannot assure you thatwe have not infringed any patent applications which have been submitted to the State IntellectualProperty Office of the PRC but has yet to be granted patent approval.In the event that a patent application for a similar process to our 2-A2MPS production process has beensubmitted and is granted approval for registration for patent protection before us and/or an action isbrought against us for infringement of a third party’s patent or other intellectual property rights, theproduction of our 2-A2MPS may be adversely affected. This will have a material adverse impact on ourbusiness, results of operations and financial condition.

We are affected by the availability of and increases in prices of raw material

The raw materials used in the production of our products, including BOPP film, butyl acrylate, polyvinylacetate, CCK paper, glassine paper, PA6, acrylonitrile and isobutylene, as a percentage of our costs ofsales for FY2004, FY2005, FY2006 and three months ended 31 March 2007 is approximately 93.3%,93.9%, 93.4% and 93.7% respectively. The price of these raw materials may fluctuate due to changesin supply and demand conditions. We have not entered into any long term supply contracts of morethan one year with our suppliers, and any sudden decrease in availability of such raw materials mayadversely affect our operations or result in us having to pay a higher cost for these raw materials. Ifthere are significant increases in the costs of our major raw materials and we are unable to pass onsuch price increases to our customers or we are unable to find alternative sources for such rawmaterials at competitive prices and on a timely basis for our production, our financial performance maybe materially and adversely affected.

We operate in a competitive environment and if we are unable to maintain our competitiveness,our results of operations may be adversely affected

We operate in a competitive environment and we are subject to competition from existing competitorsand new market entrants. Our competitors include both local and foreign companies which may haveaccess to greater financial and other resources than we do. There is no assurance that we will be ableto remain competitive. Should we be unable to compete successfully, this would have a materialadverse effect on our results of operations.

In order to maintain our customer base and market share, we must ensure that we are able tocontinually manufacture products that meet our customers’ demands and changing needs. If ourcompetitors are able to develop better or cheaper products through technological changes andimprovements in the development and production of their products, we may not be able to maintain ourcompetitiveness or our market share, and our business and results of operations will be materially andadversely affected. Further, if we do not develop and introduce new products or enhance existingproducts in a timely manner in response to changing market conditions or customers’ requirements, orif our new products do not achieve market acceptance, our business, results of operations and financialcondition may be materially and adversely affected.

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Please refer to the sections “Competitors” and “Competitive Strengths” of this Prospectus for furtherdetails.

Our intellectual property is important to our ability to succeed in our business but may bedifficult to protect

Our ability to compete successfully and achieve future growth in revenues depends, in part, on ourability to protect our trade secrets and/or technical know-how relating to our manufacturing processes,and also on our ability to protect our brand name and trademarks. In addition to the Service Agreementsentered into with our Executive Directors which include certain confidentiality undertakings, details ofwhich are set out under the section “Service Agreements” of this Prospectus, we have also entered intoconfidentiality agreements with our key employees, such as our manufacturing and sales personnel,who have access to trade and business sensitive information, to protect our trade secrets andproprietary information. However, there can be no assurance that these agreements will not bebreached, or that we will have adequate remedies for any breach, or that other parties will not obtainknowledge of our trade secrets and proprietary processes, technologies and systems, or infringe ourbrand name and trademarks. Further, in the event of a departure of any of our management or technicalpersonnel, they may disclose such trade secrets and/or technical know-how to third parties.

We have not applied for any patents in respect of the adhesive glue formulae for the production ofadhesives tapes. In the event that other parties replicate our processes for the production of adhesiveglue, we will have no legal recourse to protect any proprietary rights that we may have. If ourcompetitors are able to do so at lower costs, we may lose our competitive edge and our business,results of operations, financial condition and profitability will be materially and adversely affected.

If we decide to enforce our intellectual property rights through litigation, such litigation, whethersuccessful or unsuccessful, could result in substantial costs and diversions of resources, either ofwhich could have a material adverse effect on our business, financial condition and results ofoperations.

Further, third parties may assert claims to the processes, technologies and systems used in theproduction of our adhesive glue and 2-A2MPS or our brand names and trademarks. In such event, wemay need to acquire licences to, or to contest the validity of, issued or pending patents or claims of thirdparties. There can be no assurance that any licence in relation to such trademarks and patents wouldbe made available to us on acceptable terms, if at all, or that we would prevail in any such contest. Inaddition, we may incur substantial costs and time in contesting or defending such claims broughtagainst them. Our business, results of operations and financial condition may be materially andadversely affected by such claims.

We may not be able to sustain our growth and this could adversely affect our future prospects

Between FY2004 and FY2006, our revenue grew at a compounded growth rate of approximately55.5%, largely driven by the growth experienced in our BOPA film business which commenced in 2005.Our future operating results will depend on our management’s ability to manage and grow our business,including recruiting, training and retaining qualified employees, controlling costs, managing ourproduction capacity, introduction of new products, effectively implementing quality control andexpanding our existing markets and penetrating into new markets. Any unexpected decline in thegrowth of our revenue without a corresponding decline in the growth of our operating costs or anyfailure to successfully manage and grow our business could have a material adverse impact on ourbusiness, results of operations and financial condition. In addition, our growth will also require us toexpand our production capacity and if such expansion is not undertaken successfully, our future growthand prospects will be adversely affected. Please refer to the section “Prospects and Future Plans” ofthis Prospectus for further details.

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A low acceptance level of our UV cured release film will adversely affect our revenue andprofitability

As disclosed in the section “Prospects and Future Plans” of this Prospectus, we intend to useapproximately RMB63.0 million for commissioning and installation of a new production line for our newproduct UV cured release film. Whilst we believe there are good prospects for UV cured release film,there is no assurance that this new product will be accepted by our customers or our potentialcustomers. A low level of acceptance of UV cured release film may therefore not yield the financialresults that we expect. Our profitability will be affected by the costs incurred on the construction of theproduction line and the production of such new products without a commensurate rise in revenue.

We are exposed to potential product quality liability

Under the Product Quality Law of the PRC , if a product causes propertydamage or personal injury, manufacturers and sellers of the product are liable for property damage orpersonal injuries caused by the product. Although the laboratory tests conducted by us has notindicated that our products are toxic or irritating, there can be no assurance that our products will notcause irritation, health complications or any other allergic reactions on contact by users. Any successfulproduct liability claim against us will materially and adversely affect our business and reputation. Evenif we are able to successfully defend such claim, there can be no assurance that our customers will notlose confidence in our products, which will adversely affect our business and the reputation of ourGroup. A product liability claim, even one without merit, could result in us incurring significant expensesand substantial time and efforts of our management in defending and proving such claim to be withoutmerit.

Failure to retain the services of our key management staff or to hire and retain experiencedexecutives and staff will adversely affect our operations and results

Our continued success is dependent, to a large extent, on our ability to retain the services of our keymanagement and operations personnel as they are responsible for the formulation of our businessstrategies and overseeing our manufacturing operations. The loss of our key management and staff,who have the experience and expertise in our business as well as established relationships with ourcustomers and suppliers, without suitable replacements, or the inability to attract and retain qualifiedpersonnel will adversely affect our operations and hence, revenue and profits. In particular, the loss ofthe services of our Executive Directors, Yang Qingjin, Chen Yongfu, Wong Chit Fu, Yan Yilin and oursenior management, will have an adverse impact on our business, results of operations and financialcondition.

We are exposed to credit risks of our customers

Our trade receivables of approximately RMB50.1 million, RMB88.4 million, RMB111.7 million andRMB110.7 million accounted for approximately 37.6%, 43.6%, 57.4% and 38.2% of our current assetsand approximately 24.2%, 32.6%, 48.9% and 34.3% of our total assets as at 31 December 2004, 31December 2005, 31 December 2006 and 31 March 2007 respectively. Therefore, our financial position,profitability and cash flow are dependent to a large extent on the creditworthiness of our customers andtheir ability to pay us on a timely basis. Further, as our customer base grows, we will be exposed tocredit risks from new customers. We are unable to assure you that the risk of default by our customerswill not occur or increase in the future. Please refer to the section “Credit Policy” of this Prospectus formore details.

We are subject to the PRC’s environmental laws and regulations

Our manufacturing facilities in the PRC are subject to environmental laws and regulations imposed bythe PRC authorities. In the PRC, our business operations are subject to laws and regulations relatingto, inter alia, air protection, waste management and water protection. If stricter rules are imposed onair protection, waste management and water protection by the PRC authorities which result in us having

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to incur a higher production cost to comply with such stricter rules, our business and financialperformance in the PRC will be adversely affected.

Cessation of income tax exemption for Changtian Enterprise will have an adverse impact on ournet profit

In accordance with the applicable corporate income tax law of the PRC, Changtian Enterprise, ourwholly-owned subsidiary which was established as a WFOE in the PRC, is exempted from thecorporate income tax for its first two profitable calendar years of operations and is entitled to a 50%relief from the state corporate income tax and exempted from the local corporate income tax for thefollowing three years. The two years’ tax exemption period for Changtian Enterprise is expected tocommence in the financial year ending 31 December 2007 and expire as at 31 December 2008 asapproved by the local tax authority. Upon expiry of the tax exemption period, Changtian Enterprise isexpected to be subject to a reduced tax rate of 50% for the three financial years from 1 January 2009to 31 December 2011.

On 16 March 2007, a new PRC Enterprise Income Tax Law was passed by the People’s Congressaccording to which the income tax rate applicable to all PRC enterprises (including foreign investedenterprises) will be fixed at 25%, effective as of 1 January 2008.

However, under the new PRC Enterprise Income Tax Law, enterprises established before 16 March2007 which currently enjoy the preferential tax treatment of a two-year tax exemption, followed by athree-year 50% reduced tax rate, will be granted a five-year transition period during which they will stillenjoy such preferential tax treatment.

According to the Income Tax Law of the People’s Republic of China for Enterprises with ForeignInvestment and Foreign Enterprises, as an enterprise registered in Xiamen (which is a specialeconomic zone), apart from enjoying the aforesaid preferential tax treatment, we are also entitled to anincome tax rate of 15% from 1 January 2012 (in other words, we are entitled to a reduced income taxrate of 15% after the expiry of the aforesaid five-year tax preferential period). According to the new PRCEnterprise Income Tax Law, foreign investment enterprises registered in special economic zones maycontinue to enjoy the 15% preferential tax treatment if so stipulated by the State Council of the PRC.However, as the State Council of the PRC has not promulgated the relevant implemental rules, wecannot assure you that we will enjoy the 15% preferential income tax treatment after the aforesaid5-year preferential tax treatment.

Please refer to the section “Selected Group Combined Financial Information” of this Prospectus whichstates the combined financial information of our Group for the past three financial years ended 31December 2004, 2005 and 2006 for more details.

The outbreak, or threatened outbreak, of any severe communicable disease in the PRC, couldmaterially and adversely affect our Group’s business and results of operations

The outbreak, or threatened outbreak, of any severe communicable disease (such as severe acuterespiratory syndrome or avian influenza) in the PRC, could materially and adversely affect overallbusiness sentiments and environment in the PRC, particularly if such outbreak is inadequatelycontrolled. This in turn could materially and adversely affect domestic consumption, labour supply and,possibly, the overall GDP growth of the PRC. Our revenue is currently derived entirely from our PRCoperations and any labour shortages on contraction or slowdown in the growth of domesticconsumption in the PRC could materially and adversely affect our business and results of operations.In addition, if any of our employees is affected by any severe communicable disease, it could adverselyaffect or disrupt our production and materially and adversely affect our results of operations as we maybe required to close our facilities to prevent the spread of the disease. The spread of any severecommunicable disease in the PRC may also affect the operations of our customers and suppliers,which could materially and adversely affect our business and results of operations.

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RISKS RELATING TO THE PRC

Our operations could be adversely affected by changes in the political, economic and socialconditions in the PRC

Since our manufacturing facilities are located in the PRC and our revenue is entirely derived from thePRC, our business operations and financial position are subject to the political, economic and socialdevelopments in the PRC.

The economy of the PRC has historically been a planned economy subject to a series of economicplans adopted by the state. The PRC government has implemented economic reforms resulting insignificant economic and social advancement over the past 30 years. Many of these reforms howeverare unprecedented or experimental and may be subject to change or reversal. There is no assurancethat the PRC government will continue to pursue a policy of economic reforms.

Changes in the political, economic and social conditions in the PRC or changes in government policiessuch as changes in laws and regulations or their interpretation, the introduction of measures to controlinflation, changes in the rate and method of taxation and the imposition of additional restrictions oncurrency conversion and overseas remittances, may affect our future performance and profitability.

Our operations are subject to changes and uncertainties in the PRC legal system

The PRC legal system is based on statutory law. Unlike the common law system, statutory law is basedon written statutes. Prior court decisions may be cited as persuasive authority but do not have bindingeffect. Since 1979, the PRC government has been promulgating and amending the laws and,regulations regarding economic matters, such as corporate organisation and governance, foreigninvestment, commerce, taxation and trade. However, the PRC legal system is still not as well developedas those western countries with a common law legal system and the interpretation and enforcement ofthe PRC laws are still subject to uncertainties.

If any court decision or any interpretation or enforcement of the PRC laws in relation to our businessdoes not follow relevant precedents and are decided to our detriment, our business, results of operationand financial position will be materially and adversely affected as a result of such uncertainty.

Our results of operations and financial condition may be adversely affected by the changes inthe PRC foreign exchange controls

Changtian Enterprise is subject to the rules and regulations imposed by the PRC government oncurrency conversion. In the PRC, the conversion of RMB into foreign currencies is regulated by theState Administration for Foreign Exchange (“SAFE”). Currently, foreign investment enterprises (“FIEs”)are required to apply to SAFE for “Foreign Exchange Registration Certificates for FIEs”. ChangtianEnterprise is FIE. Such registration certificates are renewable annually and allow the FIEs to openforeign currency accounts for the payment of:

(a) recurring items, including the distribution of dividends and profits to foreign investors of FIEs uponpresentation of board resolutions which authorise the distribution of profits or dividends (“CurrentAccount”); and

(b) capital items, such as repatriation of capital, repayment of loans and for securities investment(“Capital Account”).

Currency transactions within the scope of the Current Account can be effected without requiring theapproval of SAFE. However, the conversion of currency in the Capital Account still requires the approvalof SAFE.

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We have obtained the Foreign Exchange Registration Certificate for FIEs which is renewable annuallyupon application to SAFE. Although we do not presently anticipate any difficulty in meeting our foreignexchange needs, there can be no assurance that the current foreign exchange rules with respect tocurrency transactions within the scope of the Current Account will not be changed to our detriment. Assuch, there can be no assurance that Changtian Enterprise will be able to continue obtaining sufficientforeign exchange to pay dividends.

In order to regulate PRC domestic residents engaged in trans-territorial capital transactions involved ininvestment and financing activities via overseas special purpose companies, on 21 October 2005, SAFEpromulgated the Notice of the State Administration of Foreign Exchange on Relevant Issues concerningForeign Exchange Administration for Domestic Residents to Engage in Financing and in ReturnInvestment via overseas Special Purpose Companies (the “Notice 75”). According to the Notice 75, adomestic resident shall, before establishing or controlling an overseas special purpose company (the“SPC”), being the prescriptive materials to the local branch of SAFE (the “SAFE Branch”) to apply for goingthrough the procedures for foreign exchange registration of overseas investments. SAFE Branch shall,after examining and checking the materials to be inerrant, affix the special seal for foreign exchangebusiness for capital account transactions on the “Certificate of Foreign Exchange Registration of OverseasInvestments” or the “Form of Foreign Exchange Registration of Overseas Investments of the DomesticIndividual Resident”. Where a domestic resident contributes the assets or stock rights of a domesticenterprise it owns into a SPC, or engages in stock right financing abroad after contributing assets or stockrights into a SPC, it shall go through the procedures for modification of foreign exchange registration ofoverseas investments with regard to the net asset equities of the SPC it holds. After an SPC accomplishesoverseas financing, the domestic resident may, according to the plan on use of funds as stated in thebusiness plans or the prospectus, transfer the funds which ought to be arranged for use inside PRC intoPRC. A domestic resident, may after accomplishing the procedures for foreign exchange registration ofoverseas investments or for modification thereof in accordance with the legal provisions, pay the profits,dividends, liquidation expenses, stock right assignment expenses, capital decrease expenses, etc. to theSPC. Where an SPC meets with a major capital modification event such as capital increase or decrease,stock rights or credits or provision of guarantee to a foreign party, and is not involved in return investment(the “Major Events”), the PRC resident shall, within 30 days as of a Major Event, apply to the SAFE Branchfor going through the procedures for modification or filing of the foreign exchange registration of theoverseas investment. Notice 75 has been in effect as of 1 November 2005.

Chen Yongfu and Yang Qingjin, who are PRC domestic residents and directly or indirectly hold Shares inour Company, have already complied with the registration requirements under Notice 75.

However, there can be no assurance the SAFE will not continue to issue new rules and regulations and/orfurther interpretations of Notice 75 that will strengthen the foreign exchange control. As ChangtianEnterprise generates most of our sales and these sales are denominated mainly in RMB, its ability to paydividends or make other distributions to us may be restricted by PRC foreign exchange control restrictions.There can be no assurance that the relevant regulations will not be amended to our detriment and that theability of Changtian Enterprise to distribute dividends to us will not be adversely affected.

RISKS RELATING TO INVESTMENT IN OUR SHARES

Future sale of our Shares could adversely affect our Share price

Any future sale or availability of our Shares can have a downward pressure on our Share price. Thesale of a significant amount of our Shares in the public market after the Invitation, or the perception thatsuch sales may occur, could materially adversely affect the market price of our Shares. These factorsalso affect our ability to sell additional equity securities. Except as otherwise described in the section“Moratorium” of this Prospectus, there will be no restriction on the ability of our SubstantialShareholders to sell their Shares either on the SGX-ST or otherwise.

40

Investors in our Shares will face immediate and substantial dilution in the book value per Shareand may experience future dilution

The Issue Price of 47.00 cents is substantially higher than our NTA per Share of 15.19 cents (based onthe Adjusted NTA as referred to under the section “Invitation Statistics” of this Prospectus and asadjusted for the net proceeds from the Invitation). Thus, there is an immediate and substantial dilutionin the book value per Share. Please refer to the section “Dilution” of this Prospectus. In addition, wehave implemented a share option scheme, details of which are set out in the section “ChangtianEnterprise Share Option Scheme” and Appendix G — “Rules of the Changtian Share Option Scheme”of this Prospectus.

If the exercise price of any option to acquire new Shares under the ESOS is below the market price ofour Shares at the time of the exercise, our existing Shareholders may suffer dilution in the value of theirinvestments.

Further, we may need to raise additional funds in future to finance expansion of or new developmentsrelating to our existing operations or new acquisitions. If additional funds are raised through theissuance of new equity or equity-linked securities of our Company other than on a pro rata basis to ourthen existing Shareholders, the percentage ownership of our Shareholders may be reduced.

Our Share price may fluctuate following the Invitation

The market price of our Shares may fluctuate significantly and rapidly as a result of, among others, thefollowing factors, some of which are beyond our control:

• variations of our operating results;

• changes in securities analysts’ estimates of our financial performance;

• announcements by us of significant acquisitions, strategic alliances or joint ventures;

• additions or departures of key personnel;

• fluctuations in stock market prices and volume;

• involvement in litigation; and

• general economic and stock market conditions.

Our Shares have never been publicly traded and the Invitation may not result in an active orliquid market for our Shares

Prior to the Invitation, there has been no public market for our Shares. The Issue Price may not beindicative of the market price for our Shares after the completion of the Invitation. However, noassurance can be given that an active trading market for our Shares will develop or, if developed, willbe sustained following the Invitation, or that the market price of our Shares will not decline following theInvitation. The price and trading volume of our Shares may be highly volatile. Factors such as variationsin our revenue, earnings and cash flows and announcements of new investments, strategic alliancesand/or acquisitions could cause the market price of our Shares to change substantially.

We are a Bermuda incorporated company and the rights and protection accorded to ourShareholders may be different from those applicable to shareholders of a Singapore-incorporated company

We are incorporated in Bermuda as an exempted company under the Bermuda Companies Act. TheSingapore Companies Act may provide shareholders of Singapore incorporated companies rights andprotection of which there may be no corresponding or similar provisions under Bermuda CompaniesAct. As such, if you invest in our Shares, you may or may not be accorded the same level ofShareholder rights and protection that a shareholder of a Singapore incorporated company may beaccorded under the Singapore Companies Act. We have set out in Appendix E of this Prospectus, a

41

summary of certain provisions under Bermuda company law and in Appendix D of this Prospectus asummary of the Constitution of our Company. Each of the summaries and explanatory statements is notintended to be and does not constitute legal advice and any person wishing to have advice on thedifferences between the Bermuda Companies Act and the Singapore Companies Act and/or the lawsof any jurisdiction with which he is not familiar is recommended to seek independent legal advice.Copies of our Memorandum of Association and Bye-laws are available for inspection at such place andtime as set out in the section “Documents available for inspection” of this Prospectus.

Control by existing Shareholders may limit your ability to influence the outcome of decisionsrequiring the approval of Shareholders

After the Invitation, both Yang Qingjin and Chen Yongfu will together own approximately 55.8% of ourpost-Invitation issued share capital. They may be able to significantly influence our corporate actionssuch as mergers or take-over attempts in a manner that could conflict with the interests of our publicShareholders. This concentration of ownership could have the effect of delaying or preventing a changein control of our Company or otherwise discouraging a potential acquirer from attempting to obtaincontrol of us through corporate actions such as merger or take-over attempts (notwithstanding that thesame may be synergistic or beneficial to us) in a manner that could conflict with the interests of ourpublic Shareholders.

The purchase by our Company of our own Shares may lead to the diminishing of our issuedshare capital

Under the Bermuda Companies Act, a company may, if authorised by its memorandum of associationor bye-laws, purchase its own shares. Our Company has such power to purchase our own Sharespursuant to Clause 7(iii) of our Memorandum of Association. Such purchases may be effected out ofthe capital paid-up on the purchased Shares or out of the funds of our Company otherwise availablefor dividends or distribution or out of proceeds of a fresh issue of Shares made for that purpose. Anypremium payable on such a purchase over the par value of the Shares to be purchased must beprovided for out of the funds of our Company otherwise available for dividends or distribution or out ofour Company’s share premium account before the Shares are purchased. Further, such purchase maynot be made if, on the date on which the purchase is to be effected, there are reasonable grounds forbelieving that our Company is, or after the purchase would be, unable to pay our liabilities as theybecome due. Shares purchased by our Company will be treated as cancelled and our Company’sissued, but not our authorised capital, will be diminished accordingly. For further details, please referto the section “Purchase by our Company of our own Shares” of this Prospectus.

Depositors holding our Shares through CDP will not be recognised as members of ourCompany

Under the Bermuda Companies Act, only those persons who agree to become members of a companyand whose names are entered on the register of members of such a company are consideredmembers, with rights to attend and vote at general meetings and rights to dividends and otherdistributions. Depositors holding Shares through CDP would not be recognised as members of ourCompany, and would not have a right to attend and vote at general meetings of our Company. In theevent that Depositors wish to attend and vote at general meetings of our Company, CDP will have toappoint them as proxies, pursuant to the Bye-laws and the Bermuda Companies Act. In the event of anychange in the Bermuda Companies Act, the rights of Depositors to attend and vote at general meetingsmay be adversely affected. For further details, please refer to the section “Attendance at GeneralMeetings” of this Prospectus.

42

Exchange rate fluctuations may adversely affect the value of the Company’s dividends

Dividends, if any, in respect of our Shares will be declared in RMB and converted by our Company intoSingapore dollars for those investors whose Shares are held through CDP. For further details, pleaserefer to the section “Dividend Policy” of this Prospectus. Fluctuations in the exchange rate between theSingapore dollar and the RMB will affect, among other things, the Singapore dollar value of ourCompany’s dividends, if any, declared in RMB and paid in Singapore dollars.

Singapore taxes may differ from the tax laws of other jurisdictions

Prospective investors should consult their tax advisers concerning the overall tax consequences ofacquiring, owning or selling our Shares. Singapore tax law may differ from the tax laws of otherjurisdictions, including the PRC. Please refer to the section “Taxation” set out in the Appendix C of thisProspectus for more information.

Our operations and significant assets are located in the PRC. It could be difficult to enforce aSingapore judgement against us, our Executive Directors and our Executive Officers

Our subsidiary, Changtian Enterprise, is incorporated in the PRC, and our main operations and assetsare located in the PRC. In addition, all of our Executive Directors and our Executive Officers arenon-residents of Singapore, and substantially all the assets of these persons are located outsideSingapore. As a result, it could be difficult for investors to effect service of process in Singapore if theywish to make a claim against our Company or our Executive Directors or our Executive Officers, or toenforce a judgement obtained in Singapore against our Company or our Executive Directors or ourExecutive Officers.

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INVITATION STATISTICS

Issue Price 47 cents

NTA

The adjusted NTA per Share based on the Audited Combined FinancialInformation of our Group as at 31 December 2006 and after adjusting for theRestructuring Exercise referred to in the section “Restructuring Exercise” ofthis Prospectus (the “Adjusted NTA per Share”):

(a) before adjusting for the estimated net proceeds of the New Shares andbased on our pre-Invitation share capital of 500,000,000 Shares

6.19 cents

(b) after adjusting for the estimated net proceeds of the New Shares andbased on our post-Invitation share capital of 660,000,000 Shares

15.19 cents

Premium of Issue Price over the Adjusted NTA per Share:

(a) before adjusting for the estimated net proceeds of the New Shares andbased on our pre-Invitation share capital of 500,000,000 Shares

659.29%

(b) after adjusting for the estimated net proceeds of the New Shares andbased on our post-Invitation share capital of 660,000,000 Shares

209.41%

EPS

Historical net EPS of our Group for FY2006 based on our pre-Invitation sharecapital of 500,000,000 Shares

5.94 cents

Historical net EPS of our Group for FY2006 based on our pre-Invitation sharecapital of 500,000,000 Shares, assuming that the Service Agreements (set outin the section “Service Agreements” of this Prospectus) had been in placesince the beginning of FY2006

5.81 cents

PER

Historical net PER based on the historical net EPS of our Group for FY2006 7.91 times

Historical net PER based on the historical net EPS of our Group for FY2006assuming that the Service Agreements (set out in the section “ServiceAgreements” of this Prospectus) had been in place since the beginning ofFY2006

8.09 times

Net Operating Cash Flow(1)

Historical net operating cash flow per Share of our Group for FY2006 based onour pre-Invitation share capital of 500,000,000 Shares

3.06 cents

Historical net operating cash flow per Share of our Group for FY2006 based onour pre-Invitation share capital of 500,000,000 Shares, assuming that theService Agreements had been in place since the beginning of FY2006

2.94 cents

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Price to Net Operating Cash Flow

Ratio of Issue Price to historical net operating cash flow per Share for FY2006 15.36 times

Ratio of Issue Price to historical net operating cash flow per Share for FY2006assuming that the Service Agreements had been in place since the beginningof FY2006

15.99 times

Market Capitalisation

Our Company’s market capitalisation based on our post-Invitation sharecapital of 660,000,000 Shares and the Issue Price

S$310.20 million

Note:

(1) Net operating cash flow is defined as net cash generated from operating activities of our Group.

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DILUTION

Dilution is the amount by which the Issue Price paid by subscribers of our Shares in the Invitationexceeds our NAV per Share after the Invitation. The NAV of our Group as at 31 March 2007 afteradjusting for the Restructuring Exercise up to the date of registration of this Prospectus, but beforeadjusting for the net proceeds from the issue of New Shares (the “Adjusted NAV”) was approximately7.91 cents per Share based on our pre-Invitation share capital of 500,000,000 Shares.

Based on the issue of 160,000,000 New Shares at the Issue Price pursuant to the Invitation and afterdeducting our share of the estimated issue expenses, the Adjusted NAV of our Group as at 31 March2007 based on our post-Invitation share capital of 660,000,000 Shares would have been approximately16.50 cents per Share. This represents an immediate increase in NAV of approximately 8.59 cents perShare to our existing Shareholders and an immediate dilution in NAV of approximately 30.50 cents perShare to our new investors.

The following table illustrates this per Share dilution:

Per Share(cents)

Issue Price 47.00

Adjusted NAV 7.91

Increase in adjusted NAV attributable to the Invitation 8.59

Adjusted NAV after the Invitation 16.50

Dilution in adjusted NAV to new investors 30.50

Dilution in adjusted NAV to new investors as a percentage of the Issue Price 64.89%

The following table summarises the total number of Shares acquired by our Directors and/or SubstantialShareholders and the Pre-Invitation Investors (after adjusting for the Restructuring Exercise, details ofwhich are set out in the section “Restructuring Exercise” of this Prospectus) during the period of threeyears prior to the date of this Prospectus, the total consideration paid by them and the average price perShare to our Directors and/or Substantial Shareholders, Pre-Invitation Investors and to the new investorspursuant to the Invitation.

Number ofShares acquired

Total cashconsideration

Average priceper Share

(’000) (S$’000)(2) (cents)

Directors and/or Substantial Shareholders(1)

Yang Qingjin 169,800 14,000 8.2

Chen Yongfu 213,550 14,002 6.6

Pre-Invitation Investors 116,650 27,991 24.0

New Investors 160,000 75,200 47.0

Notes:

(1) The amount paid by our Directors and/or Substantial Shareholders includes the subscription price paid by Rowview, acompany wholly-owned by Chen Yongfu and Chen Baohua, the wife of Yang Qingjin (our Chairman and Executive Director)and the sister of Chen Yongfu (our Deputy Chairman and Executive Director), for the shares in Jumbo Glories. These shareswere subsequently transferred to the Pre-Invitation Investors when they exchanged their exchangeable notes for the saidShares pursuant to the terms of the Exchangeable Notes, details of which are set out in the Restructuring Exercise.

(2) Based on the exchange rate of US$1:S$1.513 as at the Latest Practicable Date.

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SELECTED GROUP COMBINED FINANCIAL INFORMATION

The following selected financial information of our Group should be read in conjunction with the full textof this Prospectus, including the section “Review of Past Operating Performance and FinancialPosition” of this Prospectus, the “Report from the Joint Reporting Accountants on the AuditedCombined Financial Information of the Group for the Financial Years Ended 31 December 2004, 31December 2005 and 31 December 2006” and the “Review Report from the Joint Reporting Accountantson the Unaudited Combined Financial Information of the Group for the Three Months Ended 31 March2007” as set out respectively in Appendix A and Appendix B of this Prospectus.

OPERATING RESULTS OF OUR GROUP(1)

Audited Unaudited

(RMB’000) FY2004 FY2005 FY2006

Three monthsended

31 March 2006

Three monthsended

31 March 2007

Revenue 223,246 412,001 540,013 116,638 151,297

Cost of sales (161,343) (287,332) (351,185) (76,908) (94,933)

Gross profit 61,903 124,669 188,828 39,730 56,364

Other income 267 2,016 1,980 149 139

Selling and distribution expenses (4,765) (8,233) (9,836) (2,251) (3,468)

Administrative expenses (3,046) (3,784) (4,097) (1,060) (1,020)

Operating profit 54,359 114,668 176,875 36,568 52,015

Finance costs (2,312) (2,447) (1,777) (479) (361)

Profit before income tax 52,047 112,221 175,098(2) 36,089 51,654

Income tax expense (7,848) (17,080) (26,156) (5,333) (7,753)

Profit attributable to equityholders 44,199 95,141 148,942(2) 30,756 43,901

EPS (RMB cents)(3) 8.84 19.03 29.79 6.15 8.78

Adjusted EPS (RMB cents)(4) 6.70 14.42 22.57 4.66 6.65

Notes:

(1) The financial results of our Group for the Period Under Review have been prepared on the basis that our Group structurehad been in place as set out in note 3 to the Combined Financial Information.

(2) Had the Service Agreements (set out in the section “Service Agreements” of this Prospectus) been in place since 1 January2006, the profit before income tax and profit attributable to equity holders for FY2006 would have been approximatelyRMB171.5 million and RMB145.9 million respectively.

(3) For comparative purposes, EPS for the Period Under Review have been computed based on the profit attributable to equityholders and our pre-Invitation share capital of 500,000,000 Shares.


47

OPERATING RESULTS OF OUR GROUP(1)

(translated to Singapore Dollars)

For illustrative purposes, the operating results of our Group have been translated into S$ using theaverage rates for each respective financial year/period set out in the section “Exchange Rates” of thisProspectus.

Audited Unaudited

(S$’000) FY2004 FY2005 FY2006

Three monthsended 31

March 2006

Three monthsended 31

March 2007

Revenue 45,579 83,672 107,594 23,582 29,853

Cost of sales (32,941) (58,353) (69,971) (15,550) (18,732)

Gross profit 12,638 25,319 37,623 8,032 11,121

Other income 55 409 394 30 27

Selling and distribution expenses (973) (1,672) (1,960) (455) (684)

Administrative expenses (622) (768) (816) (214) (201)

Operating profit 11,098 23,288 35,241 7,393 10,263

Finance costs (472) (497) (354) (97) (71)

Profit before income tax 10,626 22,791 34,887(2) 7,296 10,192

Income tax expense (1,602) (3,469) (5,211) (1,078) (1,530)

Profit attributable to equityholders 9,024 19,322 29,676(2) 6,218 8,662

EPS (Singapore cents)(3) 1.80 3.86 5.94 1.24 1.73

Adjusted EPS (Singaporecents)(4) 1.37 2.93 4.50 0.94 1.31

Notes:

(1) The financial results of our Group for the Period Under Review have been prepared on the basis that our Group structurehad been in place as set out in note 3 to the Combined Financial Information.

(2) Had the Service Agreements (set out in the section “Service Agreements” of this Prospectus) been in place since 1 January2006, the profit before income tax and profit attributable to equity holders for FY2006 would have been approximatelyS$34.2 million and S$29.1 million respectively.

(3) For comparative purposes, EPS for the Period Under Review has been computed based on the profit attributable to equityholders and our pre-Invitation share capital of 500,000,000 Shares.


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FINANCIAL POSITION OF OUR GROUP(1)

For illustrative purposes, the financial position of our Group has been translated into S$ using theclosing exchange rate for each respective financial year/period set out in the section “Exchange Rates”of this Prospectus.

Audited Unaudited Audited UnauditedAs at

31 December 2006As at

31 March 2007As at


31 March 2007

(RMB$’000) (RMB$’000)(Translated into

S$’000)(Translatedinto S$’000)

Non-current assets

Property, plant andequipment 32,866 32,293 6,459 6,341

Deposits 946 583 186 114

33,812 32,876 6,645 6,455

Current assets

Inventories 14,369 14,653 2,824 2,877

Trade receivables 111,745 110,651 21,962 21,726

Deposits and otherreceivables 473 179 93 35

Due from related parties 39 18,922 8 3,715

Pledged bank deposits 9,894 7,533 1,944 1,479

Cash and bank balances 58,220 137,590 11,443 27,016

194,740 289,528 38,274 56,848

Current liabilities

Trade and bills payables 47,727 55,528 9,380 10,903

Accrued liabilities and otherpayables 3,355 15,548 659 3,053

Due to related parties 20 22,201 4 4,359

Bank loans, secured 20,000 20,000 3,931 3,927

Provision for tax — 7,753 — 1,522

71,102 121,030 13,974 23,764

Net current assets 123,638 168,498 24,300 33,084

Net assets 157,450 201,374 30,945 39,539

Represented by:

Equity attributable to equityholders of our Company 157,450 201,374 30,945 39,539

NTA per Share(RMB cents)(2) 31.49 40.27 n.a. n.a.

NTA per Share (Singaporecents)(2) n.a. n.a. 6.19 7.91

Notes:

(1) The financial position of our Group has been prepared on the basis that our Group structure had been in place as set outin note 3 to the Combined Financial Information.

(2) For comparative purposes, our NTA per Share as at 31 December 2006 and 31 March 2007 has been computed based onour net assets and on our pre-Invitation share capital of 500,000,000 Shares.

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REVIEW OF PAST OPERATING PERFORMANCE AND FINANCIAL POSITION

The following discussion of our results of operations and financial position should be read inconjunction with the Combined Financial Information as set out in Appendix A and Appendix B of thisProspectus. This discussion contains forward-looking statements that involve risks and uncertainties.Our actual results may differ significantly from those projected in the forward-looking statements.Factors that might cause our actual future results to differ significantly from those projected in theforward-looking statements include, but are not limited to, those discussed below and elsewhere in thisProspectus, particularly in the section “Risk Factors” of this Prospectus.

BASIS OF PRESENTATION

The combined income statements, combined statements of changes in equity and combined cash flowstatements of our Group for the Period Under Review and the combined balance sheets of our Groupas at 31 December 2004, 2005 and 2006 and 31 March 2007 which have been prepared in accordancewith International Financial Reporting Standards, have been based on the audited financial statementsof Xiamen Changtian for FY2004, FY2005 and FY2006 and, where appropriate, unauditedmanagement accounts of Xiamen Changtian and our subsidiaries now comprising our Group.

The operations of our Group were originally carried out by Xiamen Changtian. Pursuant to the assetand business transfer agreement (as amended by a supplemental transfer agreement), details of whichare set out in the section “Restructuring Exercise” of this Prospectus, Jumbo Glories agreed to acquireall of Xiamen Changtian’s business including its relevant product and sales activities, assets andobligations, except for (i) the leasehold interest in leasehold buildings; (ii) the leasehold interest in landuse rights; (iii) the amounts due from the equity holders of Xiamen Changtian; and (iv) tax payablebalances due to the relevant tax authorities (the “Transferred Operations”). Items (i) to (iv) above areretained by Xiamen Changtian and they are collectively referred to as the “Non-transferred Operations”.Pursuant to the Restructuring Exercise, Changtian Enterprise entered into a trademark agreement totransfer all of the trademarks already registered and being registered by Xiamen Changtian to ourGroup. Currently, our Group also leases from Xiamen Changtian and Xiamen Brightforever land, officebuildings, staff quarters and factory premises. Please refer to the section “Restructuring Exercise” ofthis Prospectus for details of the trademark agreement and lease agreements. For the Period UnderReview, Xiamen Changtian leased from Xiamen Brightforever the manufacturing facilities for theproduction of Xiamen Changtian’s BOPA film since March 2005. On 21 May 2007, Changtian Enterpriseentered into a Machinery Acquisition Agreement with Xiamen Brightforever pursuant to whichChangtian Enterprise would acquire the plant and machinery from Xiamen Brightforever for theproduction of BOPA film and certain office equipment and motor vehicles with effect from 1 April 2007.

Our Group is regarded as a continuing entity resulting from the Restructuring Exercise since theTransferred Operations and Non-transferred Operations were under common control before andimmediately after the Restructuring Exercise. Consequently, immediately after the RestructuringExercise, there was a continuation of the risks and benefits to the ultimate shareholders that existedprior to the Restructuring Exercise. The Restructuring Exercise has been accounted for as areorganisation under common control in a manner similar to pooling of interests. Accordingly, theCombined Financial Information have been prepared on the basis of merger accounting, and comprisethe financial statements of the subsidiaries of our Group and, where appropriate, Xiamen Changtian,which were under common control of the ultimate shareholders that existed prior to the RestructuringExercise.

Please refer to note 3 of the Combined Financial Information for further details.

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We have prepared the Combined Financial Information of our Group on a merger accounting basis. TheJoint Reporting Accountants are of the view that the:

(a) profit attributable to equity holders for FY2006;

(b) net asset value as at 31 December 2006; and

(c) net increase or decrease in cash and cash equivalents for FY2006

would not have been materially different whether the financial information of our Group was prepared ona pro forma basis or on a merger accounting basis.

OVERVIEW

We are principally engaged in the manufacture and sale of (i) adhesive tapes, (ii) release papers, (iii)BOPA film, and (iv) 2-A2MPS.

As at the Latest Practicable Date, we have production facilities, located at 16 and 18 Xinsheng Road,Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, PRC 361026. As at the LatestPracticable Date, our annual production capacity for our products is as follows:

• Adhesive tapes : 324 million sq m

• Release papers : 120 million sq m

• BOPA film : 5,400 tonnes

• 2-A2MPS : 1,500 tonnes

Revenue

Our revenue is derived from the production and sales of products as classified above.

Our revenue increased from approximately RMB223.2 million in FY2004 to RMB540.0 million inFY2006, representing a compounded annual growth rate of approximately 55.5%. For the three monthsended 31 March 2007, our revenue was approximately RMB151.3 million which was an increase ofapproximately 29.8% as compared to the corresponding period in 2006. The increase in our revenuefor the Period Under Review was due mainly to the increase in the demand for our products as a resultof greater brand recognition, increasing customer base and increase in product offering.

Amongst our four product segments, adhesive tapes was continuously the key contributor to our totalrevenue, contributing approximately 70.0%, 55.6%, 49.9% and 44.4% of our revenue or approximatelyRMB156.2 million, RMB229.1 million, RMB269.2 million and RMB67.2 million to our revenue forFY2004, FY2005, FY2006 and the three months ended 31 March 2007 respectively.

Release papers is our other major product segment contributing approximately 25.0%, 23.9%, 24.0%and 21.7% of our revenue or approximately RMB55.8 million, RMB98.3 million, RMB129.5 million andRMB32.9 million to our revenue for FY2004, FY2005, FY2006 and the three months ended 31 March2007 respectively.

Even though the production and sale of BOPA film commenced only in April 2005, it has replacedrelease papers as our second major product for revenue and gross profit margin contributions in thefirst quarter of FY2007. BOPA film contributed approximately 15.7%, 19.0% and 27.0% of our revenue,or approximately RMB64.6 million, RMB102.9 million and RMB40.9 million to our revenue for FY2005,FY2006 and the three months ended 31 March 2007 respectively.

2-A2MPS contributed approximately 5.0%, 4.8%, 7.1% and 6.9% of our revenue or approximatelyRMB11.3 million, RMB20.0 million, RMB38.5 million and RMB10.4 million to our revenue for FY2004,FY2005, FY2006 and the three months ended 31 March 2007 respectively.

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Revenue is recognised upon the delivery and acceptance of our products. For the last three financialyears ended 31 December 2006 and the three months ended 31 March 2007, all of our revenue isdenominated in RMB as all of our sales were made in the PRC.

The main factors that may affect our revenue are as follows:

(a) Ability to retain our existing customers and secure new customers;

(b) Ability to maintain and enhance our competitive strengths;

(c) Ability to maintain and increase selling prices;

(d) Continuous demand for our products;

(e) Ability to increase production capacity;

(f) Ability to compete successfully against new and existing competitors; and

(g) Ability to pass on increases in the price of our raw materials to our customers.

Please refer to the section “Risk Factors” of this Prospectus for other factors which may affect our revenue.

Our customers do not enter into any long-term orders with us. Our orders are normally received fromcustomers either on a monthly basis or from customers who enter into yearly sale contracts with us wherethey would at the end of each year provide us with an estimate of their requirements for the coming year(“Pre-order Customers”). We would then confirm with these Pre-order Customers on a monthly basis theactual orders and pricing for these orders for the forthcoming one to two months. We usually deliver ourproducts to our customers within 45 days from the date of the orders placed by our customers.

Cost of sales

Cost of sales represented approximately 72.3%, 69.7%, 65.0% and 62.7% of our revenue for FY2004,FY2005, FY2006 and the three months ended 31 March 2007 respectively. Our cost of sales comprisesraw materials, direct labour and production overheads as follows:

Breakdown of costs of sales as a percentage of revenue

Audited FY2004 Audited FY2005 Audited FY2006

Unauditedthree months

ended31 March 2006


ended31 March 2007

RMB’000

As a %of

revenue RMB’000

As a %of

revenue RMB’000

As a %of

revenue RMB’000

As a %of

revenue RMB’000

As a %of

revenue

Raw materials 150,560 67.5 269,643 65.4 328,163 60.7 72,049 61.8 88,912 58.7

Direct labour 1,562 0.7 2,656 0.6 3,167 0.6 724 0.6 767 0.5

Productionoverheads 9,221 4.1 15,033 3.7 19,855 3.7 4,135 3.5 5,254 3.5

Total 161,343 72.3 287,332 69.7 351,185 65.0 76,908 65.9 94,933 62.7

52

Breakdown of cost of sales



ended31 March 2006


ended31 March 2007

RMB’000

As a %of costof sales RMB’000




As a %of costof sales

Raw materials 150,560 93.3 269,643 93.9 328,163 93.4 72,049 93.7 88,912 93.7

Direct labour 1,562 1.0 2,656 0.9 3,167 0.9 724 0.9 767 0.8

Productionoverheads 9,221 5.7 15,033 5.2 19,855 5.7 4,135 5.4 5,254 5.5

Total 161,343 100.0 287,332 100.0 351,185 100.0 76,908 100.0 94,933 100.0

The raw materials for the production of our products accounted for a significant proportion of our costof sales representing approximately 93.3%, 93.9%, 93.4% and 93.7% or RMB150.6 million, RMB269.6million, RMB328.2 million and RMB88.9 million respectively for FY2004, FY2005, FY2006 and thethree months ended 31 March 2007.

The major raw materials include BOPP film, butyl acrylate and polyvinyl acetate for the production ofour adhesive tapes, CCK paper and glassine paper for the production of our release papers, PA6 forthe manufacture of our BOPA film and acrylonitrile and isobutylene for the production of our 2-A2MPS.The following table shows each type of raw materials as a percentage of the total raw materials costfor FY2004, FY2005, FY2006 and the three months ended 31 March 2007:

Name of raw materials For the production of

As a % of total raw materials cost

FY2004 FY2005 FY2006

Three monthsended

31 March 2007

BOPP film, butyl acrylate andpolyvinyl acetate Adhesive tapes 57.8% 48.0% 44.0% 37.1%

CCK paper and glassine paper Release papers 22.4% 20.3% 21.4% 20.8%

PA6 BOPA film n.a. 15.3% 19.1% 26.4%

Acrylonitrile and isobutylene 2-A2MPS 4.0% 3.0% 4.2% 4.3%

Others(1) 15.8% 13.4% 11.3% 11.4%

Total 100.0% 100.0% 100.0% 100.0%

Note:

(1) This represents over 100 types of minor raw materials for the production of our products.

Direct labour and production overheads, in aggregate, accounted for approximately 6.7%, 6.1%, 6.6% and6.3% of our cost of sales for FY2004, FY2005, FY2006 and the three months ended 31 March 2007. Directlabour includes wages and other staff-related costs for operators, technicians and those who are directlyinvolved in the manufacture of our products. Production overheads consist of depreciation of our plant andmachinery and equipment, fuel and utilities charges for our factories, consumables and supplies,packaging materials and other factory-related costs.

Other income

Other income comprises interest income and other non-operating income which mainly included gainon disposal of land use rights for approximately RMB1.4 million in FY2005 and grants from thegovernment of approximately RMB1.3 million for our development of 2-A2MPS. On 29 May 2006, 22October 2006 and 30 September 2006, Xiamen Changtian received two grants of RMB0.2 million each

53

from the Xiamen Municipal Development and Reform Committee and a grantof RMB0.9 million from the Xiamen Municipal Science and Technology Bureaurespectively for the development and production of 2-A2MPS.

Operating expenses

Operating expenses comprise selling and distribution expenses and administrative expenses.

Selling and distribution expenses include mainly transportation costs, salaries of sales and marketingpersonnel, and delivery charges. From FY2004 to FY2006 and the three months ended 31 March 2007,selling and distribution expenses constituted approximately 61.0%, 68.5%, 70.6% and 77.3%respectively of our total operating expenses.

Administrative expenses are mainly salaries of administrative personnel, depreciation of officeequipment and motor vehicles, travelling expenses, amortisation of land use rights, entertainmentexpenses and sundry expenses. Administrative expenses accounted for approximately 39.0%, 31.5%,29.4% and 22.7% of our total operating expenses incurred for FY2004 to FY2006 and the three monthsended 31 March 2007 respectively.

Finance costs

Finance costs comprise interest charges on our short-term and long-term bank loans which bearinterest rates ranging from 6.1% to 7.6% per annum for the Period Under Review.

Income tax expense

Income tax expense represents the tax charges provided in respect of the assessable profits derivedfrom our Group’s operations in the PRC.

For FY2004 to FY2006, our Group was subject to the applicable tax rate of 15%. Xiamen is one of thespecial economics zone in the PRC which is subject to the applicable tax rate of 15%. The applicabletax rate of non special economics zone, which includes our Shanghai branch, is 33%. Our Shanghaibranch office was closed in October 2006.

In accordance with the applicable corporate income tax law of the PRC, Changtian Enterprise, ourwholly-owned subsidiary which was established as a WFOE in the PRC on 6 December 2006, iscurrently exempted from the corporate income tax under the newly revised tax law in PRC for its firsttwo profitable calendar years of operations (“Initial Exemption Period”) and is entitled to a 50% relieffrom the state corporate income tax and exempted from the local corporate income tax for the followingthree years after Initial Exemption Period. The Initial Exemption Period for Changtian Enterprise isexpected to commence in the financial year ending 31 December 2007 and expire as at 31 December2008 as approved by the State tax authority. Upon expiry of the Initial Exemption Period, ChangtianEnterprise is expected to be entitled to 50% relief from the state corporate income tax for the threefinancial years from 1 January 2009 to 31 December 2011. After 31 December 2011, a statutory incometax rate of the PRC will be applicable to Changtian Enterprise.

Inflation

Our financial performance during the Period Under Review was not materially affected by inflation.

Seasonality

There is no apparent seasonality pattern in our sales during the Period Under Review.

54

REVIEW OF RESULTS OF OPERATIONS

All our products are sold in the PRC, therefore a segmentation of our revenue by geographical regionsmay not be applicable. We categorised our products into product segments namely adhesive tapes,release papers, BOPA film and 2-A2MPS. We have segmented our revenue, gross profit and grossprofit margin for each of our product segment for the Period Under Review as set out below.

Breakdown of revenue by product segments



ended31 March 2006


ended31 March 2007

RMB’000 % RMB’000 % RMB000 % RMB’000 % RMB’000 %

Adhesivetapes 156,179 70.0 229,107 55.6 269,168 49.9 59,480 51.0 67,160 44.4

Releasepapers 55,771 25.0 98,301 23.9 129,454 24.0 27,726 23.8 32,870 21.7

BOPA film — — 64,596 15.7 102,850 19.0 22,183 19.0 40,867 27.0

2-A2MPS 11,296 5.0 19,997 4.8 38,541 7.1 7,249 6.2 10,400 6.9

223,246 100.0 412,001 100.0 540,013 100.0 116,638 100.0 151,297 100.0

Breakdown of gross profit by product segments


Unaudited threemonths ended 31

March 2006

Unaudited threemonths ended 31

March 2007

RMB’000 % RMB’000 % RMB000 % RMB’000 % RMB’000 %

Adhesivetapes 43,499 70.3 66,547 53.4 91,681 48.5 19,983 50.3 25,889 45.9

Releasepapers 14,251 23.0 30,861 24.7 43,759 23.2 9,472 23.8 10,738 19.1

BOPA film — — 17,199 13.8 31,146 16.5 6,080 15.3 14,011 24.8

2-A2MPS 4,153 6.7 10,062 8.1 22,242 11.8 4,195 10.6 5,726 10.2

61,903 100.0 124,669 100.0 188,828 100.0 39,730 100.0 56,364 100.0

Breakdown of gross profit margin by product segments

AuditedFY2004

AuditedFY2005

AuditedFY2006


ended31 March 2006


ended31 March 2007

% % % % %

Adhesive tapes 27.9 29.0 34.1 33.6 38.5

Release papers 25.6 31.4 33.8 34.2 32.7

BOPA film — 26.6 30.3 27.4 34.3

2-A2MPS 36.8 50.3 57.7 57.9 55.1

Overall 27.7 30.3 35.0 34.1 37.3

55

REVIEW OF PAST PERFORMANCE

FY2004 VS FY2005

Revenue

Our revenue increased by approximately 84.6% or RMB188.8 million from approximately RMB223.2million in FY2004 to approximately RMB412.0 million in FY2005. All of our existing products contributedto the increase of our revenue, of which, revenue from the sale of our adhesive tapes was still a majorcontributor to the increase of the revenue, recording an increase of approximately 46.7% or RMB72.9million from approximately RMB156.2 million in FY2004 to approximately RMB229.1 million in FY2005.BOPA film, which was launched in FY2005, contributed approximately RMB64.6 million to our revenue.Revenue from the sale of our release papers recorded an increase of approximately 76.2% or RMB42.5million from approximately RMB55.8 million in FY2004 to approximately RMB98.3 million in FY2005.Revenue from the sale of our 2-A2MPS increased by approximately 77.0% or RMB8.7 million fromapproximately RMB11.3 million in FY2004 to approximately RMB20.0 million in FY2005.

The increase in revenue was mainly attributable to the following:

(a) Increase in sales volume, customer base and average turnover per customer

We experienced a growth in sales volume for our three products, namely adhesive tapes byapproximately 42.7%, release papers by approximately 74.7% and 2-A2MPS by approximately35.2%. This increase in sales volume was due to a net increase in the number of customers from233 in FY2004 to 282 in FY2005. Average turnover per customer has also increased byapproximately 50.0% from RMB1.0 million to RMB1.5 million. Our gross 65 new customerscontributed to approximately 80.4% of the increase in revenue. Sales to new customers inFY2005 accounted for approximately 19.0% for our adhesive tapes, 36.4% for our release papers,100% for our BOPA film and 38.6% for our 2-A2MPS.

(b) Wider range of adhesive tapes products

Our adhesive tapes are manufactured for mass market demand or in accordance to therequirements of our customers with variations in width, usage and colour. For FY2005, there hasbeen an increase in our customers’ demand for a greater variety of tapes which resulted in a widerrange of products being offered for sale. In FY2004, there was no change in the type of releasepapers sold, and we did not produce and sell any BOPA film for which production onlycommenced in FY2005.

(c) Increase of average selling price

Average selling price for our products have increased as a result of the increase in certain rawmaterial costs which we have managed to pass on to the customers by increasing the price of ourproducts. The price of our adhesive tapes, release papers and 2-A2MPS increased by 2.8%, 0.8%and 31.1% respectively. With respect to the increase in the selling price of our 2-A2MPS productby 31.1%, we had in FY2004 offered significant discounts to customers with a view to gainingmarket acceptance and customer base. In FY2005, such discounts were no longer offered as our2-A2MPS product had gained market recognition.

(d) Sale of a new product

We commenced production of our new BOPA film in April 2005 which has contributedapproximately 15.7% or approximately RMB64.6 million of our total revenue for FY2005 in onlynine months of operations.

Cost of sales and gross profit margin

Our cost of sales increased by approximately 78.1% or RMB126.0 million from approximatelyRMB161.3 million in FY2004 to approximately RMB287.3 million in FY2005 which was approximately

56

in line with the increase of our revenue. The percentage increase in our cost of sales of approximately78.1% was less than the percentage increase in revenue of approximately 84.6%. This was mainlybecause:

(i) the cost of the key raw material, BOPP film, used in the production of adhesive tapes increasedby 8.7% and the cost of the key raw material, acrylonitrile, used in the production of 2-A2MPSincreased by 4.6%;

and partially offset by:

(ii) the decrease of 6.0% in the cost of the key raw material, butyl acrylate, used in the production ofadhesive tapes and the decrease of 9.1% and 8.7% in the cost of the key raw materials, CCKpaper and glassine paper, respectively, used in the production of release papers.

For each of our existing products, the gross profit margin for adhesive tapes has increased from 27.9% inFY2004 to 29.0% in FY2005, release papers has increased from 25.6% in FY2004 to 31.4% in FY2005and 2-A2MPS increased from 36.8% in FY2004 to 50.3% in FY2005 partly due to us ceasing to offerdiscounts on this product as we had done in FY2004.

Due to the increase of our revenue and overall gross profit margin, total gross profit has therefore doubledor increased approximately 101.5% or RMB62.8 million from approximately RMB61.9 million in FY2004 toapproximately RMB124.7 million in FY2005.

Our gross profit margin is mainly affected by raw materials costs as it accounted for approximately 93.3%and 93.9% of our cost of sales in FY2004 and FY2005 respectively. The other factors that may affect ourgross profit margins are immaterial.

Other income

Other income increased from approximately RMB0.3 million in FY2004 to RMB2.0 million in FY2005due mainly to the gain on disposal of land use rights of approximately RMB1.4 million in FY2005.

Operating expenses

With the expansion of our business operations in FY2005, our overall operating expenses increased byapproximately RMB4.2 million or 53.8% from approximately RMB7.8 million in FY2004 toapproximately RMB12.0 million in FY2005.

Our selling and distribution expenses increased by approximately 70.8% or RMB3.4 million fromapproximately RMB4.8 million in FY2004 to approximately RMB8.2 million in FY2005 due mainly to anincrease in transportation costs and salaries. In FY2005, transportation costs and salaries increased byapproximately RMB2.4 million and RMB0.8 million respectively as we expand our customer basethroughout the PRC. Headcount for sales and marketing personnel increased from 31 in FY2004 to 47in FY2005. The balance of the incremental selling and distribution expenses was mainly attributable toan increase in courier and postage and entertainment expenses. Courier and postage expensesincreased from RMB0.1 million in FY2004 to RMB0.2 million in FY2005, while entertainment expensesincreased from RMB0.1 million in FY2004 to RMB0.2 million in FY2005. The increase in theseexpenses was due to the increase in revenue by 84.6% from FY2004 to FY2005.

Our administrative expenses increased by approximately 26.7% or RMB0.8 million from approximatelyRMB3.0 million in FY2004 to approximately RMB3.8 million in FY2005 due mainly to legal feesincurred. Legal and professional fees increased by approximately RMB0.5 million attributable mainly tolegal fees incurred as a result of litigation with Agricultural Bank of China for the repayment of bankloans. The balance of the incremental administrative expenses of RMB0.3 million was mainlyattributable to an increase in staff costs.

57

Finance costs

Our finance costs increased by approximately 4.3% or RMB0.1 million from RMB2.3 million to RMB2.4million in FY2005. The increase in finance costs was mainly attributable to an increase in averageborrowing interest rate for the RMB20.0 million loan of approximately 6.9 % in FY2004 as compared toapproximately 7.3% in FY2005 which was partially offset by the decrease in interest expenses upon therepayment of bank loans of RMB9.4 million in the fourth quarter of FY2005.

Profit before income tax

Our profit before income tax increased by approximately RMB60.2 million from approximately RMB52.0million in FY2004 to approximately RMB112.2 million in FY2005 in line with the increase in revenue andgross profit which was partially offset by an increase in our operating expenses. Our profit beforeincome tax margin increased by approximately 3.9 percentage points from approximately 23.3% inFY2004 to 27.2% in FY2005.

Income tax expense

Our income tax expense increased by approximately 119.2% or RMB9.3 million from approximatelyRMB7.8 million in FY2004 to approximately RMB17.1 million in FY2005. Our applicable tax rate wasunchanged at 15% in FY2005.

FY2005 VS FY2006

Revenue

In FY2006, our revenue increased by approximately 31.1% or RMB128.0 million from approximatelyRMB412.0 million in FY2005 to approximately RMB540.0 million in FY2006. All of our productscontinued to record an increase in sales during the year and contributed to the increase of our revenue.The increase of revenue from the sale of our adhesive tapes continued to be a major contributor to theincrease of our turnover, recording an increase of approximately 17.5% or RMB40.1 million fromapproximately RMB229.1 million in FY2005 to approximately RMB269.2 million in FY2006. Thecontribution from BOPA film continued to be strong, with a recorded turnover of approximatelyRMB102.9 million, or an increase of approximately RMB38.3 million or 59.3% from RMB64.6 million inFY2005. Revenue from the sale of our release papers increased by approximately 31.7% or RMB31.2million from approximately RMB98.3 million in FY2005 to approximately RMB129.5 million in FY2006.Revenue from the sale of our 2-A2MPS increased by approximately 92.5% or RMB18.5 million fromapproximately RMB20.0 million in FY2005 to approximately RMB38.5 million in FY2006.


(a) Increase in sales volume, customer base and average turnover per customer

We continued to experience a growth in sales volume for all of our products, namely adhesivetapes by approximately 15.6%, release papers by approximately 27.5%, BOPA film byapproximately 58.8% and 2-A2MPS by approximately 90.2%. This growth in sales volume wasdue to a net increase in the number of customers from 282 in FY2005 to 286 in FY2006. Averageturnover per customer has also increased by approximately 26.7% from RMB1.5 million toRMB1.9 million. Our gross 29 new customers contributed to approximately 40.9% of the increasein revenue. Sales to new customers in FY2006 contributed approximately 4.8% for our adhesivetapes, 6.6% for our release papers, 22.3% for our BOPA film and 20.6% for our 2-A2MPS.

(b) Increase in average selling prices

Average selling prices for adhesive tapes, release papers, BOPA film and 2-A2MPS have alsorecorded slight increases of 1.6%, 3.5%, 0.3% and 1.4% respectively in FY2006 as compared toFY2005. The increase in average selling prices for (i) adhesive tapes is due to the larger

58

proportion of higher priced adhesive tapes being sold; (ii) release papers is due to the largerproportion of higher priced CCK release papers being sold which is three times the price ofglassine coated release papers; (iii) BOPA film and 2-A2MPS is due to greater demand for theseproducts.

(c) Full year contribution from BOPA film sales

Revenue attributable to BOPA film increased from approximately RMB64.6 million in FY2005 toapproximately RMB102.9 million in FY2006 or approximately 59.3% as a result of full yearcontribution in FY2006 as compared to only nine months contribution in FY2005.


Our cost of sales increased by approximately 22.2% or RMB63.9 million from approximately RMB287.3million in FY2005 to approximately RMB351.2 million in FY2006. As compared with the increase of31.1% in revenue during the corresponding period, our cost of sales percentage increase was lower asa result of a decrease in average prices of butyl acrylate, CCK paper, glassine paper, PA6 andacrylonitrile of 12.5%, 2.9%, 0.6%, 7.1% and 9.6% respectively which were used in the production ofour products. This was partially offset by an increase in the average prices of BOPP film of 4.2% usedin the production of adhesive tapes.

Hence, our overall gross profit margin increased from approximately 30.3% in FY2005 to approximately35.0% in FY2006. In particular, the gross profit margin of adhesive tapes increased from 29.0% inFY2005 to 34.1% in FY2006 as we have managed to improve efficiency by reducing wastage on theamount of butyl acrylate. Our gross profit margin for BOPA film also increased from 26.6% in FY2005to 30.3% in FY2006 due mainly to higher selling prices, lower raw materials cost together with greatereconomies of scale achieved as a result of a full year contribution of BOPA film as compared to theprevious year from 2,100 tonnes in FY2005 to 3,100 tonnes in FY2006. Our gross profit margin forrelease papers and 2-A2MPS increased relatively less percentage points in FY2006 as compared tothe previous year’s increase due mainly to more stable pricing in the raw materials of release papersas well as the average selling price of 2-A2MPS.

Our total gross profit has increased by approximately RMB64.1 million or approximately 51.4% fromapproximately RMB124.7 million in FY2005 to approximately RMB188.8 million in FY2006.

Other income

Other income was about the same level of FY2005 at approximately RMB2.0 million comprising twogrants of RMB0.2 million each from the Xiamen Municipal Development and Reform Committee

and a grant of RMB0.9 million from the Xiamen Municipal Science andTechnology Bureau in relation to our efforts in developing the 2-A2MPS productsand interest income of RMB0.7 million in FY2006.

Operating expenses

Our operating expenses increased by approximately 15.8% or RMB1.9 million from approximatelyRMB12.0 million in FY2005 to approximately RMB13.9 million in FY2006. The increase of RMB1.9million was mainly attributable to the increase of RMB1.6 million in selling and distribution expensesand RMB0.3 million in administrative expenses.

Our selling and distribution expenses increased by approximately 19.5% or RMB1.6 million fromapproximately RMB8.2 million in FY2005 to approximately RMB9.8 million in FY2006. The increasewas mainly attributable to the increase of RMB0.6 million from transportation costs arising from theincrease in revenue and RMB0.5 million from the increase of salaries as total headcount for sales andmarketing personnel increased from 47 in FY2005 to 54 in FY2006. The balance of the incremental

59

selling and distribution expenses of RMB0.5 million was mainly attributable to an increase inconsumable tools and travelling expenses.

Our administrative expenses increased by approximately 7.9% or RMB0.3 million from approximatelyRMB3.8 million in FY2005 to approximately RMB4.1 million in FY2006 due mainly to increase in realestate tax and sundry expenses. Real estate tax comprised property tax and land use tax. In FY2006,property tax is charged at 0.9% on the cost of relevant buildings owned by Xiamen Changtian while landuse tax is charged at RMB5 per sq m on the land then owned by Xiamen Changtian.

Finance costs

Our finance costs decreased by approximately 25.0% or RMB0.6 million from RMB2.4 million toRMB1.8 million in FY2006. The decline was mainly attributable to repayments of bank loans of RMB7.9million by instalments from the second to fourth quarters of FY2006.


Our profit before income tax increased by approximately 55.9% or RMB62.8 million from approximatelyRMB112.3 million in FY2005 to approximately RMB175.1 million in FY2006 due mainly to the significantincrease in revenue and gross profit margins for all of our product types, in particular BOPA film, andrelatively stable operating expenses. Our profit before income tax margin increased by approximately5.2 percentage points from approximately 27.2% in FY2005 to 32.4% in FY2006.

Income tax expense

Our income tax expense increased by approximately 53.2% or RMB9.1 million from approximatelyRMB17.1 million in FY2005 to approximately RMB26.2 million in FY2006. Our applicable tax rate wasunchanged at 15% in FY2006.

THREE MONTHS ENDED 31 MARCH 2006 VS THREE MONTHS ENDED 31 MARCH 2007

Revenue

Our revenue increased by approximately 29.8% or RMB34.7 million from approximately RMB116.6million for the three months ended 31 March 2006 to approximately RMB151.3 million for the threemonths ended 31 March 2007. All of our products have recorded an increase in sales during the periodbut the increase in BOPA flim has outpaced the other products as the major contributor to the increaseof turnover during the period. Revenue from the sale of our BOPA film increased by approximately84.2% or RMB18.7 million from approximately RMB22.2 million for the three months ended 31 March2006 to approximately RMB40.9 million for the three months ended 31 March 2007. Revenue from thesale of our adhesive tapes continued to contribute significantly to our turnover but such products haveonly recorded an increase of approximately 12.9% or RMB7.7 million from approximately RMB59.5million for the three months ended 31 March 2006 to approximately RMB67.2 million for the threemonths ended 31 March 2007. Revenue from the sale of our release papers increased byapproximately 18.8% or RMB5.2 million from approximately RMB27.7 million for the three monthsended 31 March 2006 to approximately RMB32.9 million for the three months ended 31 March 2007.Revenue from the sale of our 2-A2MPS increased by approximately 44.4% or RMB3.2 million fromapproximately RMB7.2 million for the three months ended 31 March 2006 to approximately RMB10.4million for the three months ended 31 March 2007.


(a) Increase in sales volume and customer base

We had experienced increase in sales volume of approximately 1.1% for our adhesive tapes,approximately 15.8% for our release papers, approximately 87.2% for our BOPA film andapproximately 45.5% for our 2-A2MPS and this was mainly attributable to the increase in the

60

number of customers from 249 for the three months ended 31 March 2006 to 284 for the threemonths ended 31 March 2007. The average turnover per customer was approximately at thesame level of RMB0.5 million for both periods.

(b) Increase of selling price

During the three months ended 31 March 2007, our two major products, namely adhesive tapesand release papers, recorded an increase of average selling prices of 11.7% and 2.3%respectively as compared to the corresponding period of 2006. The increases in selling priceswere driven by market demand. However, the increases have been partially offset by marginaldecreases of selling prices of BOPA film and 2-A2MPS by 1.6% and 1.4% respectively.


Our cost of sales increased by approximately 23.4%, or RMB18.0 million from approximately RMB76.9million for the three months ended 31 March 2006 to approximately RMB94.9 million for the threemonths ended 31 March 2007. The increase of our cost of sales was less than in the increase of ourturnover as a result of our continued efforts in improving our efficiency and reducing the wastage ratio.

Our overall gross profit margin increased from approximately 34.1% for the three months ended 31March 2006 to approximately 37.3% for the three months ended 31 March 2007. In particular, the grossprofit margin of BOPA film posted an increase from 27.4% for the three months ended 2006 to 34.3%for the three months ended 2007 as the price of the raw material, PA6, has decreased by approximately8.7% but the selling price has only recorded a decrease of only 1.7%. In the corresponding period, ourgross profit margin for adhesive tapes increased from 33.6% for the three months ended 31 March2006 to 38.5% for the three months ended 31 March 2007 due mainly to higher average selling pricesof approximately 11.7% which has been offset by an increase of the major raw materials ofapproximately 6.5%. However, the increase of gross profit margin from our BOPA film and adhesivetapes was offset by the decrease in profit margins from our 2-A2MPS products and release papers dueto increase of raw material price. Our gross profit margin for 2-A2MPS decreased from 57.9% for thethree months ended 2006 to 55.1% for the three months ended 2007 and the gross profit margin forrelease papers decreased from 34.2% for the three months ended 31 March 2006 to 32.7% for thethree months ended 31 March 2007. The prices for the main raw materials for the production of releasepapers, being CCK papers and glassine papers increased by approximately 2.0% and 5.3%respectively. The price for the main raw material for the production of 2-A2MPS, being acrylonitrile,increased by 7.0%.

As a result, our total gross profit recorded an increase of approximately RMB16.7 million orapproximately 42.1% from RMB39.7 million for the three months ended 31 March 2006 to RMB56.4million for the same period in 2007.

Other income

Other income is approximately RMB0.1 million and comprised only interest income for the three monthsended 31 March 2007.

Operating expenses

Our operating expenses increased by approximately 36.4% or RMB1.2 million from approximatelyRMB3.3 million for the three months ended 31 March 2006 to approximately RMB4.5 million for thethree months ended 31 March 2007.

Our selling and distribution expenses increased by approximately 52.2% or RMB1.2 million fromapproximately RMB2.3 million for the three months ended 31 March 2006 to approximately RMB3.5million for the three months ended 31 March 2007 which was attributable to the increase oftransportation costs as result of increase in revenue.

61

Our administrative expenses for the three months ended 31 March 2007 were stable as compared withthe same period in 2006.


Our profit before income tax increased by approximately 43.2% or RMB15.6 million from approximatelyRMB36.1 million for the three months ended 31 March 2006 to approximately RMB51.7 million for thethree months ended 31 March 2007 due mainly to the increase in our gross profit. Our profit beforeincome tax margin increased by approximately 3.2 percentage points from approximately 30.9% for thethree months ended 31 March 2006 to 34.1% for the three months ended 31 March 2007.

Income tax expense

Our income tax expense increased by approximately 47.2% or RMB2.5 million from approximatelyRMB5.3 million for the three months ended 31 March 2006 to approximately RMB7.8 million for thethree months ended 31 March 2007 due mainly to the increase in profit before income tax.

LIQUIDITY AND CAPITAL RESOURCES

Since our establishment, our capital expenditure and operating requirements have been financedthrough a combination of shareholders’ equity, cash generated from operations and bank borrowings.As at the Latest Practicable Date, our cash and cash equivalents amounted to approximatelyRMB213.6 million. Please refer to the section “Capitalisation and Indebtedness” of this Prospectus forfurther details of the banking facilities.

A summary of our cash flow statement for the Period Under Review is set out in the table below:

AuditedFY2004

AuditedFY2005

AuditedFY2006


ended31 March 2006


ended31 March 2007

(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)

Net cash generated fromoperating activities 34,791 77,203 76,914 32,503 55,819

Net cash (used in)/generatedfrom investing activities (3,280) (2,787) (8,758) (1,850) 2,272

Net cash (used in)/generatedfrom financing activities (12,312) (51,847) (82,177) (7,479) 21,279

Net increase/(decrease) in cashand cash equivalents 19,199 22,569 (14,021) 23,174 79,370

Cash and cash equivalents atbeginning of financial year/period 30,473 49,672 72,241 72,241 58,220

Cash and cash equivalents atend of financial year/period 49,672 72,241 58,220 95,415 137,590

In FY2004, we recorded net cash generated from operating activities of approximately RMB34.8 million.This comprised operating profit before changes in working capital of approximately RMB58.9 millionadjusted for net working capital outflows of approximately RMB17.0 million, income taxes paid ofapproximately RMB7.4 million and interest received of approximately RMB0.3 million. The net workingcapital outflows were the result of:

(a) an increase in inventories of approximately RMB11.9 million in line with the increase in ourbusiness activities;

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(b) an increase in trade receivables of approximately RMB26.0 million in line with the increase in ourbusiness activities; and

(c) a decrease in accrued liabilities and other payables of approximately RMB1.1 million for partialsettlement of renovation fees in FY2004. The renovation fees were costs incurred for therenovation of our Group’s office and factory premises, warehouses and workers’ quarters at 18Xinsheng Road, Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, PRC.

The above working capital outflows were partially mitigated by the cash inflows from an increase in tradeand bills payables of approximately RMB22.0 million in line with the increase in our business activities.

We recorded net cash used in investing activities of approximately RMB3.3 million in FY2004. This wasdue mainly to the payment for the acquisition of property, plant and equipment during FY2004 amountingto approximately RMB1.8 million (being net of an amount of RMB471,000 paid in FY2003 as deposit forsuch acquisition) and an increase in pledged bank deposits amounting to approximately RMB1.7 million.These cash outflows were partially mitigated by cash inflows arising from proceeds on disposal of motorvehicles amounting to approximately RMB0.2 million.

Net cash used in financing activities amounted to approximately RMB12.3 million in FY2004 was a resultof repayments of bank loans of approximately RMB29.4 million, interest paid of approximately RMB2.3million and dividend payments of RMB10.0 million to equity holders of Xiamen Changtian. The cashoutflows were partially mitigated by cash inflows arising from the drawdown of bank loans of approximatelyRMB29.4 million.

In FY2005, we recorded net cash generated from operating activities of approximately RMB77.2 million.This comprised operating profit before changes in working capital of approximately RMB117.5 millionadjusted for net working capital outflows of approximately RMB24.6 million, income taxes paid ofapproximately RMB16.3 million and interest received of approximately RMB0.6 million. The net workingcapital outflows were the result of:



(c) a decrease in accrued liabilities and other payables of approximately RMB1.8 million for partialsettlement of renovation fee in FY2005. The renovation fees relate to the renovation costsincurred in FY2004.

The above working capital outflows were partially mitigated by the cash inflows from an increase in tradeand bills payables of approximately RMB18.3 million in line with the increase in our business activities.

We recorded net cash used in investing activities of approximately RMB2.8 million in FY2005. This wasdue mainly to the acquisition of property, plant and equipment in FY2005 amounting to approximatelyRMB1.2 million (which included the amount of RMB0.8 million of construction in progress set out in thesection “Material Capital Expenditures and Divestments” of this Prospectus), deposits paid for purchasesof property, plant and equipment amounting to approximately RMB0.1 million, purchases of two publicinvestment funds in the PRC, namely Bank of Communication — Schroders Selectin September 2005 and Xing Ye Qu Shi Tou Zi in October 2005 (the “Investment Funds”),for trading purposes amounting to approximately RMB0.8 million and an increase in pledged bank depositsamounting to approximately RMB4.4 million. These cash outflows were partially mitigated by cash inflowsarising from the proceeds on disposal of land use rights of approximately RMB3.0 million and proceeds ondisposal of one of the Investment Funds of approximately RMB0.7 million at a nominal gain in December2005.

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Net cash used in financing activities amounted to approximately RMB51.8 million in FY2005 as a result ofrepayments of bank loans of approximately RMB29.4 million, interest paid of approximately RMB2.4million and dividend payments of approximately RMB40.0 million to equity holders of Xiamen Changtian.The cash outflows were partially mitigated by cash inflows arising from the drawdown of bank loan ofapproximately RMB20.0 million.

In FY2006, we recorded net cash generated from operating activities of approximately RMB76.9 million.This comprised operating profit before working capital changes of approximately RMB181.2 millionadjusted for net working capital outflows of approximately RMB85.5 million, income taxes paid ofapproximately RMB19.5 million and interest received of approximately RMB0.7 million. The net workingcapital outflows were the result of:

(a) an increase in trade receivables of approximately RMB23.4 million in line with the increase in ourbusiness activities;

(b) an increase in deposits and other receivables of approximately RMB0.4 million in line with theincrease in our business activities;

(c) a decrease in trade and bills payables of approximately RMB17.1 million, as a result ofimprovements in our raw material procurement planning and production management, we wereable to reduce the average stock level of raw materials to meet production requirments. We weretherefore able to reduce purchases of raw materials to maintain our raw materials adequacy, andcorrespondingly trade and bills payable outstanding at any point in time; and

(d) an advance to equity holders of Xiamen Changtian of RMB72.5 million of which the balance wasnot transferred to our Group.

The above working capital outflows were partially mitigated by the cash inflows from:

(a) a decrease in inventories of approximately RMB20.3 million to minimise our stock level; and

(b) an increase in accrued liabilities and other payables of approximately RMB7.6 million in line withthe increase in our business activities.

Accrued liabilities and other payables included the value added tax payables. Due to the increase of salesover the years from FY2004 to FY2006, the relevant value added tax payables as at the end of therespective financial years also increased.

We recorded net cash used in investing activities of approximately RMB8.8 million in FY2006. This wasdue mainly to the acquisition of property, plant and equipment during FY2006 of approximately RMB5.1million (which included the amount of RMB3.2 million of construction in progress set out in the section“Material Capital Expenditures and Divestments” of this Prospectus), deposits paid for purchases ofproperty, plant and equipment amounting to approximately RMB0.9 million and an increase in pledgedbank deposits of approximately RMB3.9 million. These cash outflows were partially mitigated by cashinflows arising from receiving the balance payment from disposal of land use rights of approximatelyRMB1.0 million and proceeds on disposal of the other Investment Fund of approximately RMB0.1 millionat a nominal gain.

Net cash used in financing activities amounted to approximately RMB82.2 million in FY2006 as a result ofrepayments of bank loans of approximately RMB27.9 million, interest paid of approximately RMB1.8million and dividend payments of approximately RMB72.5 million to equity holders of Xiamen Changtian.The cash outflows were partially mitigated by cash inflows arising from the drawdown of bank loan ofapproximately RMB20.0 million.

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For the three months ended 31 March 2006, we recorded net cash generated from operating activities ofapproximately RMB32.5 million. This comprised operating profit before working capital changes ofapproximately RMB37.6 million adjusted for net working capital outflows of approximately RMB3.5 million,income tax paid of approximately RMB1.7 million and interest received of approximately RMB0.1 million.The net working capital outflows were the result of:



(c) a decrease in accrued liabilities and other payables of approximately RMB0.1 million.

The above working capital outflows were partially mitigated by the cash inflows from:

(a) a decrease in an amount due from a related party by approximately RMB1.0 million due mainlyto the final payment for disposal of land use rights receivable from Xiamen Brightforever;

(b) an increase in an amount due to a related party by RMB0.2 million resulting from rental payableto Xiamen Brightforever; and

(c) an increase in trade and bills payables of approximately RMB13.5 million.

We recorded net cash used in investing activities of approximately RMB1.9 million for the three monthsended 31 March 2006. This was due mainly to an increase in deposits paid for purchases of property, plantand equipment of approximately RMB0.6 million, increase in pledged bank deposits of approximatelyRMB1.3 million and purchases of property, plant and equipment of approximately RMB0.1 million. Thesecash outflows were partially mitigated by cash inflows arising from the proceeds on disposal of the rest ofthe Investment Funds of approximately RMB0.1 million at a nominal gain.

Net cash used in financing activities amounted to approximately RMB7.5 million for the three monthsended 31 March 2006 as a result of repayments of bank loans of approximately RMB22.0 million andinterest paid of approximately RMB0.5 million. The cash outflows were partially mitigated by cash inflowsarising from the drawdown of bank loans of approximately RMB15.0 million.

For the three months ended 31 March 2007, we recorded net cash generated from operating activities ofapproximately RMB55.8 million. This comprised operating profit before working capital changes ofapproximately RMB52.9 million adjusted for net working capital inflows of approximately RMB2.8 millionand interest received of approximately RMB0.1 million. The net working capital inflows were the result of:

(a) a decrease in trade receivables of approximately RMB1.1 million due to better improvement indebt collection procedures;

(b) a decrease in deposits and other receivables of approximately RMB0.3 million due to lower indeposits on purchases of consumable tools;

(c) an increase in amounts due to related parties by approximately RMB0.6 million as a result ofrental payable to Xiamen Brightforever of approximately RMB0.5 million and certain expenses ofour Group in relation to the Invitation paid by Yang Qingjin on our behalf of approximately RMB0.1million;

(d) an increase in trade and bills payables of approximately RMB7.8 million; and

(e) an increase in accrued liabilities and other payables of approximately RMB12.2 million in line withthe increase in our business activities.

Accrued liabilities and other payables include the value added tax payables. Due to the increase of salesover the years from FY2004 to FY2006, the relevant value added tax payables as at the end of therespective financial years also increased.

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The above working capital inflows were partially offset by the cash outflows from:

(a) an increase in inventories of approximately RMB0.3 million in line with the increase in ourbusiness activities; and

(b) an increase in amounts due from related parties of approximately RMB18.9 million as a result oftax (comprising mainly enterprise taxes and value added tax incurred) paid on behalf of XiamenChangtian (for further details, please refer to the section “Past Interested Persons Transactions”of this Prospectus).

We recorded net cash generated from investing activities of approximately RMB2.3 million for the threemonths ended 31 March 2007. This was due mainly to a decrease in pledged bank deposits ofapproximately RMB2.4 million. The cash inflows were partially offset by purchases of property, plant andequipment of approximately RMB0.1 million.

Net cash generated from financing activities amounted to approximately RMB21.3 million for the threemonths ended 31 March 2007 as a result of partial capital injection due to the Restructuring Exercise ofapproximately RMB21.7 million and drawdown of bank loans of approximately RMB20.0 million. The cashinflows were partially offset by cash outflows arising from repayments of bank loans of approximatelyRMB20.0 million and interest paid of approximately RMB0.4 million.

Our Directors are of the opinion that, after taking into account the cash flows generated from operations,banking facilities and cash and cash equivalents as at the Latest Practicable Date, we have adequateworking capital for our present requirements.

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MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS

Our material capital expenditures and divestments for FY2004, FY2005, FY2006, the three monthsended 31 March 2007 and up to the Latest Practicable Date were as follows:

Audited Unaudited

FY2004(RMB’000)

FY2005(RMB’000)

FY2006(RMB’000)

Three monthsended

31 March 2007(RMB’000)

Up to theLatest

PracticableDate

(RMB’000)

Acquisitions

— Leasehold buildings 26 — — — —

— Land use rights — — — — —

— Plant and machinery 251 153 1,755 451 80,138

— Furniture, fixtures and officeequipment 83 223 49 6 560

— Motor vehicles 2 — 277 — 470

— Construction in progress(1) 1,947 846 3,119 — —

2,309 1,222 5,200 457 81,168

Divestments

— Leasehold buildings — — 31,558 — —

— Land use rights — 1,843 3,924 — —

— Plant and machinery — — — — —

— Furniture, fixtures and officeequipment — — — — —

— Motor vehicles 236 — — 36 36

— Construction in progress(1) — — 200 — —

236 1,843 35,682 36 36

Note:

(1) Construction in progress comprises buildings under construction and plant and machinery pending installation at ourproduction premises.

Acquisitions

The acquisition of plant and machinery in FY2004 mainly comprised the purchase of an aluminumcutting machine and some other machinery improvements for the existing adhesive tape productionline. The acquisition did not result in an increase in total production capacity of our adhesive tapes.Construction in progress in FY2004 included 2-A2MPS plant and machinery improvement, electricitytransformer, elevator and computer system for our office.

The acquisition of plant and machinery in FY2005 was in relation to the purchase of some minormachinery and parts for the existing adhesive tape production line and 2-A2MPS production line. Theacquisition did not result in an increase in total production capacity of our adhesive tapes and2-A2MPS. Construction in progress in FY2005 included 2-A2MPS plant and machinery improvement,safety renovation and computer system for our office.

The acquisition of plant and machinery in FY2006 mainly comprised the purchase of a centrifuge andcertain machinery improvements for the existing 2-A2MPS production line and adhesive tape

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production line respectively. The acquisition resulted in an increase in total production capacity for2-A2MPS from 900 tonnes to 1,500 tonnes. Construction in progress in FY2006 was solely for2-A2MPS production.

The acquisition of plant and machinery for the three months ended FY2007 was in relation to machineryimprovement of the existing adhesive tape production line. Up to the Latest Practicable Date, theacquisition of plant and machinery was mainly in relation to the purchase of a BOPA film production linefrom Xiamen Brightforever. Please refer to the section “Restructuring Exercise” of this Prospectus fordetails.

Divestments

Pursuant to the Asset and Business Transfer Agreement entered into between Xiamen Changtian andChangtian Enterprise, some of the assets and liabilities were not transferred to our Group. Thedivestments in FY2006 represented mainly leasehold interest in the leasehold building and theleasehold interest in land use rights which were not transferred to our Group and were treated as adeemed distribution to Xiamen Changtian. For details, please refer to the section “Review of PastOperating Performance and Financial Position”. The divestment in FY2004 was in relation to thedisposal of a motor vehicle. The divestment in FY2005 was the disposal of part of the land use rightsto Xiamen Brightforever. Please refer to the section “Interested Person Transactions” of thisProspectus.

FOREIGN EXCHANGE EXPOSURE

The reporting currency of our Group is in RMB. Our operating subsidiary, Changtian Enterprise, carriesout its operations in the PRC. Accordingly, the functional currency of our Group and our books andrecords are in RMB. Transactions in currencies other than the functional currency during the relevantperiod are translated into the functional currency at exchange rates prevailing at the time of thetransactions. Monetary assets and liabilities denominated in currencies other than the functionalcurrency at the balance sheet date are translated into the functional currency at exchange rates rulingat the balance sheet date.

Exchange gains and losses are dealt with in the income statement of our Group. For the last threefinancial years ended 31 December 2006, all of our purchases and sales were denominated in RMB.However, to the extent that we may enter into transactions in currencies other than RMB in the future,particularly, as we expand our sales to overseas markets, our financial results may be subject tofluctuations between such foreign currencies and RMB.

Currently, we do not have any hedging policy with respect to our foreign exchange exposure. We willmonitor our foreign currency exposure closely in the future and will consider hedging any materialforeign exchange exposure should the need arise. We will, prior to entering into any hedgingtransactions, seek the approval of our board of Directors on the policy for entering into suchtransactions, and submit such policy and/or transaction to our Audit Committee for review and approval.

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CAPITALISATION AND INDEBTEDNESS

The following table shows the cash and cash equivalents, capitalisation and indebtedness of ourGroup:

(a) as at 31 December 2006, based on our audited combined balance sheet as adjusted for theRestructuring Exercise;

(b) as at 31 March 2007, based on our unaudited management accounts as adjusted for theRestructuring Exercise;

(c) as at the Latest Practicable Date, based on our unaudited management accounts as adjusted forthe Restructuring Exercise; and

(d) as at the Latest Practicable Date, adjusted to give effect to the proceeds from the issuance of theNew Shares pursuant to the Invitation, after deducting our share of the estimated expensesrelated to the Invitation and taking into account the application of the proceeds from the issue ofthe New Shares as well as the Restructuring Exercise.

(RMB’000)

Audited as at31 December

2006, adjustedfor the

RestructuringExercise

Unaudited as at31 March 2007,adjusted for theRestructuring

Exercise

Unaudited as atthe Latest

Practicable Date,adjusted for theRestructuring

Exercise

Unaudited as atthe Latest

Practicable Date,adjusted for the

net proceeds fromthe issuance of

New Shares, andthe Restructuring

Exercise

Cash and bank balances 58,220 137,590 213,572 558,093

Pledged bank deposits 9,894 7,533 — —

Indebtedness

Short term

Bills payable, secured 19,789 15,065 — —

Bank loans, secured 20,000 20,000 — —

Bank loans, unsecured — — 20,000 20,000

Total indebtedness 39,789 35,065 20,000 20,000

Total equity 157,450 201,374 293,825 638,346

Total capitalisation andindebtedness 197,239 236,439 313,825 658,346

As at 31 December 2006, our bills payable of RMB19.8 million were secured by cash deposits of RMB9.9million. Our bank loans of RMB20.0 million were secured by a mortgage of the underlying land use rightsat Area 02–7 of Xinyang Industrial Area, Haicang District Xiamen City, Fujian Province, PRC 361026 andthe entire leasehold buildings on the land. As at 31 December 2006, the entire leasehold buildings on theland and the land use rights were deemed distributed to Xiamen Changtian pursuant to the RestructuringExercise. As at 31 December 2006, the bank loans bear interest rate of 7.254% per annum.

As at 31 March 2007, our bills payable of RMB15.1 million were secured by cash deposits of RMB7.5million. Our bank loans of RMB20.0 million was secured by a mortgage of the underlying land use rightsat Area 02–7 of Xinyang Industrial Area, Haicang District Xiamen City, Fujian Province, PRC 361026 andthe entire leasehold buildings on the land, which have been deemed distributed to Xiamen Changtianpursuant to the Restructuring Exercise as at 31 December 2006. As at 31 March 2007, the bank loans bearinterest rate of 7.344% per annum.

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As at the Latest Practicable Date, our bank loans of RMB20.0 million were not secured and are repayableby 6 February 2008. As at the Latest Practicable Date, the bank loans bear interest rate of 7.344% perannum. As at the Latest Practicable Date, we had repaid RMB15.1 million in full short-term secured billspayable in full. This RMB15.1 million short-term secured bills payable related to purchases of raw materialsin the ordinary course of business and had been fully repaid in August 2007.

The loans were extended to us by the Industrial Bank Co., Ltd. for purposes of working capital.As disclosed in the section “Use of Proceeds and Listing Expenses” of this Prospectus, we intend to utiliseRMB20 million from the net proceeds of the Invitation to repay this loan in full.

As at the Latest Practicable Date, based on the unaudited management accounts of our Group, there wereno material changes in our capitalisation and indebtedness as disclosed above, save for:

(a) the decrease in our borrowings by approximately RMB15.1 million from approximately RMB35.1million as at 31 March 2007 to RMB20 million;

(b) the increase in our cash and cash equivalents by approximately RMB76.0 million fromapproximately RMB137.6 million as at 31 March 2007 to approximately RMB213.6 million; and

(c) changes in our retained earnings arising from our day-to-day operations in the ordinary course ofour business.

Capital and Operating Lease Commitments

As at 31 December 2006 and as at the Latest Practicable Date, we have no capital commitments. Forfurther details, please refer to the section “Material Capital Expenditure and Divestments” of thisProspectus.

We have operating lease commitments relating to our total future minimum lease payments undernon-cancellable operating leases for property, plant and machinery as follows:

As at31 December 2006

(RMB’000)

As at theLatest Practicable Date

(RMB’000)

Within one year 6,000 3,500

In the second to fifth years 24,000 4,831

After five years 13,500 —

43,500 8,331

As at 31 December 2006, the operating lease commitments relate to the lease of factory premises, plantand equipment from Xiamen Brightforever. As at the Latest Practicable Date, the operating leasecommitments relate to the lease of factory premises from Xiamen Brightforever and Xiamen Changtian.Please refer to the section “Interested Person Transactions” of this Prospectus for more details.

Contingent Liabilities

As at the Latest Practicable Date, we do not have any outstanding contingent liabilities.

Save for the foregoing, as at the Latest Practicable Date, our Group has no other borrowings orindebtedness and liabilities under acceptances (other than normal trading bills) or acceptance credits,mortgages, charges, obligations under finance leases, guarantees or other material contingentliabilities.

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EXCHANGE CONTROLS

The following is a description of the exchange controls that exist in the jurisdiction which our Groupoperates in.

PRC

Major reforms have been introduced to the foreign exchange control system of the PRC since 1993.

On 28 December 1993, the People’s Bank of China (“PBOC”), with the authorisation of the StateCouncil issued the Notice on Further Reform of the Foreign Exchange Control System which came intoeffect on 1 January 1994. Other new regulations and implementation measures include the Regulationson the Foreign Exchange Settlement, Sale and Payments which were promulgated on 20 June 1996and took effect on 1 July 1996 and which contain detailed provisions regulating the settlement, sale andpayment of foreign exchange by enterprises, individuals, foreign organisations and visitors in the PRCand the regulations of the PRC on Foreign Exchange Control which were promulgated on 1 January1996 and took effect on 1 April 1996 and which contain detailed provisions in relation to foreignexchange control.

On 21 July 2005, the People’s Bank of China issued Public Announcement of the PBOC on Reformingthe RMB Exchange Rate Regime, which stated that from 21 July 2005, PRC will reform the exchangerate regime by moving into a managed floating exchange rate regime based on market supply anddemand with reference to a basket of currencies. RMB will no longer be pegged to the US$ and theRMB exchange rate regime will be improved with greater flexibility.

Under these new regulations, the previous dual exchange rate system for RMB was abolished and aunified floating exchange rate system based largely on supply and demand was introduced. The PBOCpublishes the RMB exchange rate against the US$ daily and other major foreign currencies daily. Suchrate is to be set by reference to the RMB/US$ and other major foreign currencies trading price on theprevious day on the inter bank foreign exchange market.

The foreign exchange earnings of all PRC enterprises, other than those foreign investment enterprises(“FIE”), who are allowed to retain a part of their regular foreign exchange earnings or specificallyexempted under the relevant regulations, are to be sold to designated banks. Foreign exchangeearnings obtained from borrowings from foreign institutions or issues of shares or bonds denominatedin foreign currency need not be sold to designated banks, but must be kept in foreign exchange bankaccounts of designated banks unless specifically approved otherwise.

At present, control of the purchase of foreign exchange is relaxed. Enterprises within the PRC whichrequire foreign exchange for their ordinary trading and non-trading activities, import activities andrepayment of foreign debts may purchase foreign exchange from designated banks if the applicationis supported by the relevant documents. Furthermore, FIEs may distribute profit to their foreigninvestors with funds in their foreign exchange bank accounts kept with designated banks. Should suchforeign exchange be insufficient, enterprises may purchase foreign exchange from designated banksupon the presentation of the resolutions of the directors on the profit distribution plan of the particularenterprise.

When conducting foreign exchange transactions, the designated banks may, based on the exchangerate published by the PBOC and subject to certain limits, freely determine the applicable exchange rate.

The China Foreign Exchange Trading Centre (“CFETC”) was formally established and came intooperation on 1 April 1994. CFETC has set up a computerised network with sub-centres in several majorcities, thereby forming an interbank market in which designated PRC banks can trade and settle theirforeign currencies. Prior to 1 December 1998, FIE may upon their own choice enter into exchangetransactions through a swap centre or through designated PRC banks. On 25 October 1998, PBOC and

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the State Administration of Foreign Exchange issued a joint announcement on the abolishment offoreign exchange swap business which stated that from 1 December 1998, foreign exchangetransactions will have to be conducted through designated banks. In addition, some swap centreswould be abolished while others which are already linked up with CFETC by the computerised networkwill be merged with CFETC and sub-centres to the CFETC.

On 14 January 1997, the Regulations of the People’s Republic of China on Foreign Exchange Controlwas amended such that the payment in and transfer of foreign exchange for current internationaltransactions will no longer be subject to the PRC government control or restrictions.

In addition, on 21 October 2005, the State Administration for Foreign Exchangeof the PRC promulgated Notice Concerning the Foreign Exchange

Administration in the Financing and Round-trip Investment Conducted by PRC Residents via SpecialPurpose Vehicle Companies

(the “SAFE Notice No. 75”). Under the SAFE Notice No. 75, PRC residents have toregister their foreign investments with the local SAFE prior to the incorporation or taking control ofspecial purpose companies (the “SPV”) and prior to the alteration registration through which such SPVacquires the PRC residents’ assets for the financing of foreign investments.

Other than the above-mentioned registration requirement, the SAFE Notice No. 75 also requires PRCresidents who are majority shareholders in the overseas invested companies to register, modify orrecord with the local foreign exchange authority within 30 days from the date of any increase/decreaseof capital, share transfer, mergers/demergers, change in long-term equity or debts investments andoutward guarantees in the SPV. Moreover, profits, dividends and foreign exchange relating to capitalchanges received by PRC residents from the SPV shall be repatriated to the PRC within 180 days ofreceiving such amounts. For SPV which were incorporated or restructured prior to the issue of the newrules, the SAFE Notice No. 75 requires the domestic residents to complete the supplementalregistration before 31 March 2006.

When a PRC resident violates the provisions in SAFE Notice No. 75 and it constitutes an evasion ofany foreign exchange regulations, SAFE will penalize the PRC resident in accordance with the relevantforeign exchange rules and regulations.

BERMUDA

Please refer to Appendix E — “Summary of Bermuda company law” of this Prospectus for details onexchange controls in Bermuda.

Save as disclosed above, there are no restrictions on the ability of our PRC subsidiaries to transferfunds to our Company in the form of dividends or for the repayment of loans or advances.

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DIVIDEND POLICY

Subject to the Bermuda Companies Act, shareholders in general meeting may from time to time declarea dividend or other distribution but no dividend or distribution shall be declared in excess of the amountrecommended by our Directors. Subject to the Bermuda Companies Act, our Directors may also fromtime to time declare a dividend or other distribution.

Our Company has not distributed any cash dividend on our Shares since our incorporation on 29 March2007. Xiamen Changtian, from which our subsidiary, Changtian Enterprise, acquired its business underthe Asset and Business Transfer Agreement (details of which are set out in the section “RestructuringExercise” of this Prospectus), declared and paid dividends to its then equity holders for the past threefinancial years as follows:

FY2004(RMB’000)

FY2005(RMB’000)

FY2006(RMB’000)

Dividends 10,000 40,000 72,500

Investors should note that the amount of dividends declared and distributed by Xiamen Changtian in thepast is not to be taken as an indication of dividends to be declared and paid by us in the future.

Our Group currently does not have any formal dividend policy. The declaration and payment of dividendsin the future will depend upon our operating results, financial conditions, other cash requirements includingcapital expenditure, restrictions under the terms of our credit facilities (if any), and other factors deemedrelevant by our Directors.

Subject to the above, our Directors intend to recommend and distribute dividends of not less than 20% ofour net profits attributable to our Shareholders for FY2007 and FY2008 (the “Proposed Dividend”).However, investors should note that all the foregoing statements, including the statements on theProposed Dividend, are merely statements of our present intention and shall not constitute legally bindingstatements in respect of our future dividends which may be subject to modification (including reduction ornon-declaration thereof) in our Directors’ sole and absolute discretion. Investors should not treat theProposed Dividend as an indication of our Group’s future dividend policy. No inference should or can bemade from any of the foregoing statements as to our actual future profitability or ability to pay dividendsin any of the periods discussed.

Our Company will declare dividends if any, and make payment of the dividends in S$. Information relatingto taxes payable on dividends is set out in Appendix C — “Taxation” to this Prospectus.

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GENERAL INFORMATION ON OUR GROUP

SHARE CAPITAL

Our Company (Registration No. 39836) was incorporated in Bermuda on 29 March 2007 under theBermuda Companies Act as an exempted company under the name of Changtian Plastic & ChemicalLimited. As at the date of incorporation, the authorised share capital of the Company was US$12,000divided into 120,000 ordinary shares of US$0.10 each.

On 30 March 2007, 1 ordinary share of US$0.10 each in the capital of our Company was allotted andissued nil-paid to Eastline Investments.

Pursuant to the written resolutions dated 6 July 2007 in lieu of a special general meeting, 99 ordinaryshares of US$0.10 each in the capital of our Company was allotted and issued nil-paid to EastlineInvestments (the “Share Subscription”).

Further, pursuant to written resolutions dated 6 July 2007 in lieu of a special general meeting, our thensole Shareholder approved, inter alia, the following:

(a) the change of denomination of every 120,000 ordinary shares of US$0.10 each into 120,000ordinary shares of S$0.154 each (the “Share Redenomination”);

(b) the sub-division of every one ordinary share of S$0.154 each after the Share Redenomination into154 ordinary shares of S$0.001 each (the “Share Subdivision”); and

(c) the consolidation of every 50 ordinary share of S$0.001 each after the Share Subdivision into oneordinary share of S$0.05 each (the “Share Consolidation”).

Pursuant to written resolutions dated 24 September 2007 in lieu of a special general meeting, our then soleShareholder approved, inter alia, the following:

(a) the increase in the authorised share capital of our Company from S$18,480 divided into 369,600ordinary Shares of S$0.05 each to S$75 million divided into 1,500,000,000 ordinary Shares ofS$0.05 each;

(b) crediting as fully paid the 308 nil-paid shares registered in the name of Eastline Investments andthe allotment and issue of 499,999,692 new Shares to the Shareholders of Jumbo Glories (as partof our Restructuring Exercise (details of which are set out under the section “RestructuringExercise” of this Prospectus));

(c) the adoption of a new set of Bye-laws of our Company;

(d) the adoption of the ESOS;

(e) the offer, allotment and issue of the 160,000,000 New Shares, which when issued and fullypaid-up, shall rank pari passu in all respects with our existing issued and paid-up Shares;

(f) the offer for sale of 55,000,000 Vendor Shares held by CIM VIII, Goodwise Investments, HongKong Investments and Longold Group in connection with the Invitation, such Vendor Shares torank pari passu in all respects with the existing issued and fully paid-up Shares; and

(h) that authority be given to our Directors, to:

(i) issue Shares whether by way of rights, bonus or otherwise (including Shares as may beissued pursuant to any Instrument (as defined below) made or granted by our Directors whilethis Resolution is in force notwithstanding that the authority conferred by this Resolution mayhave ceased to be in force at the time of issue of such Shares); and/or

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(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or wouldrequire Shares to be issued, including but not limited to the creation and issue of warrants,debentures or other instruments convertible into Shares, at any time and upon such termsand conditions and for such purposes and to such persons as our Directors may in theirabsolute discretion deem fit,

provided that the aggregate number of Shares issued pursuant to such authority (includingShares issued pursuant to any Instrument), shall not exceed 50% of the Post-Invitation IssuedShare Capital, and provided further that the aggregate number of such Shares to be offered otherthan on a pro rata basis in pursuance to such authority (including Shares issued pursuant to anyInstrument) to the existing Shareholders shall not exceed 20% of the Post-Invitation Issued ShareCapital, and, unless revoked or varied by our Company in general meeting, such authority shallcontinue in force until the conclusion of the next Annual General Meeting of our Company or thedate by which the next Annual General Meeting of our Company is required by law to be held,whichever is the earlier.

For the purposes of this resolution, the “Post-Invitation Issued Share Capital” shall mean theenlarged issued share capital of our Company immediately after the Invitation, after adjusting for:(i) new shares arising from the conversion or exercise of any convertible securities; (ii) new sharesarising from exercising share options or vesting of share awards outstanding or subsisting at thetime such authority is given, provided the options or awards were granted in compliance with theListing Manual; and (iii) any subsequent consolidation or sub-division of shares.

Approval for crediting as fully paid the 308 nil-paid shares and the allotment and issue of 499,999,692 NewShares was received from the Bermuda Monetary Authority on 30 August 2007.

As at the Latest Practicable Date, we have only one class of shares, being ordinary shares of S$0.05 each.The rights and privileges of our Shares are stated in our Bye-laws. Save for the Option Shares, there areno founder, management, deferred or unissued shares reserved for the issuance for any purpose. Savefor the Options that may be granted under the ESOS, no person has been, or is entitled to be, given anoption to subscribe for or purchase any securities of our Company or any of our subsidiaries. As at theLatest Practicable Date, no option to subscribe for our Shares has been granted to, or was exercised byany of our Directors. There are no Shares held by or on behalf of our Company or by our subsidiaries.

Our present issued and paid-up capital is S$25,000,000 divided into 500,000,000 Shares. Upon theallotment and issue of the New Shares, the resultant issued and paid-up share capital of our Company willbe increased to S$33,000,000 divided into 660,000,000 Shares.

Details of the changes in our issued and paid-up share capital since incorporation and the issued andpaid-up share capital immediately after the Invitation are as follows:

Purpose Par Value

Issue price/Consideration

(S$)Number ofnew Shares

Number ofresultantissuedShares

Resultantissued and

paid upshare capital

(S$)

Issued ordinary share of US$0.10each nil-paid as at31 March 2007 US$0.10 — 1 1 —

Issued ordinary shares ofUS$0.10 each nil-paid as at6 July 2007 US$0.10 — 99 100 —

Redenomination of par value ofeach ordinary share fromUS$0.10 to S$0.154 S$0.154 — 100 100 —

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Purpose Par Value

Issue price/Consideration

(S$)Number ofnew Shares

Number ofresultantissuedShares

Resultantissued and

paid upshare capital

(S$)

Subdivision of every one ordinaryshare of S$0.154 into S$0.001 S$0.001 — — 15,400 —

Consolidation of 50 ordinaryshares of S$0.001 each into oneordinary share of S$0.05 S$0.05 — — 308 —

Credited as fully paid the 308ordinary Shares of S$0.05 eachthat were issued nil-paid S$0.05 15.40 — 308 15.40

Issued and fully paid-up Sharesallotted and issued pursuant tothe Restructuring Exercise S$0.05 24,999,984.60 499,999,692 500,000,000 25,000,000

Pre-Invitation share capital S$0.05 — — 500,000,000 25,000,000

New Shares to be issuedpursuant to the Invitation S$0.05 0.47 160,000,000 660,000,000 33,000,000

Post-Invitation share capital S$0.05 — — 660,000,000 33,000,000

The authorised share capital and the Shareholders’ equity of our Company as at the date of incorporation,after the Restructuring Exercise and after the issue of the New Shares pursuant to the Invitation are setforth below. These statements should be read in conjunction with the Report from the Joint ReportingAccountants on the Audited Combined Financial Information of the Group for the Financial Years Ended31 December 2004, 31 December 2005 and 31 December 2006 set out in Appendix A of this Prospectus.

As atincorporation

(US$)

After the ShareSubscription,

ShareRedomination,

ShareSubdivision and

the ShareConsolidation

(S$)

Immediatelyafter the

increase inauthorised share

capital andRestructuring

Exercise(S$)

Immediatelyafter theInvitation

(S$)

AUTHORISED SHARE CAPITAL

Ordinary shares of US$0.10 each 12,000 — — —

Ordinary shares of S$0.05 each — 18,480 75,000,000 75,000,000

SHAREHOLDERS’ EQUITY

Issued nil-paid share capital 0.10 15.40(1) — —

Issued and fully paid-up sharecapital — — 25,000,000 33,000,000

Share premium(3) — — — 64,077,600

Contributed surplus(2), (3) — — 6,686,456 6,686,456

Total Shareholders’ equity 0.10 15.40 31,686,456 103,764,056

Notes:

(1) This includes the 99 ordinary shares of US$0.10 each issued nil-paid to Eastline Investments on 6 July 2007, or 308 ordinaryshares of S$0.05 each nil-paid after the Share Redenomination, Share Subdivision and the Share Consolidation.

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(2) Contributed surplus arose as a result of the Restructuring Exercise and represents the difference between the thenconsolidated net assets value of the Changtian Assets and Business acquired, over the nominal value of our Company’sShares. For the purpose of preparation of the above disclosure, the combined NAV of Jumbo Glories and the ChangtianAssets and Business acquired were calculated based on the audited accounts as at 31 December 2006. The final amountof the contributed surplus will be adjusted by reference to the combined NAV of Jumbo Glories and the Changtian Assetsand Business acquired as at 24 September 2007.

(3) For illustrative purposes, the share premium and contribution surplus amounts have been calculated using the exchangerate of RMB:S$ is at 4.969:1.

SHAREHOLDERS

The Shareholders of our Company and their respective shareholdings immediately before the Invitation(as at the Latest Practicable Date) and immediately after the Invitation are set out as follows:

< Before the Invitation > < After the Invitation >

Direct Interest Deemed Interest Direct Interest Deemed Interest

Number ofShares %

Number ofShares %

Number ofShares %

Number ofShares %

Directors

Yang Qingjin(1) — — 169,800,000 33.96 — — 169,800,000 25.73

Chen Yongfu(2) — — 213,550,000 42.71 — — 198,550,000 30.08

Wong Chit Fu — — — — — — — —

Yan Yilin — — — — — — — —

Chan Yin David — — — — — — — —

Lee Liang Ping — — — — — — — —

Liao Quanwen — — — — — — — —

Substantial Shareholders (5% or more)

Eastline Investments(1) 169,800,000 33.96 — — 169,800,000 25.73 — —

Goodwise Investments(2) 213,550,000 42.71 — — 198,550,000 30.08 — —

Others

CIM VIII(3)(4) 66,650,000 13.33 — — 32,650,000 4.95 — —

Longold Group(5) 20,000,000 4.00 — — 17,000,000 2.57 — —

Hong Kong Investments(6) 20,000,000 4.00 — — 17,000,000 2.57 — —

East Fortune(7) 10,000,000 2.00 — — 10,000,000 1.52 — —

Public — — — — 215,000,000 32.58 — —

TOTAL 500,000,000 100.00 660,000,000 100.00

Notes:

(1) Eastline Investments is wholly-owned by Yang Qingjin, our Chairman and Executive Director. Yang Qingjin is deemed tohave an interest in all the Shares held by Eastline Investments.

(2) Goodwise Investments is wholly-owned by Chen Yongfu, our Deputy Chairman and Executive Director. Chen Yongfu isdeemed to have an interest in all the Shares held by Goodwise Investments.

(3) CIM VIII is an investment holding company incorporated in the BVI on 3 January 2007. Centurion Investment ManagementHoldings (BVI) Limited, an investment holding company incorporated in the BVI on 11 January 2005 was appointed by CIMVIII as the investment manager responsible for managing its investment on a discretionary basis. CIM VIII has two classesof shares, namely voting ordinary shares and non-voting preference shares. The one issued voting ordinary share is heldby Centurion Investment Management Holdings (BVI) Limited as the investment manager for CIM VIII and the non-votingpreference shares are held as to 28.6% by Han Seng Juan, 21.6% by Loh Kim Kang David, 14.2% by Tan Chin Chai, 11.5%by Cheung Yick Chung, 4.7% by Boey Shook Fan Caroline, 4.7% by Chia Soon Loi, 4.7% by Henry Quek Peng Hock, 2.8%by Loh Kim Guan, 2.4% by Mak Bang Mui, 2.4% by Tang Kay Hwa and 2.4% by Tang Boo Teck.

(4) Centurion Investment Management Holdings (BVI) Limited is the wholly-owned subsidiary of Centurion Holdings (BVI)Limited, which is equally owned by Loh Kim Kang David and Han Seng Juan. Loh Kim Kang David and Han Seng Juan aredeemed to be interested in the shares held by CIM VIII. Loh Kim Kang David and Han Seng Juan are trading representativesof UOB Kay Hian Private Limited, our Underwriter and Placement Agent. They are maternal cousins. Loh Kim Kang Davidand Han Seng Juan are not related to our Directors, Executive Officers or Controlling Shareholders.

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(5) Longold Group is wholly-owned by Chuang Chin Fang, who is deemed to have an interest in all the Shares held by LongoldGroup.

(6) Hong Kong Investments is wholly-owned by Cheung Chi Mang, who is deemed to have an interest in all the Shares heldby Hong Kong Investments.

(7) East Fortune is wholly-owned by Yip Man King, who is deemed to have an interest in all the Shares held by East Fortune.

Our Shares held by our Directors and Substantial Shareholders do not carry different voting rights from theNew Shares which are the subject of the Invitation. To the best of their knowledge, our Directors are notaware of any arrangement, the operation of which may at a subsequent date result in a change in controlof our Company.

Save for the Shares issued by our Company as disclosed above, we are not directly or indirectly ownedor controlled by another corporation, any government or other natural or legal person severally or jointly.

Save as disclosed under the section “Restructuring Exercise” of this Prospectus, there has been nosignificant change in the percentage of ownership of our Shares since our incorporation.

No option to subscribe for shares in, or debentures of, our Company or our subsidiaries has been grantedto, or was exercised by, any Director or Executive Officer within the two financial years preceding the dateof this Prospectus.

There has not been any public take-over offer by a third party in respect of our Shares or by ourCompany in respect of shares of another corporation or units of a business trust which has occurredbetween 1 January 2006 and the Latest Practicable Date.

VENDORS

The name of the Vendors and the number of Vendor Shares which the Vendors will offer pursuant tothe Invitation are set out below:

Shares heldimmediately before the

Invitation as at theLatest Practicable Date

Vendor Shares offered pursuant tothe Invitation

Shares held after theInvitation

Name/AddressNumber of

Shares

% of pre-Invitation

sharecapital

Number ofShares

% of pre-Invitation

sharecapital

% of post-Invitation

sharecapital

Number ofShares

% of post-Invitation

sharecapital

CIM VIIIP.O. Box 957Offshore IncorporationsCentreRoad Town TortolaBritish Virgin Islands

66,650,000 13.33 34,000,000 6.80 5.15 32,650,000 4.95

Goodwise Investments2nd Floor Abbott BuildingRoad Town TortolaBritish Virgin Islands

213,550,000 42.71 15,000,000 3.00 2.27 198,550,000 30.08

Hong Kong Investments2nd Floor Abbott BuildingRoad Town TortolaBritish Virgin Islands

20,000,000 4.00 3,000,000 0.60 0.45 17,000,000 2.57

Longold Group2nd Floor Abbott BuildingRoad Town TortolaBritish Virgin Islands

20,000,000 4.00 3,000,000 0.60 0.45 17,000,000 2.57

Save as disclosed in this Prospectus, none of our Directors or Substantial Shareholders have a director indirect interest in the Vendor Shares, and none of the Vendors have had any position, office or othermaterial relationship with our Group within the period of 3 years before the date of lodgement of thisProspectus.

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MORATORIUM

To demonstrate their commitment to our Group, each of Eastline Investments and GoodwiseInvestments which holds approximately 25.73% and 30.08% of our Company’s post-Invitation sharecapital respectively, has undertaken not to dispose of or transfer or enter into any agreement that willdirectly or indirectly constitute or will be deemed as a disposal of any part of their respectiveshareholding in our Company for a period of six months commencing from the date of admission of ourCompany to the Official List of the SGX-ST, and each of them will not dispose of or transfer any of theirshareholdings in our Company to below 50% of the above mentioned shareholdings in our Companyin the six months thereafter.

Yang Qingjin and Chen Yongfu, who holds the entire issued and paid-up share capital of EastlineInvestments and Goodwise Investments respectively, has undertaken not to dispose of or transfer orenter into any agreement that will directly or indirectly constitute or will be deemed as a disposal of anypart of their respective shareholding in Eastline Investments and Goodwise Investments respectivelyfor a period of twelve months commencing from the date of admission of our Company to the OfficialList of the SGX-ST.

The Pre-Invitation Investors, CIM VIII, Longold Group, Hong Kong Investments and East Fortune,which hold 32,650,000, 17,000,000, 17,000,000 and 10,000,000 Shares respectively representingapproximately 4.95%, 2.57%, 2.57% and 1.52% respectively of our Company’s post-Invitation sharecapital, have each undertaken not to dispose of or transfer or enter into any agreement that will directlyor indirectly constitute or will be deemed as a disposal of any part of their respective shareholding inour Company for a period of six months commencing from the date of admission of our Company to theOfficial List of the SGX-ST.

Each of (i) Centurion Investment Management Holdings (BVI) Limited which holds the one votingordinary share in CIM VIII; (ii) Chuang Chin Fang who holds the entire issued and paid-up share capitalof Longold Group; (iii) Cheung Chi Mang who holds the entire issued and paid-up share capital of HongKong Investments; and (iv) Yip Man King who holds the entire issued and paid-up share capital of EastFortune has given their respective undertaking that each of them will not dispose of or transfer or enterinto any agreement that will directly or indirectly constitute or will be deemed as a disposal of any partof each of their respective interest in the respective companies for a period of six months commencingfrom the date of admission of our Company to the Official List of the SGX-ST.

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RESTRUCTURING EXERCISE

To streamline and rationalise our corporate structure and shareholding structure in preparation for ourlisting on the SGX-ST, we implemented a restructuring exercise prior to the Invitation (the“Restructuring Exercise”), resulting in our Company becoming the investment holding company of ourGroup.

The following steps were taken in the Restructuring Exercise:

(a) Incorporation of Jumbo Glories

Jumbo Glories was incorporated on 1 April 2005 in the BVI as an investment holding companywith an authorised share capital of US$50,000 divided into 50,000 ordinary shares of US$1.00each. On 3 January 2006, Chen Baohua (the wife of Yang Qingjin (our Chairman and ExecutiveDirector) and the sister of Chen Yongfu (our Deputy Chairman and Executive Director)) and ChenYongfu subscribed for and was allotted and issued 2,215 and 2,785 shares of Jumbo Glories,representing 44.3% and 55.7% of the total issued share capital of Jumbo Glories, respectively.

On 8 March 2007, Chen Yongfu transferred his entire interest in Jumbo Glories to GoodwiseInvestments for the issue of 1 share in Goodwise Investments, a company wholly and beneficiallyowned by Chen Yongfu.

On 8 March 2007, Chen Baohua transferred her entire interest in Jumbo Glories to EastlineInvestments for the issue of 1 share in Eastline Investments, a company wholly and beneficiallyowned by Chen Baohua. On the same date, Chen Baohua transferred her entire interest inEastline Investments to Yang Qingjin, her spouse, who is our Chairman and Executive Director.

Thereafter, Eastline Investments, Goodwise Investments and Rowview, a company equallyowned by Chen Baohua and Chen Yongfu, subscribed for and were allotted 1,181, 1,486 and2,333 shares of Jumbo Glories for a subscription consideration of US$1,181, US$1,486 andUS$18.5 million, respectively.

Upon completion of the transfers and subscription, Eastline Investments, Goodwise Investmentsand Rowview, respectively held 3,396, 4,271 and 2,333 shares in Jumbo Glories, representing33.96%, 42.71% and 23.33% of the total issued share capital of Jumbo Glories. The considerationof US$1,181 and US$1,486 was based on the aggregate par value of the number of shares ofJumbo Glories of US$1.00 each being transferred. The consideration of US$18.5 million wasarrived at based on the amount that the Pre-Invitation Investors intended to invest in the Companythrough the subscription of exchangeable notes. Please refer to the sub-section “Subscription andIssuance of Exchangeable Notes” for further details.

(b) Incorporation of Changtian Enterprise

On 21 July 2006, the Xiamen Foreign Investment Bureau granted thecertificate of approval for the incorporation by Jumbo Glories of Changtian Enterprise as a whollyforeign-owned enterprise in the PRC. Changtian Enterprise was incorporated on 6 December2006 with a registered capital of US$18.0 million and with a business term of 30 years from 6December 2006 to 5 December 2036. Pursuant to a capital verification report on ChangtianEnterprise’s registered capital dated 13 June 2007, the registered capital of Changtian Enterpriseof US$18.0 million was fully paid by Jumbo Glories by 11 June 2007.

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(c) Acquisition of certain assets and business as well as liabilities of Xiamen Changtian andlease of premises

On 14 April 2006, Jumbo Glories as purchaser, and Xiamen Changtian as seller, entered into anasset and business transfer agreement (the “Initial Asset and Business Transfer Agreement”) (asamended by a supplemental transfer agreement dated 21 May 2007) (the “Supplemental TransferAgreement”) pursuant to which Jumbo Glories agreed to acquire all of Xiamen Changtian’sbusiness together with certain of its assets and liabilities (excluding its land use rights, buildings,amounts due from equity holders, tax payables balances and certain reserves balances) (the“Changtian Assets and Business”). The total consideration for the acquisition was US$18.5million, which is approximately RMB143.48 million, arrived at based on the NAV (as at 31December 2005) of the Changtian Assets and Business, as valued by an independent valuer,Xiamen Dacheng Valuation Office in its report dated 30 March 2006, tobe satisfied in full by cash payment. The Initial Asset and Business Transfer Agreement wasapproved by the Xiamen Foreign Investment Bureau on 21 July 2006.

Due to the amendments to certain applicable PRC rules and regulations, the Certificate ofApproval for Establishment of Enterprise with Foreign Investment in the PRC

of Changtian Enterprise was obtained only on 6 December2006.

Pursuant to the Supplemental Transfer Agreement, the parties agreed that the considerationpayable under the Initial Asset and Business Transfer Agreement would remain at US$18.5 million(or approximately RMB143.48 million), being the NAV of the Changtian Assets and Business asat 31 December 2005 as valued by an independent valuer, Xiamen Dacheng Valuation Office inits report dated 30 March 2006. The parties also agreed that profits arising from Changtian Assetsand Business prior to 1 January 2007 shall belong to the shareholders of Xiamen Changtian andprofits for the period from 1 January 2007 shall belong to Changtian Enterprise. In arriving at thisagreement, the parties have considered the valuation of the Changtian Assets and Business asat 31 January 2007 of RMB155.14 million by Xiamen Dacheng Valuation Office in its valuationreport dated 10 March 2007, and that after deducting the profits generated by Xiamen Changtianfor the period from 1 January 2007 to 31 January 2007 amounting to RMB10.93 million from thevaluation of RMB155.14 million, the NAV of the Changtian Assets and Business as at 31December 2006 was RMB144.21 million.

The valuation of the Changtian Assets and Business as at 31 January 2007 included the entireassets and liabilities of Xiamen Changtian but excluded (i) the land and buildings owned byXiamen Changtian which will be leased back to Changtian Enterprise, (ii) an amount of RMB72.5million advanced to shareholders by Xiamen Changtian not transferred to Changtian Enterpriseand (iii) tax payable balances due to the relevant tax authorities not transferred to ChangtianEnterprise.

As agreed in the Supplemental Agreement, the effective date of the transfer was changed to 1April 2007 and Changtian Enterprise assumed all rights, obligations and benefits in respect of theChangtian Assets and Business acquired from Xiamen Changtian with effect from 1 January2007.

The transfer of the Changtian Assets and Business by Xiamen Changtian was approved by itsshareholders in general meetings held on 10 April 2006 and 22 May 2007. Completion of theacquisition of the Changtian Assets and Business took place on 11 June 2007 and ChangtianEnterprise has made full payment of the consideration of US$18.5 million.

The Initial Asset and Business Transfer Agreement and the Supplemental Transfer Agreementhave been ratified and approved by Xiamen Foreign Investment Bureau on 21July 2006 and 24 May 2007 respectively.

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In connection with the Initial Asset and Business Transfer Agreement, as amended by theSupplemental Transfer Agreement, the following agreements were entered into:

(i) Property lease agreement with Xiamen Changtian

On 21 May 2007, Changtian Enterprise entered into a lease agreement with XiamenChangtian (the “Changtian Lease Agreement”) (as amended by a supplemental leaseagreement (the “Supplemental Lease Agreement”) dated 6 July 2007) to lease from XiamenChangtian the premises and the underlying land use rights, at 18 Xinsheng Road, XinyangIndustrial Zone, Haicang District, Xiamen City, Fujian Province, PRC 361026 where ourproduction facilities for the production of adhesive tapes, release papers and 2-A2MPS aresituated. The leased premises has an aggregate building floor area of approximately 20,960sq m comprising factory premises, warehouses and staff quarters.

The lease is for a term of 20 years commencing from 1 January 2007 to 31 December 2026,with a rent-free period from 1 January 2007 to 31 March 2007 (as amended by theSupplemental Lease Agreement), at an annual rent of RMB2.3 million, as determined by avaluation report dated 5 March 2007 prepared by an independent valuer, LCH (Asia-Pacific)Surveyors Limited. The annual rental is payable on a quarterly basis. However, pursuant tothe Supplemental Lease Agreement, the parties agreed that no rent shall be payable for theperiod from 1 January 2007 to 31 March 2007.

Under the Changtian Lease Agreement, upon the expiry of the initial three year term, thelease may be terminated at the option of Changtian Enterprise by giving at least threemonths’ notice to Xiamen Changtian. The annual rental payable after the first three years ofthe lease is subject to review once every three years and may be adjusted based on anindependent valuers’ valuation to ascertain prevailing market price.

Further, under the Changtian Lease Agreement, Changtian Enterprise has the option toacquire the leased premises from Xiamen Changtian at the prevailing market price to bedetermined by independent valuers.

The Changtian Lease Agreement was filed with the Xiamen Municipal Land Resources andHousing Administrative Bureau on 4 June 2007.

(ii) Property lease agreement with Xiamen Brightforever

On 21 May 2007, Changtian Enterprise entered into a lease agreement with XiamenBrightforever (the “Brightforever Lease Agreement”) to lease from Xiamen Brightforever thepremises and the underlying land use rights, at 16 Xinsheng Road, Xinyang Industrial Zone,Haicang District, Xiamen City, Fujian Province, PRC 361026 where our production facilitiesfor BOPA film are situated. The leased premises has an aggregate building floor area ofapproximately 11,270 sq m.

The lease is for a term of 20 years commencing from 1 April 2007 at an annual rent ofRMB1.2 million, as determined by a valuation report dated 5 March 2007 prepared by anindependent valuer, LCH (Asia-Pacific) Surveyors Limited. The annual rental is payable ona quarterly basis.

Under the Brightforever Lease Agreement, upon the expiry of the initial three year term, thelease may be terminated at the option of Changtian Enterprise by giving at least threemonths’ notice to Xiamen Brightforever. The annual rental payable after the first three yearsof the lease is subject to review once every three years and may be adjusted based on anindependent valuers’ valuation to ascertain prevailing market price.

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Further, under the Brightforever Lease Agreement, Changtian Enterprise has the option toacquire the leased premises from Xiamen Brightforever at the prevailing market price to bedetermined by independent valuers.

The Brightforever Lease Agreement was filed with the Xiamen Municipal Land Resourcesand Housing Administrative Bureau on 4 June 2007.

(iii) Non-Competition Undertaking

On 21 May 2007, Xiamen Changtian, the then shareholders of Xiamen Changtian, namelyChen Baohua and Chen Yongfu and the directors, namely Chen Yongfu, and Wong Chit Fu,and in addition Yang Qingjin, the husband of Chen Baohua (collectively, the “XiamenChangtian Covenantors”) executed a non-competition undertaking (the “Non-CompetitionUndertaking”) in favour of our subsidiary Changtian Enterprise.

Under the Non-Competition Undertaking, Xiamen Changtian and the Xiamen ChangtianCovenantors respectively undertook to Changtian Enterprise, inter alia, with effect from 1April 2007:

(a) not to carry out or participate in any business which is similar to our Group’s currentbusiness including, without limitation, the production, distribution and sale of adhesivetapes, release papers, BOPA film and 2-A2MPS;

(b) not to carry out any business which is in competition or may be in competition, whetherdirectly or indirectly, with our Group and not to in any way solicit any employee,customer or distributor of our Group; and

(c) not to use the name, trademark or logo of our Group including but not limited to thewords “Changtian” or any of its trademarks, and not to use any name, trademark orlogo that are capable of being or likely to be confused with our “Changtian” name.

On 12 June 2007, Xiamen Changtian changed its scope of business to engage only in thelease of properties.

(iv) Trademark Transfer Agreement

On 21 May 2007, Changtian Enterprise and Xiamen Changtian entered into a trademarktransfer agreement for the purpose of effecting the transfer of the registered trademarks andtrademarks pending registration under Xiamen Changtian’s name (the “Trademark TransferAgreement”), which we have acquired pursuant to the Initial Asset and Business TransferAgreement, as amended by the Supplemental Transfer Agreement. Pursuant to theTrademark Transfer Agreement, the parties agreed to jointly make an application to theTrademark Bureau of the State Administration for Industry and Commerce

and to take the necessary steps to effect the transfer of thetrademarks to Changtian Enterprise (details of the trademarks are set out in the section“Intellectual Property” of this Prospectus (the “Trademarks”)). Notwithstanding that XiamenChangtian would still be the registered owner of the Trademarks prior to the date of theeffective transfer of the respective Trademarks, the parties agreed that Changtian Enterpriseshall have the exclusive rights to use the Trademarks until the registration of the transfershas been effected, following which Changtian Enterprise would be the registered owner ofthe Trademarks.

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(d) Machinery Acquisition Agreement between Xiamen Brightforever and ChangtianEnterprise

On 21 May 2007, Changtian Enterprise entered into an acquisition agreement with XiamenBrightforever (the “Machinery Acquisition Agreement”) to acquire from Xiamen Brightforever theplant and machinery used in the manufacture of BOPA film and certain office equipment and motorvehicles for a consideration of approximately RMB79.85 million. The consideration wasdetermined based on the valuation report dated 8 March 2007 of the plant and machinery as at31 December 2006, conducted by an independent valuer, LCH (Asia-Pacific) Surveyors Limited.

In accordance with the Machinery Acquisition Agreement, an initial payment of 30% of theconsideration has been paid to Xiamen Brightforever on 27 June 2007 with the balance to besettled in full within one year of the effective date of the Machinery Acquisition Agreement, being1 April 2007. We intend to settle the balance from our internal resources.

(e) Subscription and Issuance of Exchangeable Notes

On 9 March 2007, Eastline Investments, Goodwise Investments, Chen Baohua, Chen Yongfu andYang Qingjin (as guarantors), Rowview, Jumbo Glories and the Pre-Invitation Investors enteredinto a subscription agreement (the “Subscription Agreement”) for the issuance of exchangeablenotes amounting in aggregate to US$18.5 million (the “Exchangeable Notes”) by Rowview to thePre-Invitation Investors.

Under the Subscription Agreement, the parties agreed, inter alia, that:

(i) the Exchangeable Notes were exchangeable into 2,333 shares of Jumbo Glories held byRowview in the event of the listing of our Company on the SGX-ST, on the terms andconditions of the Subscription Agreement and the exchangeable note instrument dated 7June 2007 entered into by the parties to the Subscription Agreement; and

(ii) Eastline Investments, Goodwise Investments, Chen Baohua, Chen Yongfu and Yang Qingjinwould guarantee, inter alia, the due payment by Rowview of the principal amount andinterest accruing on the Exchangeable Notes (if any), as and when the same should becomedue and payable.

On 7 June 2007, Rowview issued the Exchangeable Notes to the Pre-Invitation Investors and theaggregate consideration of US$18.5 million was satisfied in full by the Pre-Invitation Investors incash.

On 18 September 2007, the Pre-Invitation Investors exchanged their Exchangeable Notes for anaggregate of 2,333 shares of Jumbo Glories held by Rowview (the “Exchange”). Details of theamount of Exchangeable Notes held and the shareholding of the Pre-Invitation Investors in JumboGlories shares after the Exchange are set out below:

Before the Exchange < After the Exchange >

Pre-Invitation InvestorExchangeable Notes

(US$)

Number ofordinary shares

of JumboGlories shares

%Shareholding inJumbo Glories

CIM VIII 10,570,000 1,333 13.33

Longold Group 3,172,000 400 4.00

Hong Kong Investments 3,172,000 400 4.00

East Fortune 1,586,000 200 2.00

Total 18,500,000 2,333 23.33

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(f) Acquisition of Jumbo Glories and Share Swap

On 24 September 2007, we, as purchaser, and the shareholders of Jumbo Glories, comprisingEastline Investments, Goodwise Investments and the Pre-Invitation Investors, as vendors,entered into a share swap agreement (the “Share Swap Agreement”). Pursuant to the ShareSwap Agreement, we acquired the entire issued and paid-up share capital of Jumbo Gloriescomprising 10,000 shares of Jumbo Glories from the shareholders of Jumbo Glories for aconsideration of S$25 million which was arrived at based on the aggregate par value of500,000,000 new ordinary shares of S$0.05 each to be issued prior to the Invitation. Theconsideration for the said acquisition was satisfied by (i) the crediting as fully paid, at par, 308nil-paid ordinary share of S$0.05 each in our Company held by Eastline Investments; and (ii) theallotment and issue of an aggregate of 499,999,692 new ordinary shares of S$0.05 each in thecapital of our Company, credited as fully paid.

Upon completion of the Share Swap Agreement on 24 September 2007, the resultantshareholding of our Company was as follows:

Name of AllotteeNumber of Sharesallotted and issued

% of the issued andpaid capital of our

Company

Goodwise Investments 213,550,000 42.71

Eastline Investments(1) 169,800,000 33.96

CIM VIII 66,650,000 13.33

Longold Group 20,000,000 4.00

Hong Kong Investments 20,000,000 4.00

East Fortune 10,000,000 2.00

Total 500,000,000 100.00

Note:

(1) Includes crediting as fully paid, 308 shares issued nil-paid to Eastline Investments.

All relevant filings and approvals required under PRC laws and regulations in relation to theRestructuring Exercise have been obtained by our Group. Upon completion of the various stepsin the Restructuring Exercise as set out above, our Group structure and shareholding structureare as set in the section “Group Structure” of this Prospectus.

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GROUP STRUCTURE

Our shareholding structure and Group structure immediately following the Restructuring Exercise and before the Invitation is set out below:

Chen Yongfu

100%

Yang Qingjin

100% 100%

100%

EastlineInvestments

GoodwiseInvestments CIM VIII

Hong KongInvestments Longold Group East Fortune

33.96% 42.71% 13.33% 4.0% 4.0% 2.0%

Changtian Plastic & ChemicalLimited

(Bermuda)

Jumbo Glories (BVI)

Changtian Enterprise(PRC)

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Our shareholding structure and Group structure immediately following the Restructuring Exercise and after the Invitation is set out below:

100%

100% 100%

100%

Yang Qingjin Chen Yongfu

LongoldGroup

East Fortune

Public

32.58% 2.57%

1.52%2.57%

Hong KongInvestments

4.95%

CIM VIII GoodwiseInvestments

30.08% 25.73%

EastlineInvestments

Changtian Plastic & Chemical Limited (Bermuda)

Jumbo Glories(BVI)

Changtian Enterprise(PRC)

The details of our subsidiaries are set out as follows:

Name of company Place of incorporation Principal Business/Principal place of business Equity held by our Company/Group

Jumbo Glories BVI Investment holding/BVI 100%

Changtian Enterprise PRC Production, manufacture and sale of bi-directional stretchpolypropylene film, pressure sensitive adhesive products,paper class product and plastic product/PRC

100%

None of our subsidiaries is listed on a stock exchange. We do not have any associated company.

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HISTORY AND BUSINESS

HISTORY AND DEVELOPMENT

Our Company was incorporated on 29 March 2007 under the Bermuda Companies Act as an exemptedcompany. On 24 September 2007, we completed our Restructuring Exercise, the details of which areset out in the section “Restructuring Exercise” of this Prospectus. Pursuant to the completion of theRestructuring Exercise, we became the holding company of Jumbo Glories, a company incorporatedin the BVI. Jumbo Glories holds the entire registered capital of Changtian Enterprise, a WFOEestablished in the PRC engaged in the manufacture and sale of adhesive tapes, release papers, BOPAfilm and 2-A2MPS.

Our business was founded in 1999 when Chen Yongfu and Xiamen Xin Guan established Xiamen XinGuan Plastic & Chemical Co., Ltd. (“Xin Guan Plastic”). The initial registeredcapital of Xin Guan Plastic was RMB1.0 million, of which Chen Yongfu contributed 95% and Xiamen XinGuan contributed 5%. Xin Guan Plastic was at that time principally engaged in the manufacture andsale of adhesive tapes and release papers. In August 1999, Xin Guan Plastic obtained land approvalfor the construction of manufacturing facilities located at 18 Xinsheng Road, Xinyang Industrial Zone,Haicang District, Xiamen City, Fujian Province, PRC 361026 for the production of adhesive tapes andrelease papers.

Yang Qingjin, our Chairman and Executive Director, was the initial legal representative of Xiamen XinGuan. He held indirect interests in Xiamen Xin Guan through (i) Xiamen Xin Hua Adhesive ProductsCo., Ltd (“Xiamen Xin Hua”), which held 31.59% interest in Xiamen XinGuan and (ii) Xiamen Yong Guan Chemicals Co., Ltd (“Xiamen YongGuan”), which held 30.74% interest in Xiamen Xin Guan.

The other initial shareholders of Xiamen Xin Guan which in aggregate held 37.67% interest in XiamenXin Guan were independent third parties. These other shareholders were Fuzhou Xin Yi Adhesives Co.,Ltd (“Fuzhou Xin Yi”), Xian Ju County Yong Zheng Adhesive Products Co.,Ltd (“Xian Ju”), Xiamen Yong Cheng Xing Adhesives Co., Ltd

(“Xiamen Yong Cheng”) and Xiamen Xin Long Di Trading Co., Ltd(“Xiamen Xin Long”). Currently, Xiamen Xin Guan is owned by Liu Guojin and

Ye Meili, who are the brother-in-law and mother-in-law of Yang Qingjin, our Chairman and ExecutiveDirector. Ye Meili is also the mother of Chen Yongfu, our Deputy Chairman and Executive Director. Bothof them have confirmed that Xiamen Xin Guan has ceased operations and have undertaken not tocompete with our Group’s business.

In February 2000, Xiamen Xin Guan sold its 5% interest in Xin Guan Plastic to Xiamen Shun Jia XiangTrading Co., Ltd. (“Xiamen Shunjiaxiang”) for a consideration of RMB50,000.Further, in contemplation of the expansion of its business, the registered capital of Xin Guan Plasticwas increased from RMB1.0 million to RMB11.0 million. The additional capital of RMB10.0 million wascontributed by Chen Yongfu and Xiamen Shunjiaxiang in the amount of RMB9.5 million and RMB0.5million respectively. The shareholders of Xiamen Shunjiaxiang were Yang Jianhong , thenephew of Yang Qingjin, and Yang Junqing , one of our Executive Officers.

In August 2000, Xin Guan Plastic further increased its registered capital from RMB11.0 million toRMB34.0 million through capital contribution from Chen Yongfu of RMB17.4 million and Chen Baohua,the wife of Yang Qingjin (our Chairman and Executive Director) and the sister of Chen Yongfu (ourDeputy Chairman and Executive Director), of RMB5.6 million. After this capital contribution, ChenYongfu, Chen Baohua and Xiamen Shunjiaxiang respectively held 81.9%, 16.5% and 1.6% in Xin GuanPlastic. Xin Guan Plastic changed its name to Xiamen Changtian on 5 August2000. This change of name was approved by the relevant authorities on 27 August 2000.

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In March 2001, Chen Baohua acquired Xiamen Shunjiaxiang’s interests in Xiamen Changtian for aconsideration of RMB0.55 million. For the purposes of further expansion, Xiamen Changtian increasedits registered capital from RMB34.0 million to RMB50.0 million through a RMB16.0 million capitalinjection by Chen Baohua. Xiamen Changtian also obtained approval to increase its license period from10 years to 50 years expiring in February 2049.

Prior to completion of the construction of our manufacturing facilities, we commenced the sale ofadhesive tapes in July 2001, by purchasing jumbo rolls of BOPP adhesive tapes and cutting and sellingthem to our customers. In January 2002, we began developing the production process for adhesivesglue used in the manufacture of adhesive tapes and since May 2002, we have used our self-developedglue formula for the production of adhesive tapes. In February 2002, we completed the installation ofa release paper production line with a production capacity of 120 million sq m per annum. In July 2002,we completed the installation of an adhesive tape production line with a production capacity of 64million sq m per annum. This adhesive tape production line can also be used for the production ofrelease papers. Up to the Latest Practicable Date, we have used this line solely for the production ofadhesive tapes. In the same year, we also collaborated with Xiamen University to improve on ourformulation and production process for adhesive glue.

We also collaborated with Xiamen University in May 2002 to study the production of our 2-A2MPS.Subsequently, in January 2003, we began production and sale of 2-A2MPS on a small scale.

In July 2002, Xiamen Changtian was awarded a “High Technology Enterprise” Certificateby Xiamen Municipal Science and Technology Bureau .

In October 2002, Xiamen Changtian, Fujian Changcheng Freezing Co., Ltd(“Fujian Chang Cheng”) and Wong Chit Fu established Xiamen Brightforever to explore opportunitiesfor the manufacture and sale of BOPA film. Upon establishment, Xiamen Brightforever was held as to33.3% by Xiamen Changtian, 20.0% by Fujian Chang Cheng and 46.7% by Wong Chit Fu. Prior to thecapital injection from the original investors in Xiamen Brightforever, Xiamen Changtian decided to focusits financial and other resources on the production of 2-A2MPS. Therefore, Xiamen Changtiantransferred its entire shareholding of 33.3% in Xiamen Brightforever to Pucheng County Anhua RealEstate Development Co., Ltd. , Sunwin International Limited and WongChit Fu. The said transfer was approved by the relevant PRC authorities on 6 March 2003.

In January 2003, to meet increasing demand, we expanded our production capacity for adhesive tapesfrom 64 million sq m per annum to 174 million sq m per annum by adding one adhesive tapesproduction line. Further, we commenced production of our 2-A2MPS product with an annual capacityof 600 tonnes per annum.

In April 2003, Xiamen Changtian set up a branch office in Shanghai to handle and expand our sales inthat region. This branch office was later closed in October 2006 as we felt that the same functions couldbe performed with equal efficiency from our head office in Xiamen.

In August 2003, a further adhesive tapes production line was installed in order to capture the marketdemand for adhesive tapes. Our annual production capacity was, as a result of the additionalproduction line, increased to approximately 324 million sq m per annum.

On 27 January 2004, Xiamen Changtian obtained ISO 9001:2000 certification for our manufacture ofadhesive tapes.

In early 2004, through technical improvement on the production process, we increased our 2-A2MPSproduction capacity from 600 tonnes to 900 tonnes per annum.

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As we have established a distribution network, and as part of our efforts to expand and diversify ourproduct offering, we decided to reconsider the feasibility of the manufacture and sale of BOPA film. On20 March 2005, we entered into a lease agreement with Xiamen Brightforever to lease its BOPA filmproduction line and production premises to us. Apart from the ownership of these assets, XiamenBrightforever did not have any other business operations. Pursuant to the lease agreement, XiamenChangtian leased from Xiamen Brightforever its BOPA film production line and the production premisesfor a monthly fee of RMB0.4 million for the first year and a monthly fee of RMB0.5 million from thesecond year onwards. In April 2005, we commenced the manufacture and sale of BOPA film.

In January 2006, due to the demand for our 2-A2MPS product, we made further technicalimprovements to our 2-A2MPS production process and increased our annual production capacity for2-A2MPS from 900 tonnes to 1,500 tonnes per year.

With our successful launch of 2-A2MPS, on 29 May 2006 and 22 October 2006, Xiamen Changtianreceived two grants of RMB0.2 million each from the Xiamen Municipal Development and ReformCommittee for the development of our 2-A2MPS product. Subsequently on30 September 2006, Xiamen Municipal Science and Technology Bureau awardedXiamen Changtian a grant of RMB0.9 million for the development and production of 2-A2MPS, as partof its programme to encourage entrepreneurial activities and raise science and technology standards.

In preparation for our listing on the SGX-ST, we commenced our Restructuring Exercise, details ofwhich are set out in the section “Restructuring Exercise” of this Prospectus. The Restructuring Exercisewas completed on 24 September 2007.

BUSINESS OVERVIEW

We are principally engaged in the manufacture and sale of the following products:

(a) Adhesive tapes;

(b) Release papers;

(c) BOPA film; and

(d) 2-A2MPS.

Our adhesive tapes, release papers and BOPA film are sold under our brand name and our2-A2MPS products are sold under our brand name .

Our manufacturing facilities are located at 16 and 18 Xinsheng Road, Xinyang Industrial Zone, HaicangDistrict, Xiamen City, Fujian Province, PRC 361026.

(a) Adhesive tapes

We manufacture and sell a wide range of adhesive tapes for industrial, commercial and consumeruses. We manufacture our range of adhesive tapes by using different types of raw materials, suchas BOPP film, crepe paper and kraft paper which exhibit various tensile strength as base material.By using different glue formulations, we are able to produce adhesive tapes with varying degreesof bonding strength and adhesiveness to suit our customers’ requirements. We have a wide rangeof adhesive tapes which includes BOPP adhesive tapes and more specialized tapes such asdouble-sided oil based tapes.

Our adhesive tapes are sold mainly to customers in the packaging, food and beverage,electronics, construction and shoe making industries.

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The types of adhesive tapes that we produce are set out below:

Type of adhesivetapes Description Our products

BOPP adhesive tapes Our BOPP adhesive tapes aremanufactured using BOPP film andcoating the BOPP film with acrylicbased adhesives in different coatingthickness for different types ofadhesive tapes.

BOPP adhesive tapes are used for:

− sealing carton boxes; and

− stationery in offices andhomes.

If required by customers, we are ableto print trademarks, logos, names andspecified wordings or designs on theBOPP adhesive tapes. We are alsoable to provide BOPP adhesive tapesin various colours.

Packaging adhesive tapes —transparent BOPP adhesive tapes.

Printed adhesive tapes — BOPPadhesive tapes printed withtrademarks, logos, wordings anddesigns in up to 4 colours.

Colour adhesive tapes — BOPPadhesive tapes in bright and richcolours for labelling.

Stationery adhesive tapes —transparent adhesive tapes for generalstationery use.

Masking Tapes Our masking tapes are manufacturedusing crepe paper.

Masking tapes are used for sealingand masking light to medium papercarton packaging. Masking tapes arealso used during spray-painting ofvehicles and home renovations tocover areas that should not bepainted.

Crepe paper masking tapes forsealing, packaging and spray paintingpurposes.

Double-sided AdhesiveTapes

Our double-sided adhesive tapes aremanufactured using cotton paper withadhesive on both sides of the cottonpaper.

Double-sided tapes are used forholding and securing lightweight itemsback-to-back and are used in home,office and commercial applications.

Double-sided water based adhesivetapes — for general adhesivepurpose.

Double-sided oil-based and yellow oil-based adhesive tapes — for securingcloth and fabrics, such as in shoe-making.

Double-sided embroidery adhesivetapes — for use in computerisedmachine embroidery and which can bereused repeatedly.

Kraft Paper AdhesiveTapes

Our kraft paper adhesive tapes aremanufactured using kraft paper.

Kraft paper adhesive tapes are non-toxic, odour-free adhesive tapes usedin packaging, especially in conditionsof strong sunlight and lowtemperatures due to their strongadhesiveness

General purpose kraft paper adhesivetapes.

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Type of adhesivetapes Description Our products

Aluminium Tapes Aluminium adhesive tapes are usedwidely for food packaging, especiallyin frozen food packaging due to itsability to maintain its adhesiveness atlow temperatures.

Commercial tapes used mainly infrozen food packaging.

(b) Release Papers

We manufacture and sell release papers which are used as a protective backing on adhesivetapes or other adhesive material to protect the adhesive tapes or adhesive material from losingtheir adhesiveness. An example of release paper is the backing on paper label sheets. When thepaper label is to be used, the paper label is peeled off from the release paper and the releasepaper is discarded.

We manufacture and sell two types of release papers:

Type Description

Glassine siliconecoated release papers

Our glassine silicone coated release papers are manufactured using glassinepaper and silicone adhesive coating. Glassine paper is a very smooth andgrease resistant paper.

Our glassine silicone coated release papers are used as backing for productssuch as double-sided tapes, labels and anti-fake-labels.

CCK release papers Our CCK release papers are manufactured using kraft paper which is a highquality, pure wood paper with the ability to withstand temperatures of up to170°C.

Our CCK release papers are used in high quality packaging and printing, asbacking for the manufacture of carbon fibre products such as golf shafts,fishing rods and grips for sporting goods.

(c) BOPA film

We manufacture and sell BOPA film which is a type of clear film used as packaging in manyindustries, such as food and beverage, pharmaceutical and medical industries and in electricalindustrial materials.

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BOPA film is widely used as a packaging material in the food and beverage, pharmaceutical andmedical industries due to the following characteristics that BOPA film possesses:

Characteristics Effects

Good barrier to oxygen Longer shelf life of products

Good barrier to aroma Minimise loss of aroma

Good gloss and high transparency Better appearance, sight and security of thepackaged goods

Good tensile strength, resistance to puncture andgood tear resistance

Better package strength

Good temperature resistance Suitable for sterilization processes

With such characteristics, BOPA film are used widely for packaging perishable food andodour-sensitive products and may be used under a wide range of temperatures for applicationsfrom refrigeration to vapour sterilization.

Our BOPA film customers are mainly in the food and beverage industry.

(d) 2-A2MPS — 2-Acrylamido 2-Methyl propane sulfonic acid

We manufacture and sell 2-A2MPS in white crystal powder form.

2-A2MPS is one of the raw materials used in the manufacture of water-soluble polymers.Water-soluble polymers are used in industrial processes, such as in oil and water treatment andalso in the production of consumer products such as acrylic fibre-based textiles, personal careproducts, adhesives, paper and packaging materials.

Currently, our 2-A2MPS product is mainly sold to customers in the oil industry and water treatmentindustry.

2-A2MPS works well in conditions of high temperature, pressure and salinity, which are conditionscommonly found in the oil reservoirs. 2-A2MPS may be used as a raw material to producepolymers used in chemical flooding. Chemical flooding is a process used in the tertiary oilrecovery process whereby chemicals, such as alkali and polymer, are injected into the oil reservoirto increase the pressure in the oil reservoir to facilitate extraction of oil.

2-A2MPS is used in water treatment processes to separate the waste particles from the water tobe treated. The low molecular weight of the 2-A2MPS monomer is used to inhibit calcium,magnesium and silica scale developing in cooling towers, boilers, air washers and gas scrubbersin many industrial manufacturing facilities. Scale inhibition enables production processes tooperate more efficiently and also reduces maintenance down-time.

In future, we may expand our 2-A2MPS product offering to applications and customers in otherindustries such as the acrylic fibre industry, personal care products and medical care products.

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OUR PRODUCTION PROCESSES

Our manufacturing facilities are located at 16 and 18 Xinsheng Road, Xinyang Industrial Zone, HaicangDistrict, Xiamen City, Fujian Province, PRC 361026.

(a) Production process for our adhesive tapes

We currently have four production lines for the production of adhesive tapes and release papers.Two lines are for the production of adhesive tapes, one for production of release papers and oneline that can be alternatively used to produce either adhesive tapes or release papers. Up to theLatest Practicable Date, this line has been used solely for the production of adhesive tapes.

Preparation of adhesive glue

Adhesiveglue

Coating Drying

Rolling

Semi finished products

Cutting of semifinished rolls

Storage andpackaging Delivery

Basematerials

Adhesive glue

We manufacture the adhesive glue used in the production of our adhesive tapes and releasepapers.

In the production process for adhesive glue, the initial mixture of butyl compound and other rawmaterials are mixed (based on our own formula) in the emulsification container in such proportionas is required for the specific type of adhesive tapes. Pure water is then added to the mixture andthe temperature of the mixture is increased to 90oC for 80 minutes. Emulsifying materials are thenadded and the mixture is left to emulsify for approximately 4 hours. After emulsification, themixture is stirred and kept warm at a stable temperature of 90oC for 2 hours. The temperature ofthe mixture is then reduced to 48oC to form the final adhesive glue.

A sample of the adhesive glue is tested to ensure that it conforms to the specifications for thespecific types of adhesive tapes. The mixture is then loaded into the adhesive tape machine to beapplied onto the appropriate base material for the manufacture of the adhesive tapes.

Base material

The surface tension of the base material for the adhesive tapes, such as BOPP film, crepe paperand kraft paper, will be checked to ensure that the roll is wound precisely before use. Where thebase material is BOPP film, the BOPP film may be pre-printed to include graphics and/ortrademarks, names or logos according to the specifications of our customers.

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Coating

The machines involved in the coating process are first set to the required temperatures suitablefor the coating process. The thickness and number of coatings of adhesive glue is then appliedto the base material according to the specifications for the specific types of adhesive tapes. Forinstance, one-layer adhesive tapes such as masking tapes go through only one layer of coating,while double-sided tapes undergo two layers of coating processes.

Drying and Rolling

Once the adhesive glue has been applied to the base material, the base material with theadhesive glue passes through a drying system to ensure quality and stability of the adhesivetapes. The temperature for drying will also depend on the specifications for the specific type ofadhesive tapes. After drying, the adhesive tapes are allowed to cool before being loaded onto themain roll, where the adhesive tapes are wound up into semi finished jumbo rolls. This windingprocess is done by adjusting the winding tension and using different winding methods such ascentre winding or surface winding according to types of adhesive tapes being produced. Uponcompletion of rolling of each semi finished jumbo roll, quality checks are carried out by way ofinfrared devices measuring the thickness of the tapes. These semi finished rolls may be sold assemi finished jumbo rolls or further processed as described below.

Semi-finished products and packaging and storage

The semi-finished jumbo rolls of adhesive tapes are passed to storage or the cutting sectionwhere it is re-rolled and cut according to the specifications for each type of adhesive tapes. Thefinal finished products are then packed, labelled and stored at specific areas for delivery tocustomers.

(b) Production process for release papers

The process for the production of release papers is similar to the process for the production of ouradhesive tapes.

Preparationof raw

materials

Coating Drying Rolling andcooling

Semi-finishedproducts Packaging Storage/Delivery

Basematerials

Silicone oil, gasoline and the main raw material, toluene are mixed evenly to form aconcentrated solution, which is poured into the feeder and put onto the surface of the base paperwith the silicon wheel. The coating on the base paper is made even with a steel wire scraping rodin a continuous rolling process. The silicone coated base paper is put through an oven and isheated at a high temperature to evaporate water from the solvent. After evaporation, the siliconeoil becomes solid and a non-stick surface is formed on the paper creating the release effect. Therelease papers are then cooled off with a cold roller. In the rolling machine, the finished releasepapers are rolled, packaged, labelled and stored at specific areas for delivery to customers.

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(c) Production process for BOPA film

The main raw material used in the production of our BOPA film is PA6 purchased from PRCsuppliers who import the PA6 from manufacturers in Germany and the Netherlands. We believethat imported PA6 produces better and higher quality BOPA film. We currently have oneproduction line for the production of BOPA film.

Raw materials Extrusion Casting Heating andstretching

Coronatreatment

Winding Recycling oftorn film intoresin pelletsto be reused

Storage andpackaging

Delivery

First, the PA6 pellets are transferred to a holding container. Once the PA6 pellets are checked toensure that they contain the correct moisture content, they are passed on to the extrudingmachine where the materials are fused at a temperature of approximately 243oC. The fusedmixture then flows onto a cooling drum where the liquid mixture is cooled from 243oC to 23oC tosolidify into the initial BOPA film. The BOPA film after this stage is approximately 1,500 mm wideand 120 µm thick.

The BOPA film is then passed through a machine direction orienter (MDO) to be preheated,stretched and annealed to approximately 1,400 mm wide and 46 µm thick. The BOPA film thenenters a further stretching machine to undergo a four stage preheating and stretching process,where it is biaxially orientated. The BOPA film is automatically measured to ensure that it complieswith the product specifications, which is usually approximately 4,400 mm wide and 15 µm thick.

The BOPA film then undergoes corona treating process which ionizes the air next to the film sothat the film surface tension is increased to improve its adhesive properties. This allows the finalBOPA film to be applied to many other materials for use in various forms of packaging.

As a quality control measure, the production of our BOPA film is carried out in a clean anddust-free environment.

The final BOPA film is then rolled and stored, ready to be cut according to each customer’srequirements. After cutting, the BOPA film is packed, labelled and put into storage ready to bedelivered to our customers.

BOPA film may tear during the production process. Such torn BOPA film is melted andre-processed at our premises to produce new PA6 pellets which can be used in the production ofBOPA film.

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(d) Production process for 2-A2MPS

The main raw materials used in the production of our 2-A2MPS are acrylonitrile and isobutylene.We currently have one production line for the production of our 2-A2MPS.

Raw materials Emulsification

Storage anddelivery

Packaging

Centrifuge

Drying

Acrylonitrile is first added to a reactor and the temperature in the emulsifier/reactor is lowered to−4oC. Sulphuric acid is added to the mixture gradually.

When mixing is complete, the temperature of the mixture is controlled to approximately 39oC andisobutylene is added for further reaction. When the reaction is completed, the temperature of themixture is lowered to between 10oC to 11oC and put through a centrifuge machine to undergo aseparation process to produce the initial, coarse 2-A2MPS. Residue from the centrifuge processwill be collected and reprocessed and reused for producing 2-A2MPS.

The initial coarse and damp 2-A2MPS is then transferred to a drying machine for drying andthereafter transferred to the feeding chamber for measurement and packaging before being putinto storage to be delivered to our customers.

ENVIRONMENTAL MATTERS

Industrial waste generated by our production processes is first processed internally at our premisesusing our waste treatment facilities to reduce the amount of industrial waste. The treated industrialwaste is then set aside for collection by authorised governmental authorities for safe disposal inaccordance with regulations. As our industrial waste has been treated to reduce it to a smaller amount,we pay only a minimal sum to the authorities for such safe removal. Please refer to the section“Government Regulations” for details of the relevant environmental regulations applicable to us.

PRODUCTION FACILITIES AND PRODUCTION CAPACITY

Our production facilities are located at 16 and 18 Xinsheng Road, Xinyang Industrial Zone, HaicangDistrict, Xiamen City, Fujian Province, PRC 361026. Our production facilities occupy an aggregate landarea of approximately 58,500 sq m and an aggregate built-up area of approximately 32,300 sq m as atthe Latest Practicable Date. Our production facilities comply with all applicable local and national lawsand regulations in the PRC. To the best of our Directors’ knowledge, there are no regulatoryrequirements or environmental issues that may materially affect our utilisation of tangible fixed assets.

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Based on our management’s estimate, the annual production capacity and utilisation rates for the production of each of our products for the last three financial yearsended 31 December 2006 and the three months ended 31 March 2007 are set out below:

Production capacity and utilization rates based on our production lines

FY2004 FY2005 FY2006 Three months ending 31 March 2007

AnnualProduction

CapacityAnnual

ProductionUtilisation

Rate

AnnualProduction

CapacityAnnual


Rate

AnnualProduction

CapacityAnnual


Rate

Three monthsProduction

CapacityThree months


Rate

(sq m million) (sq m million) % (sq m million) (sq m million) % (sq m million) (sq m million) % (sq m million) (sq m million) %

Adhesive tapes(1) 324 217.4 67.1 324 298.2 92.0 324 311.2 96.0 81 78.7 97.2

Release papers(2) 120 53.1 44.3 120 87.8 73.2 120 98.9 82.4 30 29.0 96.7

(tonnes) (tonnes) % (tonnes) (tonnes) % (tonnes) (tonnes) % (tonnes) (tonnes) %

BOPA film(2) — — — 5,400 2,100 38.9 5,400 3,100 57.4 1,350 1,200 88.9

2-A2MPS(2) 900 575 63.9 900 718 79.8 1,500 1,200 80.0 375 333 88.9

Notes:

(1) We have 3 production lines for adhesive tapes with a total production capacity of 324 million sq m per year. Currently, 2 production lines are used exclusively for BOPP tapes with a total annualproduction capacity of 260 million sq m per year. The third production line may be used for adhesive tapes and release papers with a total production capacity of 64 million sq m per year. Up tothe Latest Practicable Date, we have used this line solely for the production of adhesive tapes.

(2) We currently have 1 production line each for release papers, BOPA film and 2-A2MPS respectively.

Our production lines as at the Latest Practicable Date are operating based on 3 operating shifts a day for a total of 22 hours for 350 days. As at the Latest PracticableDate, the annual production capacities for each of our products remained unchanged from our annual production capacity as at FY2006.

QUALITY CONTROL

We are committed to providing our customers with reliable and competitively priced products of high quality. As such, we place emphasis on the quality of all ourproducts. We have a team of quality control personnel of approximately 20 staff with the relevant technical expertise to supervise and inspect our productionprocess and to conduct testing of our products. This ensures that our quality control procedures are strictly adhered to for all our products. As testament to ourquality control, in January 2004, we obtained ISO 9001:2000 certification for our production of adhesive tapes.

Our maintenance engineers carry out scheduled maintenance works and repairs on all our machinery and equipment regularly to ensure that they are in goodorder and are functioning properly. Due to stringent maintenance, we have not faced any major disruptions in our production due to a breakdown or malfunctionof our machinery and equipment.

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Our quality control procedures are carried out in the following four main stages to ensure that our rawmaterials, adhesive glue and tapes, release papers, BOPA film and 2-A2MPS meet our own qualitystandards as well as the requirements of our customers.

(a) Approved suppliers

As our manufacturing processes are automated, the quality of our finished products would dependlargely on the quality of our raw materials. In order to maintain a consistent standard of quality ofour raw materials, we have a pre-approved list of suppliers for our raw materials and othersupplies, who are selected based on the quality of raw materials that they supply as well as theirbackground, such as their experience, management and reputation in the market. Our qualitycontrol team constantly monitors the quality and prices of the raw materials supplied andperformance of our suppliers and reviews our list of pre-approved suppliers regularly. Currently,we have a total of approximately 67 pre-approved suppliers.

(b) Inspection of raw materials

Upon receiving our raw materials, we will conduct a sample check of each batch of raw materials.Our checks include visual inspection and random laboratory testing of samples of all raw materialsto ensure that the standards set out in our quality evaluation report, which are pegged to industrystandards, have been complied with. If defects are found, we will require the supplier to replacethe raw materials.

(c) Inspection during production process

We have established standard operational procedures and rules for each stage of the productionprocess. To ensure that our products meet quality standards, only employees who haveundergone and completed our in-house staff training are allowed to work on our production lines.Throughout our production processes, we conduct visual inspection of our semi-finished productsto ensure that there are no visible defects.

(d) Inspection of final products

Samples of each finished product are taken and tested in our laboratories for compliance withcustomer specifications. After our products are packaged and labelled, our quality control teamcontinues to monitor and ensure that they are properly handled and stored in our warehouses.Prior to delivery, checks are also made to ensure that our products are not damaged before theyare delivered to customers.

SAFETY CONTROLS

In the production of our 2-A2MPS, we handle and store acrylonitrile and isobutylene, which are highlyflammable materials. Currently, we have in place policies which prescribe rules and regulations that allemployees must follow in the course of performing their duties to ensure that our production operationsare carried out in a safe environment. We have drawn up a Fire Safety Management System

for our Group and have taken concrete steps to ensure that our variousdepartments and all our employees comply with it.

To familiarise our employees with the relevant safety policies, rules, regulations and procedures, weprovide them with comprehensive training in safety and environmental related matters. Our emergencyresponse team also conducts safety drills to test and improve the planning, coordination and executionof our emergency response procedures.

In February 2006, there was a minor explosion on our premises which resulted in a fire incident. Thisfire incident occurred when a disused tank containing traces of acrylonitrile ignited while we wereremoving certain disused piping and storage tank used for the storage of acrylonitrile. As the incident

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occurred in a segregated area on the premises of our production plant, there was limited damagecaused and there was no personal injury caused. The loss incurred for damage to property, plant andequipment as a result of the fire was approximately RMB0.2 million. In addition, Xiamen Changtian, andthe supervising employees, Zhang Anmin and Chen Guoying , were finedRMB10,000, RMB2,000 and RMB2,000 respectively by the authorities. These fines have since beenduly paid.

Subsequent to this incident, we undertook our own internal investigations and analysis and appointedan external safety consultant, namely Xiamen Jiuan Safety Examination & Evaluation Office Co., Ltd.

, to review and make recommendations to improve our safetystandards.

According to the report by Xiamen Jiuan Safety Examination & Evaluation Office Co., Ltd, our safety procedures are adequate and meet the required

safety standards. In addition, such report was submitted to the relevant government authority, HaicangDistrict Safety and Production Supervisory Bureau , which has issued to usa confirmation dated 9 May 2007 confirming our compliance with safety standards.

Save as disclosed above, for the last three financial years ended 31 December 2006 and up to theLatest Practicable Date, we did not experience any major accidents which have resulted in seriousinjury or death.

PRODUCT DEVELOPMENT

We do not have a research and development team. Certain members of our production team areresponsible for product development and improvements to our products. In 2001, we developed thevarious formulation and production processes for adhesive glue which is one of the key raw materialsthat we use in the manufacture of our adhesive tapes and release papers. Since then, we havecontinued to focus on improving the quality of our adhesive glue and on the selection of different typesof raw material to enhance cost effectiveness.

From 2002, Xiamen Changtian has worked with Xiamen University to further improve on the formulationand production process for our adhesive glue and 2-A2MPS. In March 2007, Xiamen Changtianentered into two separate agreements with Xiamen University to formalize their collaboration inadhesive glue and 2-A2MPS production, pursuant to which Xiamen Changtian agreed to pay to XiamenUniversity an amount of RMB46,000 and RMB130,000 as research and development fees for theircollaboration in adhesive glue and 2-A2MPS respectively. Subsequently, in June 2007, XiamenChangtian and Xiamen University entered into two supplemental agreements to transfer XiamenChangtian’s rights and obligations under the earlier agreements to Changtian Enterprise. Thesupplemental agreements further provide that Xiamen Changtian shall have the right to apply forpatents in respect of any intellectual property arising pursuant to the collaboration.

The Xiamen Municipal Science and Technology Bureau , offers grants to selectedcompanies as part of a programme to encourage entrepreneurial activities and raise science andtechnology standards. In 2006, Xiamen Changtian received a total of three grants, namely a grant ofRMB0.9 million from Xiamen Municipal Science and Technology Bureau and twogrants of RMB0.2 million each from the Xiamen Municipal Development and Reform Committee

. All three grants were awarded to Xiamen Changtian for the purposes ofdevelopment and production of 2-A2MPS.

As our product development is conducted by members of our production department, the allocation ofcosts related to product development cannot be calculated with reasonable accuracy. Hence, we areunable to provide a meaningful estimation of total product development expenses.

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INVENTORY MANAGEMENT

Our inventory comprises raw materials which include acrylonitrile, PA6, BOPP film and butyl acrylate,packaging materials and finished goods.

Our purchase of raw materials and packaging materials is based on our management’s year endanalysis and our target sales and production plan for the next year. Although we manufacture ourproducts only upon the receipt of confirmed orders from customers, we usually place orders for our rawmaterials and packaging materials 45 to 60 days in advance based on the anticipated demand for ourproducts.

We store our inventory at our production facilities. We manage our inventories on a “first-in, first-out”basis such that raw materials first received will be used first for our production.

The adequacy of inventory provision is reviewed by our management on a half-yearly basis. Ourprovision policy on obsolete or damaged inventory is to write off such inventory when our managementconsiders obsolete or damaged inventory to have no residual value. In addition, specific provisions aremade on the diminution in the market value of the inventory should our management decide that thecurrent level of provision is inadequate.

We have not made any provision nor written off any inventory for damage or obsolescence in the lastthree financial years ended 31 December 2006 and the three months ended 31 March 2007, as wehave not experienced any significant damage or loss in respect of our inventory.

Our inventory turnover days for FY2004, FY2005 and FY2006 and the three months ended 31 March2007 were approximately as follows:

FY2004 FY2005 FY2006Three months ended

31 March 2007

Average inventory turnover days(1)(2) 59 42 25 14

Notes:

(1) Average inventory turnover days for FY2004 to FY2006 are computed based on (the average of the beginning and closinginventories balance in the respective financial year/cost of sales) x 365 days.

(2) Average inventory turnover days for the three months ended 31 March 2007 are computed based on (the average of thebeginning and closing inventories balance in the respective financial year/cost of sales) x 90 days.

The decrease in our inventory turnover during the Period Under Review was due to better raw materialprocurement planning and production management, together with improvements in coordination with oursales and marketing department. As such, our inventory can be reduced to the minimum level, as theimprovements resulted in our Group receiving delivery of raw materials shortly before production andminimising the amount of finished goods to be stored as inventory. We will continue in our efforts toimprove our raw material procurement planning and production management. As such, we do not believethat our average inventory turnover days will be materially and adversely affected by increases in ourproduction. Further, we do not expect the additional storage facilities to have any significant impact on ourinventory turnover days.

SALES AND MARKETING

Our sales and marketing department is headed by our Executive Officer, Zhang Anmin, who isresponsible for overseeing and supervising our sales and marketing activities. As at the LatestPracticable Date, our sales and marketing department comprised 53 staff.

Our sales and marketing department is responsible for market penetration, namely cultivating newcustomers and businesses, and market development such as developing existing accounts throughprovision of better service support and establishing better supplier-customer relationships. Our salesand marketing staff will call on existing and visit new potential customers to market and promote our

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products. For marketing to prospective customers, our sales and marketing staff will first introduce ourrange of products and prices to them. If these new customers express interest in our products, we willarrange for visits at their premises or invite them to visit our production premises to further promote ourproducts and gain a better understanding of our products and production facilities.

Our sales and marketing staff personnel are responsible for coordinating and providing after-salesservices which include following through with our customers’ orders, maintaining relationships with ourcustomers, handling complaints effectively and ensuring that our customers’ needs are met. They keepin touch with our customers by maintaining regular contact and paying visits to our customers from timeto time to understand their needs, and to obtain their feedback and suggestions. Our customer basehas increased from 233 customers in FY2004 to approximately 286 customers in FY2006. As at theLatest Practicable Date, we have a total of 294 customers.

We receive orders from customers on a monthly basis or from customers who enter into yearly salecontracts with us and will provide us with an estimate of their requirement for the coming year(“Pre-order Customers”). For Pre-Order Customers, we would confirm with them on a monthly basis theactual orders and pricing for these orders for the forthcoming one to two months. For FY2004 toFY2006 and the three months ended 31 March 2007, sales to customers who place orders on amonthly basis accounted for approximately 73.6%, 79.7%, 75.8% and 67.7%, and sales to Pre-OrderCustomers accounted for approximately 26.4%, 20.3%, 24.2% and 32.3% of our total salesrespectively.

Our customers are from a broad range of industries. Our adhesive tapes are sold to customers in thepackaging, food and beverage, electronics, construction and shoemaking industries. Our BOPA film issold to customers in the food and beverage, pharmaceutical and medical industries while our 2-A2MPSproduct is sold to customers in the oil industry and water treatment industry, mainly located in ShanghaiCity, Fujian Province, Jiangsu Province, Zhejiang Province and Guangdong Province. The averageduration of our relationship with our customers is approximately 3 years.

MAJOR CUSTOMERS

We do not have any long term agreements or arrangements for a period of more than one year with anyof our major customers. None of our customers accounted for 5% or more of our revenue for the pastthree financial years ended 31 December 2006 and the three months ended 31 March 2007 and we arenot dependent on any of our customers.

We set out below our top ten customers in FY2006 and their contribution to our total turnover for thelast three financial years ended 31 December 2006 and the three months ended 31 March 2007.

Percentage of totalturnover (%)

Type(s) ofProduct FY2004 FY2005 FY2006

Threemonths

ended 31March 2007

Changshu Shidai Adhesive Tape Co., Ltd Adhesivetapes 2.6 1.2 2.0 1.8

Xiamen Seashine Trade Co., LtdBOPA film — 1.5 1.8 2.6

Jiangyin Jinzhou Adhesive Products Co., Ltd Adhesivetapes 1.7 1.2 1.8 0.8

Shandong Tiantai New Material Stock Co., Ltd Releasepapers 2.2 1.5 1.7 2.1

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Percentage of totalturnover (%)

Type(s) ofProduct FY2004 FY2005 FY2006

Threemonths

ended 31March 2007

Haining Lianlida Industrial Co., LtdBOPA film — 1.4 1.7 2.4

Wuxi Beimei Adhesive Products Co., Ltd Adhesivetapes 3.1 1.4 1.7 1.2

Zhejiang Quanwei Adhesive Products Co., Ltd Adhesivetapes 2.8 1.3 1.4 1.0

Jiangyin Yongda Composite Packaging Co., LtdBOPA film — 1.5 1.4 2.1

Quanzhou Licheng Xinchun Packaging Co., Ltd Adhesivetapes 1.7 0.9 1.3 0.9

Yantai Longtai Plastic Products Co., LtdBOPA film — 0.8 1.3 2.6

Total 14.1 12.7 16.1 17.5

None of our Directors or Substantial Shareholders has any interest, direct or indirect, in any of the abovecustomers.

Credit Policy

Our sales to our customers are normally on terms of 30 to 90 days credit, with a small portion of salesto customers on cash terms. All credit terms and limits for each customer must be reviewed and aregenerally approved by our Sales and Marketing Manager, Zhang Anmin.

The credit terms and limit for each customer is based on factors such as our assessment of thecustomer’s financial position, past collection history, volume of sales and its business performance.

We monitor and follow up on the payment status of each customer through the combined efforts of oursales and accounts departments. Our sales department will, with feedback from the accountsdepartment, assess each customer’s payment record, their financial strength, as well as the size of thetransaction. In addition, our sales personnel will visit our customers regularly to better understand thecustomer’s financial health, profitability and creditworthiness and report any significant changes to bothour sales and accounts departments. We also actively monitor our customers’ payments such that theydo not exceed the credit period extended to them.

Our credit management procedure requires a debt to be provided as a doubtful debt if it has beenoverdue for payment by more than 90 days without good reason. Specific allowances for bad debts willbe made if we fail to successfully collect overdue debts despite efforts to do so or when we are of theopinion that our customers are unable to meet their financial obligations or when we consider theamounts to be unrecoverable.

In FY2004, FY2005, FY2006 and the three months ended 31 March 2007, we did not make anyprovision for doubtful debts and we did not have any bad debts written off.

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Our average debtors turnover days for FY2004, FY2005, FY2006 and the three months ended 31March 2007 are as follows:

FY2004 FY2005 FY2006Three months ended

31 March 2007

Average debtors turnover days(1), (2) 61 61 68 66

Notes:

(1) Average debtors turnover days for FY2004 to FY2006 are computed based on (the average of the beginning and closingtrade receivables balance in the respective financial year/revenue) x 365 days.

(2) Average debtors turnover days for the three months ended 31 March 2007 are computed based on (the average of thebeginning and closing trade receivables balance in the respective financial year/revenue) x 90 days.

The aging schedule for our trade receivables from our customers of approximately RMB112 million andRMB111 million as at 31 December 2006 and as at 31 March 2007 respectively are as follows:

Aging schedule of trade receivables


(RMB’000)

As at31 March 2007

(RMB’000)

Less than 30 days : 82,128 84,805

Between 31 and 60 days : 23,938 23,898

Between 61 and 90 days : 5,639 1,579

Over 90 days : 40 369

As at the Latest Practicable Date, all of the outstanding trade receivables balance as at 31 December 2006and as at 31 March 2007 have been collected, save for an amount of trade receivables due from acustomer outstanding as at 31 March 2007 of approximately RMB60,000 which represents less than 1%of the total trade receivables balance as at 31 March 2007 and was provided for subsequently.

MAJOR SUPPLIERS

We have a pre-approved list of suppliers who are selected based on the quality of raw materials thatthey supply as well as their background, such as their experience, management and reputation in themarket. We do not have any long-term agreements or arrangements for a period of more than one yearwith any of our major suppliers and we are not dependent on any of our major suppliers.

Our suppliers who each accounted for 5% or more of our purchases in FY2004, FY2005, FY2006 andthe three months ended 31 March 2007 are as follows:

Percentage of totalpurchases (%)

Supplier

Type(s) ofraw

material(s) FY2004 FY2005 FY2006

Three Monthsended 31

March 2007

Xiamen Xiangyu Group CorporationPA6 — 9.6 9.5 12.1

Xinhui Meida DSM Nylon Chips Co., LtdPA6 — 6.6 9.5 11.6

Xiamen C&D Inc CCK/Glassinepaper 10.0 1.0 1.2 2.3

Shanghai Xinjiangnan Paper Co., Ltd CCK/Glassinepaper 7.2 4.2 4.1 2.9

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Percentage of totalpurchases (%)

Supplier

Type(s) ofraw

material(s) FY2004 FY2005 FY2006

Three Monthsended 31

March 2007

Ningbo Yasu Science and Technology Co., LtdBOPP film 7.2 3.5 2.7 2.3

Wenzhou Xinfeng Composite Material Co. Ltd. CCK/Glassinepaper 6.0 3.3 3.3 2.5

Total 30.4 28.2 30.3 33.7

None of our Directors or Substantial Shareholders has any interest, direct or indirect, in any of theabove major suppliers.

Credit Policy from Our Suppliers

The usual credit terms extended to us by our suppliers are generally between 30 to 60 days dependingon the types of raw materials supplied.

The average payable turnover days for FY2004, FY2005, FY2006 and the three months ended 31March 2007 are as follows:

FY2004 FY2005 FY2006Three Months ended

31 March 2007

Average payables turnover days(1), (2) 80 71 58 49

Notes:

(1) Average payables turnover days for FY2004 to FY2006 are computed based on (the average of the beginning and closingtrade and bills payables balance in the respective financial year/cost of sales) x 365 days.

(2) Average payables turnover days for the three months ended 31 March 2007 are computed based on (the average of thebeginning and closing trade and bills payables balance in the respective financial year/cost of sales) x 90 days.

COMPETITORS

We face competition from existing producers and new market entrants in the adhesive tapes andrelease papers industry in the PRC. There are currently many adhesive tapes and release papersproducers in the Fujian Province.

Competition in the production of BOPA film and 2-A2MPS is not as intense as adhesive tapes andrelease papers, as we believe that these are relatively new and highly skilled industries in the PRC.

We believe that our competitors for each of our products are the following:

Product Competitors

Adhesive tapes − Fuqing City Youyi Adhesive Products Co., Ltd

− Huian Youda Adhesive Products Co., Ltd

− Luxking Group Holdings Limited

Release papers − Loparex (Guangzhou) Paper Products Ltd.

− Linhai City Xiecheng Paper Products Co., Ltd

− Xiamen Taizhong Paper Invest Co., Ltd

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Product Competitors

BOPA film − Foshan Plastics Group Limited

− Tianjin Yuncheng Plastic Co., Ltd

− Xiaoxing Films (Jiaxing) Co., Ltd

2-A2MPS − Shouguang City Lianmeng Petrochemical Co., Ltd

− Lubrizol Corporation

− Toagosei Co. Ltd.

COMPETITIVE STRENGTHS

We believe that our competitive strengths are as follows:

• strong brand recognition

• wide range of products

• established track record and customer base

• competitive pricing

• experienced management team

(a) We have strong brand recognition

We have built up substantial brand goodwill and track record for our brand names over the years.We have been using the brand name for our adhesive tapes and release papers since 2001and 2003 respectively, and the brand name for our 2-A2MPS since 2003. We believe thatour brand names are widely recognised among our customers. We believe that such recognitionis synonymous with our track record and market reputation in the industry and is associated withthe quality and reliability of our products, which are the primary factors of our success thus far.

Over the years, we have maintained steady growth and established a good market reputation andtrack record for our adhesive tapes and release papers in the PRC. We believe that this is theresult of our years of experience and development in adhesive glue production used in themanufacture of our adhesive tapes and release papers. We have also developed extensive skilland expertise in the production of adhesive tapes and release papers.

(b) We produce a wide range of products

We produce a wide range of adhesive tapes for different uses, which allows us to cater to a widerange of users of adhesive tapes. Our release papers are used as backing for a range of adhesivetapes and adhesive materials and as backing for the manufacture of carbon fibre products suchas golf shafts, fishing rods and grips for sporting goods. In addition, we produce BOPA film whichis widely used in various forms of packaging and also 2-A2MPS which is an important chemicalproduct in many different industries. Our four main products are targeted at different industries,and each of them has a wide range of applications. This allows us to establish a wide customerbase.

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(c) We have an established track record and customer base

Over the years, we have established good working relationships with our wide base of customers.To date, we have built up our customer base from approximately 233 customers in FY2004 toapproximately 286 customers in FY2006. Over these years, we have consistently fulfilled thestringent quality and cost requirements of these customers and thus enjoy good workingrelationships with them. Sales to repeat customers accounted for more than 98.7% of our totalrevenue in FY2006. We believe that our reliability and long-term relationships with our customersare testimony to our reputation and track record.

(d) We offer competitive pricing

Adhesive Tapes

We have developed our own glue formula for use in the manufacture of our adhesive tapes andrelease papers. We are therefore able to achieve cost efficiency by sourcing for raw materialsused for the production of our adhesive glue. As such, we are able to offer our customerscompetitive prices for our adhesive tapes.

2-A2MPS

As far as we are aware, most existing producers of 2-Acrylamido-2-methyl propane sulfonic acidand similar products are located in Europe, the United States and Japan, where costs ofproduction are relatively higher than in the PRC. We believe that we are one of a few2-Acrylamido-2-methyl propane sulfonic acid manufacturers in the PRC. Other suppliers of2-Acrylamido-2-methyl propane sulfonic acid products in the PRC are generally importers of suchproducts. As such, we believe that we are able to provide more competitively priced quality2-A2MPS to our customers. In addition, we believe that it will be difficult for new PRCmanufacturers to effectively enter the BOPA film and 2-Acrylamido-2-methyl propane sulfonic acidindustry as they may not have the range of products and services, sales network, technicalexpertise and knowledge, manufacturing capabilities, operating track record and resources toproduce products of similar quality and quantity which we are capable of nor are they able tosecure, in the short term, the type of customers which we have.

(e) We have an experienced management team

Our business is led by a management team with a wealth of experience. Yang Qingjin, ourChairman and Executive Director, has been in the adhesive tapes and release papers industry formore than 20 years. Each of our Executive Directors has more than 5 years of experience in theindustries related to our Group’s products. As our Executive Directors are actively involved in ourday-to-day operations, management decisions can be made on a timely basis. Ourmanagement’s extensive network, experience and market knowledge has enabled us to obtainconsistently high quality supplies of raw materials at lower prices and maintain and develop ourcustomer base. In addition, we believe that our management’s business acumen andunderstanding of market trends have helped us identify and grasp new business opportunities,and will continue to help us develop our business.

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PROPERTIES AND FIXED ASSETS

Properties

As at the Latest Practicable Date, we lease the following properties from Xiamen Changtian andXiamen Brightforever:

Description/Location

Built-up area(Approximate

sq m) Use of property Lessor

Annualrental(RMB) Tenure

No. 18 Xinsheng Road,Xinyang Industrial Zone,Haicang District, XiamenCity, Fujian Province,PRC 361026(1)

20,960 Factorypremises,warehouses andstaff quarters

XiamenChangtian

2,300,000 1 January 2007 to31 December 2026(20 years)

No. 16 Xinsheng Road,Xinyang Industrial Zone,Haicang District, XiamenCity, Fujian Province,PRC 361026(2)

11,270 Factory premises XiamenBrightforever

1,200,000 1 April 2007 to31 March 2027(20 years)

Note:

(1) Xiamen Changtian has the land use rights for the land and has obtained all relevant certificates, approvals and permits inrespect of the construction of the building on the land. As at the Latest Practicable Date, Xiamen Changtian has not obtainedthe building ownership certificate in respect of the building. We have been advised by our PRC legal counsels that theconsequence of not having a building ownership certificate is that Xiamen Changtian, our landlord, will not be able to selland transfer ownership of the building but is able to lease the property to us pursuant to the Changtian Lease Agreement.Our PRC legal counsels further advised that there should not be any legal obstacle to our landlord obtaining such buildingownership certificate and that the Changtian Lease Agreement and the rights of our Company as a tenant would not beaffected in any manner by our landlord’s lack of a building ownership certificate.

(2) Xiamen Brightforever has the land use rights for the land and the building ownership certificate for the building on the land.

Please refer to the section “Restructuring Exercise” of this Prospectus for further details of the aboveleases.

Fixed Assets

As at the Latest Practicable Date, we had fixed assets with net book values as follows:

RMB’000

Plant and machinery 105,759

Furniture, fixtures and office equipment 1,307

Motor vehicles 917

There are no regulatory requirements that may materially affect our Group’s utilisation of a tangible fixedasset.

INSURANCE

As at the Latest Practicable Date, we have obtained property insurance in respect of our assets suchas the machinery and equipment, raw materials, semi-finished products and inventory. Our Directorsbelieve that our existing insurance policies are sufficient to cover the risks which we may be exposedto with regard to loss or damage whether caused by fire and/or other causes to our above mentionedassets and claims from our employees.

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Our PRC subsidiary, Changtian Enterprise, is required to maintain mandatory social insurance for itsemployees. Currently, we have obtained the necessary social insurance plans (which include pensioninsurance, unemployment insurance, work-related injury insurance, medical insurance and maternityinsurance) for our employees as required by the local social insurance administrative agency.

STAFF TRAINING

We provide in-house training of between one week and one month for all new employees. There isusually an orientation programme to familiarise them with our Group’s background, culture and policies.Further training in employees’ discipline, safety and environmental awareness and quality assurancemeasures will also be conducted. To ensure that employees possess the requisite skills and expertisefor our operations before they start work in their respective jobs, our training programmes will also focuson specific areas such as safety, sales and marketing, quality control and production training dependingon their positions. We may also conduct on-the-job supervised training to ensure that new employeesare equipped with the relevant skills to operate our automated processes.

Our Group’s training expenditure for FY2004, FY2005 and FY2006 and the three months ended 31March 2007 has been insignificant, as it is mainly conducted in-house.

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INTELLECTUAL PROPERTY

Trademarks

Pursuant to the Trademark Transfer Agreement with Xiamen Changtian, all the necessary applicationsand registration to transfer all of Xiamen Changtian’s trademarks to us have been made.

As at the Latest Practicable Date, we have registered the following trademark in the PRC:

TrademarkCountry of

Registration ClassRegistration Number/Application Number Validity Period

China 1 3199896 7 February 2004 to6 February 2014

We had also filed applications for the following trademarks to be registered in the PRC, and as at the LatestPracticable Date, the registration of these trademarks is still pending:

TrademarkCountry of

Registration ClassRegistration Number/Application Number Date of Application

China 1 5490576 20 July 2006

16 5490575 20 July 2006

17 5490574 20 July 2006

China 16 5434215 22 June 2006

17 5434214 22 June 2006

2-A2MPS China 1 5440466 26 June 2006

We have also applied for patent protection in respect of our technical know-how for our 2-A2MPS on 6June 2007 with the State Intellectual Property Office of the PRC .

GOVERNMENT REGULATIONS, LICENCES AND PERMITS

Save as disclosed below, as at the Latest Practicable Date, our business of manufacture and sale ofadhesive tapes, release papers, BOPA film and 2-A2MPS in the PRC is not a special or regulatedindustry, and we do not require special governmental or regulatory approvals, licences or permits tooperate our business, other than those generally applicable to all companies and businesses.

Environmental Protection Regulations

In accordance with the Environmental Protection Law of the PRC adopted by the Standing Committeeof the National People’s Congress on 26 December 1989, the State Environment ProtectionAdministration of the PRC sets the national guidelines for the discharge of pollutants. The provincialand municipal governments of provinces, autonomous regions and municipalities may also set theirown guidelines for the discharge of pollutants within their own provinces or districts in the event that thenational guidelines are inadequate.

A company or enterprise, which causes environmental pollution and discharges other pollutingmaterials, which endanger the public, should implement environmental protection methods and

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procedures into their business operations. This may be achieved by setting up a system ofaccountability within the company’s business structure for environmental protection; adopting effectiveprocedures to prevent environmental hazards such as waste gases, water and residues, dust powder,radioactive materials and noise arising from production, construction and other activities from pollutingand endangering the environment. The environmental protection system and procedures should beimplemented simultaneously with the commencement of and during the operation of construction,production and other activities undertaken by the company. Any company or enterprise whichdischarges environmental pollutants should report and register such discharge with the AdministrationSupervisory Department of Environmental Protection and pay any fines imposed for the discharge. Afee may also be imposed on the company for the cost of any work required to restore the environmentto its original state. Companies, which have caused severe pollution to the environment, are requiredto restore the environment or remedy the effects of the pollution within a prescribed time limit.

If a company fails to report and/or register the environmental pollution caused by it, it will receive awarning or be penalised. Companies that fail to restore the environment or remedy the effects of thepollution within the prescribed time will be penalised or have their business licences terminated.Companies or enterprises which have polluted and endangered the environment must bear theresponsibility for remedying the danger and effects of the pollution, as well as to compensate anylosses or damages suffered as a result of such environmental pollution.

On 7 June 2007, the Xiamen Municipal Environment Protection Bureau, Haicang Branchissued a Provisional Pollutant Discharge Permit, valid from 7 June 2007 to

7 June 2008 to Changtian Enterprise. The Xiamen Municipal Environment Protection Bureau, HaicangBranch has also issued a confirmation on 7 June 2007, confirming that Changtian Enterprise was notfound to be in breach of any applicable environmental protection laws and regulations of the PRC sinceits establishment.

Regulation on the mergers and acquisition of domestic enterprises by foreign investors

On 8 August 2006, six PRC regulatory agencies, including the Ministry of Commerce and the ChinaSecurities Regulatory Commission (“CSRC”), promulgated a new regulation with respect to themergers and acquisitions of domestic enterprises by foreign investors (the “M&A Regulation”) thatbecame effective on 8 September 2006. Article 40 of the M&A Regulation (“Article 40”) requires that anoffshore special purpose vehicle (“SPV”) formed for listing purposes and controlled directly or indirectlyby PRC companies or individuals, such as the Company, shall obtain the approval of the CSRC priorto the listing and trading of such SPV’s securities on an overseas stock exchange. On 21 September2006, the CSRC published on its official website procedures specifying documents and materialsrequired to be submitted to it by SPVs seeking CSRC approval of their overseas listings.

Based on its understanding of current PRC laws, regulations and rules, the procedures announced on21 September 2006 and its consultation with the CSRC, our Group’s PRC legal counsel, Jingtian &Gongcheng, has advised us that the Invitation and the Listing do not require CSRC approval becauseour Company has obtained all necessary approvals from the relevant PRC foreign trade and economiccooperative regulatory authorities for the Restructuring Exercise before 8 September 2006, theeffective date of the M&A Regulation.

Regulations on the purchase and storage of poisonous materials

For the production of our 2-A2MPS product, we are required to purchase acrylonitrile as part of our rawmaterials. According to the Administrative Rules of the Poisonous Chemicals Purchase andTransportation Permits promulgated by the Ministry ofPublic Security of the PRC in August 2005. According to such regulations,Changtian Enterprise is required to apply to the Xiamen Municipal Department of Public Security

for a poisonous materials purchase permit each time that we purchase poisonousmaterials. Our raw material, acrylonitrile, is on the List of Poisonous Materials .

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On 21 September 2006, we were fined RMB10,000 by the Xiamen Municipal Department of PublicSecurity Haicang Branch for not possessing the relevant permits when purchasingacrylonitrile. As a result, our employee Yang Junqing, the person-in-charge at the relevant time wasdetained for 5 days. Subsequent to this incident, Xiamen Jiuan Safety Examination and EvaluationOffice Co., Ltd. issued a report which confirmed that we are incompliance with the requirements to purchase, use and store poisonous chemicals, and we have sinceobtained such Poisonous Chemicals Purchase Permit and paid the RMB10,000 fine.

Further, on 11 May 2007, we have obtained the confirmation from Xiamen Municipal Department ofPublic Security that Changtian Enterprise is in compliance with the requirements and isqualified to purchase and store acrylonitrile. In addition, we are required to obtain a permit from theXiamen Municipal Department of Public Security for each purchase of acrylonitrile that wemake.

We are not aware of any incident of suspension or revocations of any of our licences, permits orapprovals on any fact or circumstances which will cause our licences, permits or approvals to besuspended or revoked. To the best of our knowledge and save as disclosed above, we have allnecessary licences, permits and approvals for our business operations in the PRC and have compliedwith all applicable laws and regulations of the PRC as at the Latest Practicable Date.

PROSPECTS AND FUTURE PLANS

Our Prospects

Our Directors expect that the PRC economy will continue to grow in the next few years. For theforeseeable future, our Directors believe that there will be sustained growth in the market demand forour products in the PRC due to the pace of growth and increasing industrialization within the PRC.Increasing spending power of PRC consumers will lead to increasing demand for consumer goods andservices.

(a) Adhesive tapes

Adhesive tapes are used widely across many sectors, such as the automotive, packaging,printing, electronics and electrical goods industries. We have a wide range of adhesive tapes withdifferent applications catering to the needs of a wide base of customers. As such, our Directorsbelieve that there will be sustained demand for our adhesive tapes underpinned by the positiveeconomic development in the PRC.

(b) Release Papers

The release papers that we produce comprise:

• glassine silicone coated release papers — smooth grease resistant release papers whichare widely used in the sticker and labelling industry and in the production of commercialadhesive tapes;

• CCK release papers — strong release papers which can withstand high temperature and donot disintegrate easily and are suitable for use in many industries. Our CCK release papersare targeted for the manufacture of carbon fibre products such as golf shafts, fishing rods,and grips for sporting goods.

These release papers have a wide range of applications, including in the hygiene, medical, tapes,labels and fibre composites sectors. As such, our Directors believe that there will be sustaineddemand for our glassine silicone coated and CCK release papers.

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Our Directors believe that there are opportunities to expand our release paper product range byinstalling and commissioning a new production line for the production of a new release paperproduct offering, the UV cured release film.

UV cured release film

UV cured release film is produced using UV curing silicones to create the release effect, insteadof using the traditional high temperature curing silicones method used in the production ofglassine and CCK release papers.

By using UV curing silicones, the production process of UV cured release film is less expensiveand incurs less wastage. UV curing is less time-consuming, friendly to the environment and savesenergy. UV cured release film can be produced using BOPP film, CPP film, PET film, PE film andnon-woven fabric.

We intend to expand into the manufacture of UV cured release film, in particular UV cured PErelease film which we target to sell mainly to manufacturers of personal hygiene products such assanitary napkins. As far as our Directors are aware, UV cured PE release film in the PRC aremainly imported from overseas. Accordingly, our Directors believe that there is significant marketpotential for UV cured PE release film produced in the PRC, as PRC manufacturers generally areable to operate with a lower cost base with quality assurance as compared to the overseasmanufacturers.

(c) BOPA film

Our Directors believe that annual world consumption of BOPA film is about 110,000 to 130,000tonnes, of which Europe, Japan and other countries in Asia consume about 40,000 tonnes, 40,000tonnes and 50,000 tonnes respectively. Annual world demand is expected to increase at 10%.Further, our Directors estimate that whilst there are about 12 manufacturers of BOPA film in China,actual production capacity is still only about 30,000 tonnes per annum, while demand for BOPAfilm in the PRC is about 50,000 tonnes. The shortfall is being met by imported BOPA film fromJapan, Korea and Italy.

BOPA film is a clear film widely used as a packaging material in many industries, such as food andbeverage, pharmaceutical and medical industries. In particular, BOPA film is an ideal element infood packaging as BOPA film packaging provides better appearance, longer shelf life of products,minimises loss of aroma and has better packaging strength.

Our Directors believe that the outlook for the food and beverage packaging industry is favourable.Rising affluence of the population and the increasing pace of lifestyle in the PRC will lead to a risein consumer preference for convenience foods. With greater awareness for hygiene and foodsafety, consumers will demonstrate a preference towards packaging materials that will ensurefreshness and preserve the quality of food products.

Prior to 2005, most of the BOPA film used in the PRC was imported. We commenced productionof BOPA film in 2005. Our BOPA film has gained recognition among the soft packagingmanufacturers, and we have enjoyed strong and stable sales volume. Currently, our BOPA filmsales are limited by our production capacities. Our Directors are of the view that there areopportunities for growth in our BOPA film segment and will seek to expand our production capacityfor BOPA film.

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(d) 2-A2MPS

2-A2MPS is a raw material widely applied in various areas, such as in the production of chemicalsused in water treatment, textile dyes, oil and gas industry, coating material and papermanufacturing. Increasingly, more industries are adopting the use of 2-A2MPS as a raw material,including the textile (spinning and dyeing), plastic, paper manufacturing, coating materials, wastewater treatment and oil and gas extraction industries.

Currently, as we are limited by our production capacity, we are only selling our 2-A2MPS productto customers in the oil industry and water treatment industry. Our Directors believe that demandfor our 2-A2MPS product will grow, underpinned by continued growth in the oil industry,particularly in the production and exploration of oil reserves in the PRC and our plan to broadenour customer reach to customers in other industries.

At this point, our Directors believe that the output of 2-A2MPS in the PRC is insufficient to meetthe increasing demand, and the demand will have to be met by imports. Fuelled by the PRCeconomic growth, demand for 2-A2MPS will continue to increase. Based on our Directors’understanding of the market, the usage of 2-A2MPS by various industries in the PRC will increaseby 20% to 30% annually in the next few years, thereby driving the growth in our 2-A2MPSsegment.

Trends

In general, for the last three financial years ended 31 December 2006 and the three months ended 31March 2006 compared with the corresponding three months period ended 31 March 2007, revenuefrom our adhesive tapes has shown a decreasing percentage contribution to our Group’s total revenue.This is due largely to the introduction of our new product BOPA film in April 2005 (which contributedRMB64.6 million to our Group’s total revenue for FY2005) and with a full year contribution in FY2006(contributing RMB102.9 million to our Group’s total revenue for FY2006). For the current financial yearending 31 December 2007, we expect that the percentage contribution of each of the productssegments will not change significantly from that for the three months ended 31 March 2007. This is duelargely to the fact that our production facilities are operating at close to full utilisation rates (please referto the section “Production Facilities and Production Capacity” of this Prospectus for further details). Weexpect that upon full implementation of our expansion plans as set out in the section “Prospects andFuture Plans” of this Prospectus, the percentage contribution of adhesive tapes will likely contribute asmaller proportion of our Group’s total revenue.

Save as disclosed above and in the sections “Risk Factors”, “Review of Past Operating Performanceand Financial Position” and “Prospects and Future Plans” of this Prospectus and barring anyunforeseen circumstances, our Directors believe that there are no other known recent trends inproduction, sales and inventory, the costs and selling prices of our products and services or otherknown trends, uncertainties, demands, commitments or events in the current financial year that arereasonably likely to have a material and adverse effect on our revenues, profitability, liquidity or capitalresources, or that would cause financial information disclosed in this Prospectus to be not necessarilyindicative of our future operating results or financial condition. Please also refer to the section“Cautionary Note Regarding Forward-Looking Statements” of this Prospectus.

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Our strategies and future plans

We intend to leverage on our scale of operation and market position to capture the growth opportunitiespresented by the UV cured release paper, BOPA film and 2-A2MPS products. Our future plans are asfollows:

(a) Expand our production capacity for BOPA film

We intend to increase our production capacity to meet the increasing demand for BOPA film andplan to install one more BOPA film production line. We intend to commence the construction of thisnew BOPA film production line in late November 2007. Construction and installation is expectedto be completed around June 2008. We expect to commence production with this new line in thethird quarter of 2008 and we expect that this will increase our production capacity from 5,400tonnes to 10,800 tonnes per annum.

The estimated costs for the commissioning and installation of the BOPA film production line isapproximately S$26.0 million or RMB129.0 million, which includes the costs for the plant andequipment and auxillary facility and equipment and the costs of renovation and fittings. Theestimated costs for the commissioning and installation of the BOPA film production line will befinanced fully out of the net proceeds from the Invitation.

(b) Expand our range of release papers to include UV cured release film

We will leverage on our expertise in the production of release papers and the opportunities for UVcured release film, and will commission and install a production line for UV cured release film witha production capacity of 3,000 tonnes. We intend to commence the construction of this newproduction line for UV cured release film around January 2008. Construction is expected to becompleted around May 2008 and installation will commence thereafter. We expect that theproduction line will be installed by September 2008. We expect to commence production of UVcured release film in the fourth quarter of 2008.

The estimated costs for the commissioning and installation of the UV cured release filmproduction line is approximately S$12.7 million or RMB63.0 million, which includes the costs forplant and equipment and auxillary facility and equipment and the costs of renovation and fittings.The estimated costs for the commissioning and installation of the UV cured release filmproduction line will be financed fully out of the net proceeds from the Invitation.

(c) Expand our production capacity for 2-A2MPS

In view of our expectation of increasing demand for 2-A2MPS, we intend to install a new 2-A2MPSproduction line to increase our production capacity for our 2-A2MPS product. We intend tocommence construction of our new 2-A2MPS production line around January 2008, withconstruction to be completed around May 2008. Installation of the new 2-A2MPS line will becompleted around September 2008. We expect to commence production with this new line in thefourth quarter of 2008 and we expect that this will increase our 2-A2MPS production capacity from1,500 tonnes to 3,000 tonnes per annum.

The estimated costs for the commissioning and installation of the 2-A2MPS production line isapproximately S$6.0 million or RMB30.0 million, which includes the costs for plant and equipmentand auxillary facility and equipment and the costs of renovation and fittings. The commissioningand installation of the 2-A2MPS production line will be financed fully out of the net proceeds fromthe Invitation.

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(d) Construction of additional storage facilities

With the expected increase in production following expansion of our production capacity as set outabove, we intend to construct additional storage facilities with an area of approximately 3,000sq.m. at our production facilities at 18 Xinsheng Road, Xinyang Industrial Zone, Haicang District,Xiamen City, Fujian Province, PRC 361026. We expect to begin construction of our additionalstorage facilities in February 2008, with construction to be completed around June 2008. Weexpect construction costs to be approximately S$3.0 million or RMB15.0 million, which will befinanced fully out of the net proceeds from the Invitation.

ORDER BOOKS

In general, our customers do not place long-term orders with us. Instead, our orders are received fromcustomers either on a monthly basis or from customers who enter into yearly sale contracts with us.Such customers, will, at the end of each year provide us with an estimate of their requirement for thecoming year (“Pre-order Customers”). We confirm with our Pre-order Customers on a monthly basis,their actual orders and pricing for these orders for the forthcoming one to two months. We usuallydeliver our products to our customers according to the orders placed by our customers within 45 days.

As at the Latest Practicable Date, our orders on hand amounted to approximately RMB93.7 million forwhich we have received confirmed purchase orders. These orders are generally scheduled for deliverywithin 45 days. These confirmed purchase orders are however subject to cancellation, deferral orrescheduling by our customers. Accordingly, our order book as at any particular date may not beindicative of our revenue for any succeeding period.

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DIRECTORS, MANAGEMENT AND STAFF

OUR MANAGEMENT STRUCTURE

Board of Directors

ChairmanYang Qingjin

Deputy ChairmanChen Yongfu

Director and General Manager

(BOPA film)Wong Chit Fu

General Manager(Adhesive tapes, release

papers, 2-A2MPS)Ke Youmi

Finance DirectorYan Yilin

Financial ControllerChan Pak Kin Ken

Deputy Financial ControllerSin Kwok Chui Malon

Deputy GeneralManager and

Sales & MarketingManager

Zhang Anmin

PurchasingManager

Yang Junqing

Deputy GeneralManager andProduction

ManagerZhang Kunshu

DIRECTORS

Our Board of Directors is entrusted with the responsibility for the overall management of our Group. OurDirectors’ particulars are listed below:

Name Age Residential Address Principal occupation

Yang Qingjin 42 Room 205, 197 Bing Lang Dong Li,Si Ming District, Xiamen City, FujianProvince, PRC

Chairman andExecutive Director

Chen Yongfu 43 Room 504, 15 He Guang Li, Si MingDistrict, Xiamen City, FujianProvince, PRC

Deputy Chairman andExecutive Director

Wong Chit Fu 63 Room 4–701, 325 He Xiang Xi Lu,Xiamen City, Fujian Province, PRC

Executive Director

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Yan Yilin 29 Room 502, 83 Jin Shan Xi Er Li, HuLi District, Xiamen City, FujianProvince, PRC

Finance Director andExecutive Director

Chan Yin David 47 15 Dalkeith Road, Singapore 299634 Investment Advisor

Lee Liang Ping 51 257 Arcadia Road, #06-04,Singapore 289851

Corporate Consultant

Liao Quanwen 60 Room 202, 4 Hai Bin Dong District,Xiamen University, Xiamen City,Fujian Province, PRC

Professor

Information on the business and working experience of our Directors is set out below:

Yang Qingjin

Mr Yang was appointed as our Chairman and Executive Director on 24 April 2007. He is responsiblefor the business direction and development of our Group. Mr Yang entered the adhesive tapes businessin 1990 when he and his wife set up Xiamen Xinhua Industry & Trading Co., Ltda company engaged in the sale and production of adhesive tapes. Since then, Mr Yang has acquiredmore than 17 years of experience in the adhesive tapes and chemicals industry. In February 1999, MrYang joined Xiamen Changtian where he was the general manager responsible for its businessdirection and development. Mr Yang graduated from Hui An County Wang Chuan Secondary School,Quanzhou City, Fujian Province in 1982.

Chen Yongfu

Mr Chen was appointed as our Deputy Chairman and Executive Director on 24 April 2007. Togetherwith Mr Yang, Mr Chen is responsible for the business planning and corporate development of theGroup. Mr Chen entered the adhesive tapes industry when he joined Xiamen Xinhua Industry & TradingCo., Ltd , a company engaged in the manufacture and sales of adhesive tapes,as a purchasing manager from 1991 to 1996. He has over 16 years of experience in the adhesive tapesand chemicals industry. In February 1999, Mr Chen together with Xiamen Xin Guan established XiamenChangtian where he remained as an executive director prior to our Group’s reorganisation and wasresponsible for general direction of the company. Mr Chen graduated from Lian Ban Primary School,Xiamen City, Fujian Province in 1977.

Wong Chit Fu

Mr Wong was appointed as our Executive Director on 24 September 2007. He is in charge ofoverseeing all matters relating to BOPA film production for our Group. Between 1969 and 1985, MrWong worked as a lecturer and eventually with Xiamen Import & Export Commodities Inspection andQuarantine Bureau , a government authority in Xiamen City, as an electricalmachinery inspector. From 1986 to 1993, Mr Wong worked in state-owned companies involved in thetrading of BOPP and chemicals. Subsequently, from 1994 to 2002, Mr Wong started his own businessfor the trading of BOPP and chemicals. In October 2002, Mr Wong became a director and generalmanager of Xiamen Brightforever. In 2005, Mr Wong was appointed director of Xiamen Changtian. MrWong graduated with a degree in engineering from Fuzhou University in 1969.

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Yan Yilin

Mr Yan was appointed as our Finance Director and Executive Director on 24 September 2007. He isresponsible for overseeing the finance and administration of our Group. Mr Yan started his career in1999 at Xiamen Xin Guan as an accounts executive. Mr Yan joined Xiamen Changtian in July 2001 asHead of the Finance Department till June 2002. Mr Yan was appointed as the Assistant to the Chairmanof Xiamen Changtian in July 2002 until March 2007, responsible for assisting the chairman in businessmatters and overseeing daily operations. Mr Yan was appointed a member of the supervisory board ofXiamen Changkai Investment Co., Ltd from December 2003 to April 2007, withthe responsibility of ensuring the proper management of the company. He has also been a member ofthe supervisory board of Xiamen Changtian since April 2005 and Changtian Enterprise since December2006. Mr Yan graduated from Xi’an Institute of Statistic in 1999 with a degree inAccounting.

Chan Yin David

Mr Chan was appointed as our Independent Director on 24 September 2007. He is our leadIndependent Director. Mr Chan has twenty years of experience analysing and carrying out businessdiligence on Asian companies, specifically those listed or about to be listed on the Hong Kong and thePRC stock exchanges including companies in the food and beverage industries. Mr Chan first beganhis investment management career, upon graduation, at Overseas Union Bank as a fund managementofficer, from October 1986 to April 1988. Thereafter, he became a manager (institutional sales) ofStandard Chartered Securities, a stockbroking company, from April 1988 to April 1990. From April 1990to February 1996, he was an associate director (investment) at Nomura Capital Management(Singapore) Ltd. during which time he was a member of the Nomura Investment Management Co.’sinternational allocation committee and the Pacific Basin stock selection committee. Subsequently, fromMarch 1996 to January 2005, he became the managing director of AGF Asset Management Asia Ltdand his duties included overseeing investments in the Asia ex-Japan equity markets. He is currently theManaging Partner of Swiss-Asia Financial Services Pte. Ltd., an investment advisory company. MrChan graduated with a Bachelor in Business degree from Simon Fraser University, Canada in 1984 andholds a Master in Business from Simon Fraser University, Canada.

Lee Liang Ping

Mr Lee was appointed as our Independent Director on 24 September 2007. Upon admission as anAdvocate and Solicitor of the Supreme Court of Singapore, Mr Lee began his career as a corporatelawyer in Allen & Gledhill until March 1982, advising clients on various types of corporate transactionsincluding mergers and acquisitions and joint venture transactions. Thereafter, from April 1982 toFebruary 1984, he was a corporate finance executive at Morgan Grenfell (Asia) Limited, now part ofDeutsche Bank Group, providing corporate finance advisory services to both public listed as well asprivate corporations. Between 1985 to 1999, Mr Lee moved into corporate management where he heldsenior management positions in public listed as well as private corporations in Singapore andIndonesia, namely, Kongsberg (Asia) Pte Ltd, DMT Investments Pte Ltd, Amcol Holdings Limited andP T Agis Tbk, which had extensive regional business interests in the oil and gas, consumer electronicsdistribution, property investments, resort development, commodity trading and manufacturing sectors.Mr Lee has, since 2000, been a corporate consultant providing corporate advisory services tocorporations in mergers and acquisitions, corporate restructuring, investor relations and seekinginvestment partners and opportunities in Asian markets including China, Indonesia and Singapore. MrLee graduated with a Bachelor of Laws (Honours) degree from the University of Singapore in 1980.

Liao Quanwen

Ms Liao was appointed as our Independent Director on 24 September 2007. Ms Liao started her careeras a lecturer in Xiamen University, School of Economics in 1982. She is currently the Principal of theResearch Institute of Human Resource of Xiamen University. Ms Liao sits on various committees in thePRC, such as the China Human Resource Development Research Association (Executive Director).

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She has also received numerous awards for her research and papers at both the provincial and nationallevels. Ms Liao is currently also an independent director of Fujian Minnan (Zhangzhou) EconomicDevelopment Co., Ltd. . Ms Liao graduated from XiamenUniversity in 1968 with a degree in Mathematics. In 1982, she obtained a Master degree inMathematics from Xiamen University.

The list of present and past directorships of each Director over the last five years excluding those heldin our Company, is set out below:

Name Present Directorships Past Directorships

Yang Qingjin Group Companies Group Companies

Jumbo GloriesChangtian Enterprise

Nil

Other Companies Other Companies

Eastline Investments Xiamen Changkai Investment Co.,Ltd

Sunwin International Limited

Chen Yongfu Group Companies Group Companies


Nil


Goodwise InvestmentsXiamen Changtian

Xiamen Brightforever

Wong Chit Fu Group Companies Group Companies


Nil


Fujian Triumph Forever PlasticIndustrial Co., Ltd

Multi Ace InternationalSunwin International LimitedXiamen BrightforeverXiamen Changtian

Rich Hope International LimitedXing Ming Group LimitedSunning Group Limited

Yan Yilin Group Companies Group Companies

Nil Nil


Nil Nil

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Chan Yin David Group Companies Group Companies

Nil Nil


Ace Asset Holding CorporationSynear Food Holdings Limited

AGF Asset Management Asia Ltd.

Lee Liang Ping Group Companies Group Companies

Nil Nil


Synear Food Holdings LimitedAIMT Pte LtdCorporate Advisory International LtdSino Hua-An International BerhadKillam Management Limited

M2B Game World Pte. Ltd.

Liao Quanwen Group Companies Group Companies

Nil Nil


Fujian Minnan (Zhangzhou)Economic Development Co., Ltd.

Nil

None of our Directors, except Yang Qingjin and Chen Yongfu, are related to one another, to any of ourExecutive Officers or Substantial Shareholders, or are related by blood or marriage to one another. YangQingjin is Chen Yongfu’s brother-in-law. Yang Qingjin’s spouse, Chen Baohua, is the sister of Chen Yongfu.

MANAGEMENT

Our day to day operations are entrusted to the Executive Officers of our Group. The particulars of ourExecutive Officers are set out below:


Ke Youmi 40 Room 407, 42 Jin Tai Li, Jin ShangXiao Sub-District, Shi Hu Li District,Xiamen City, Fujian Province, PRC

General Manager

Zhang Kunshu 41 Room 201, 17 Xi Chun Dong Li,Si Ming District, Xiamen City,Fujian Province, PRC

Deputy GeneralManager andProduction Manager

Zhang Anmin 49 Room 304, 19 Yu Qing Lu,Si Ming District,Xiamen City, Fujian Province, PRC

Deputy GeneralManager and Salesand Marketing Manager

Yang Junqing 31 Room 402, 43 Hong Wen Yi Li,Si Ming District,Xiamen City, Fujian Province, PRC

Purchasing Manager

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Chan Pak Kin Ken 35 Flat D, 46/F, Block 6, Sky Tower,38 Sung Wong Toi Road,To Kwa Wan, Hong Kong

Financial Controller

Sin Kwok Chui Malon 39 22C Tower 2, Bayshore Towers,Ma On Shan, Hong Kong

Deputy FinancialController

Ke Youmi

Mr Ke Youmi is our General Manager and is responsible for the overall management and businessoperations of our Group. Mr Ke started his career in 1990 at Xiamen Cankun Electric Appliances Co.,Ltd as an assistant to the deputy general manager. Thereafter, from 1996 to1998, he joined Xiamen C&D Inc. as an operations supervisor. In 1998, MrKe then joined Xiamen Xin Guan, a company engaged in the manufacture and sale of adhesive tapes,as the assistant to general manager and was responsible for assisting in the company’s overall internalmanagement. Subsequently, Mr Ke was appointed as the head of export department of DongguanLongde Electric Appliances Co., Ltd . Since January 2003, Mr Ke was appointedas general manager of Xiamen Changtian responsible for its overall management and operations. MrKe graduated from Dalian University of Technology with a degree in 1987 and aMaster’s Degree in 1990 majoring in Electrical Machinery and Electrical Appliance Manufacturing. MrKe also received an Engineering Certification from Personnel Bureau of Fujian Provincein 1994.

Zhang Kunshu

Mr Zhang is our Deputy General Manager and Production Manager and is responsible for overseeingour daily operations and overall production activities. Mr Zhang was appointed the productionsupervisor of Xiamen Cankun Electric Appliances Co., Ltd from 1992 to 1998.Subsequently, Mr Zhang joined Xiamen Xin Guan, a company engaged in manufacture and sale ofproducts such as adhesive tapes, as the production manager from 1998 to 2001. In November 2002,Mr Zhang was appointed as deputy general manager of Xiamen Changtian and production manager.Mr Zhang graduated from Fujian Zhangzhou Normal College with a Certificate inMathematics in 1988.

Zhang Anmin

Mr Zhang is our Deputy General Manager and Sales and Marketing Manager and is in charge of oursales and marketing activities. Mr Zhang started his career in 1985 at Xiamen Youlian Adhesive TapeCo., Ltd as the sales and marketing manager and deputy general manager till1998. From 1998 to 2002, Mr Zhang was employed as the sales and marketing manager of Xiamen XinGuan, a company engaged in the manufacture and sale of adhesive tapes. During that period, he wasalso responsible for overseeing the operations at various branch offices of Xiamen Xin Guan. In August2002, Mr Zhang was appointed as the deputy general manager and sales and marketing manager ofXiamen Changtian being responsible for sales and marketing. Mr Zhang graduated from Beijing SocialUniversity in 1987 with a degree in Financial Accounting.

Yang Junqing

Mr Yang is our Purchasing Manager and is responsible for the procurement of raw materials of ourGroup. Mr Yang started his career in 1996 at Xiamen Xin Guan, a company engaged in the manufactureand sale of adhesive tapes, as its trading department manager till 2001. In July 2001, Mr Yang joinedXiamen Changtian and was responsible for overseeing Xiamen Changtian’s purchasing operations. MrYang graduated from Fujian Economic School in Financial Accounting in 1996.

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Chan Pak Kin Ken

Mr Chan is the Financial Controller of our Group. He was appointed in July 2007 and assists in themanagement of the overall finance and accounting operations of the Group. In addition, he isresponsible for implementing internal controls and corporate governance and practices, as well asliaising with external parties and regulatory bodies in respect of our Group’s financial matters. He hasmore than 10 years of experience in the field of auditing and business advisory, and acted as auditmanager in two international firms of certified public accountants (BDO McCabe Lo & Company andGrant Thornton). Prior to joining our Group, Mr Chan was the Financial Controller of Hong Kong CuilongCopper Industry International Company Limited, a company engaged in the manufacturing and salesof copper coils, and was in charge of its daily finance and accounting matters. Mr Chan holds aBachelor of Business degree from Monash University, Australia. He is an associate member of theAssociation of Chartered Certified Accountants and the Hong Kong Institute of Certified PublicAccountants.

Sin Kwok Chui Malon

Mr Sin is our Deputy Financial Controller of our Group. He was appointed in February 2007 and assistsin the management of finance and our accounting operations. In addition, he is also responsible forimplementing internal controls and corporate governance practices as well as liaising with externalparties and regulatory bodies in respect of our Group’s financial matters. He joined Campbell Soup AsiaLimited as an accountant in 1995 and subsequently as an accountant in King Power Duty FreeCompany Ltd in 2000. From 2000 to 2002, Mr Sin was regional accountant of Nu Skin Enterprises, acompany engaged in direct selling of health products. From December 2002 to November 2003, Mr Sinwas appointed assistant manager of Citibank N.A. Subsequently, he joined Zebra Strategic OutsourceSolution Ltd, a company engaged in human resources, as an accounting manager from March 2004 toAugust 2005. Mr Sin was appointed chief accountant of Emerson Network Power Hong Kong Ltd, acompany engaged in power supply, from September 2005 to February 2006. Mr Sin graduated fromHong Kong Polytechnic University in 1997 with a Higher Certificate in Accountancy. Mr Sin became anAssociate Member of the Hong Kong Institute of Certified Public Accountants and the Association ofInternational Accountants in 2005.

The list of present and past directorships of each Executive Officer over the last five years precedingthe date of this Prospectus is set out below:


Ke Youmi Group Companies Group Companies

Nil Nil


Nil Nil

Zhang Kunshu Group Companies Group Companies

Nil Nil


Nil Xiamen Tongkun Industry & TradingCo., Ltd

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Zhang Anmin Group Companies Group Companies

Nil Nil


Nil Nil

Yang Junqing Group Companies Group Companies

Nil Xiamen Shun Jia Xiang Trading Co.,Ltd


Xiamen HongyangTrading Co., Ltd

Nil

Chan Pak Kin Ken Group Companies Group Companies

Nil Nil


Nil Nil

Sin Kwok Chui Malon Group Companies Group Companies

Nil Nil


Nil Nil

None of our Executive Officers are related to one another, to any of our Directors or SubstantialShareholders, or are related by blood or marriage to one another.

To the best of our knowledge and belief, there are no arrangements or undertakings with any SubstantialShareholders, customers, suppliers or others, pursuant to which any of our Directors and ExecutiveOfficers was appointed.

EMPLOYEES

The functional distribution of our full-time employees as at 31 December 2004, 2005 and 2006 and asat the Latest Practicable Date were as follows:

As at 31 December As at the LatestPracticable Date2004 2005 2006

By function

Production 111 160 168 176

Administration and Finance 37 40 37 47

Sales and Marketing 31 47 54 53

Number of employees 179 247 259 276

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All our employees are located in the PRC. We do not have any part-time employees. Our employeesare not unionised. The relationship and co-operation between the management and staff has beengood and is expected to continue to remain good in the future.

There has not been any incidence of work stoppages or labour disputes that affected our operations.

On 24 December 2004, one of our former employees was injured in an industrial accident while carryingout his duties on our premises and was hospitalised for 28 days. The former employee claimed for (i)food subsidies during hospitalisation; (ii) once-off medical subsidies; and (iii) workmen injuriescompensation. This matter was referred to the Xiamen Haicang District Labour Dispute ArbitrationCommittee (the “Arbitration Committee”). On 14 February 2006, the Arbitration Committee ordered thata compensation of approximately RMB22,000 be paid to the employee. Such compensation hasalready been made.

REMUNERATION

The compensation paid to our Directors and our Executive Officers for services rendered to us on anindividual basis and in remuneration bands during FY2005, FY2006 and the estimated remuneration forthe current FY2007 are as follows:

Names FY2005 FY2006Estimated for

current FY2007

Directors

Yang Qingjin Band A Band A Band A

Chen Yongfu Band A Band A Band A

Wong Chit Fu Nil Nil Band A

Yan Yilin Band A Band A Band A

Chan Yin David N/A N/A Band A

Lee Liang Ping N/A N/A Band A

Liao Quanwen N/A N/A Band A

Management

Ke Youmi Band A Band A Band A

Zhang Kunshu Band A Band A Band A

Zhang Anmin Band A Band A Band A

Yang Junqing Band A Band A Band A

Chan Pak Kin Ken N/A N/A Band A

Sin Kwok Chui Malon N/A N/A Band A

Notes:

(1) Band A means up to S$250,000.

(2) To determine the remuneration band for each of our Directors and Executive Officers, we have used the year-end S$:RMBexchange rate for FY2005 and FY2006 and the S$:RMB exchange rate as at the Latest Practicable Date for the current

FY2007.

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We have not set aside or accrued any amounts for our Directors and Executive Officers to provide forpension, retirement or similar benefits.

SERVICE AGREEMENTS

On 24 September 2007, we entered into separate service agreements (the “Service Agreements”) withour Executive Directors, Yang Qingjin, Chen Yongfu, Wong Chit Fu and Yan Yilin for a period of threeyears (the “Initial Term”) with effect from the date of our listing on the SGX-ST, and thereafter renewablefrom year to year, unless otherwise terminated by either party giving not less than three months’ noticeto the other. We may also terminate their respective Service Agreements if any of these ExecutiveDirectors are guilty of dishonesty, gross misconduct, wilful neglect of duty, continued material breachof the terms of the Service Agreement, becomes bankrupt, is convicted of any criminal offence, refusesto carry out any reasonable lawful order or otherwise acts to the prejudice of our Company and/or ourGroup. None of these Executive Directors will be entitled to any benefits upon termination of theirrespective Service Agreements.

Pursuant to the terms of their respective Service Agreements, each of Yang Qingjin, Chen Yongfu,Wong Chit Fu and Yan Yilin is entitled to an annual salary of RMB960,000, RMB840,000, RMB840,000and RMB720,000 respectively. In addition, there will be in place a performance bonus scheme(“Performance Bonus”) for each of the Executive Directors. Details of the Performance Bonus are setout below:

(a) The Performance Bonus in respect of each financial year commencing from FY2007 (the“Relevant FY”), will be calculated based on the consolidated net profit after tax and extraordinaryitems before deducting for such Performance Bonus paid to the Executive Directors (“NPAT”). Forevery RMB10 million increase in NPAT from the previous FY, a collective bonus of RMB100,000will be paid out to the Executive Directors in the following proportions:

Yang Qingjin 30%

Chen Yongfu 25%

Wong Chit Fu 25%

Yan Yilin 20%

(b) If the increase in NPAT from the previous financial year is less than RMB10 million, the ExecutiveDirectors shall not be entitled to receive Performance Bonus for the Relevant FY.

The Performance Bonus will only be payable to the Executive Directors provided that the Group shall nothave recorded a net consolidated loss after tax and extraordinary items (before deducting for suchPerformance Bonus paid to the Executive Directors and all other executives and directors of the Company)for the previous financial year.

All travelling and travel related expenses, entertainment expenses and other out-of-pocket expensesreasonably incurred by the Executive Directors in the process of discharging their duties on behalf of ourGroup will be borne by us.

Had the Service Agreements been in place since the beginning of FY2006, the aggregate remunerationpayable to our Executive Directors (including annual salary, Performance Bonus and benefits-in-kind)would have been approximately RMB3.9 million instead of RMB0.3 million and our profit before income taxwould have been approximately RMB171.5 million instead of approximately RMB175.1 million.

Save as disclosed above, there are no existing or proposed service agreements between us, oursubsidiaries and any of our Directors. There are no existing service agreements entered into or proposedservice agreements to be entered into by us or any of our subsidiaries which provide for benefits upontermination of employment.

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CHANGTIAN EMPLOYEE SHARE OPTION SCHEME

On 24 September 2007, our Shareholders approved an employee share option scheme known as theChangtian Employee Share Option Scheme (the “ESOS’’), the rules of which are set out in AppendixG — “Rules of the Changtian Employee Share Option Scheme” of this Prospectus. The ESOS complieswith the relevant rules of the SGX-ST as set out in Chapter 8 of the Listing Manual. The ESOS willprovide eligible participants with an opportunity to participate in our equity and to motivate themtowards better performance through increased dedication and loyalty. The ESOS, which forms anintegral and important component of our employee compensation plan, is designed to primarily rewardand retain executive directors, non-executive directors and employees of our Group whose services arevital to our well being and success.

As at the Latest Practicable Date, there are 276 employees in our Group and no Options have beengranted under the ESOS.

Objectives of the ESOS

The objectives of the ESOS are as follows:

(a) to motivate participants to optimise their performance standards and efficiency and to maintain ahigh level of contribution to our Group;

(b) to retain key employees and directors whose contributions are essential to the long-term growthand profitability of our Group;

(c) to instill loyalty to and a stronger identification by participants with the long-term prosperity of ourGroup;

(d) to attract potential employees with the relevant skill sets to contribute to our Group and to createvalue for our Shareholders; and

(e) to align the interest of participants with the interests of our Shareholders.

Summary of ESOS

A summary of the rules of the ESOS is set out as follows:

(1) Participants

Under the rules of the ESOS, executive and non-executive directors (including our IndependentDirectors) and employees of our Group, who are not Controlling Shareholders or their Associates,are eligible to participate in the ESOS.

(2) Administration

The ESOS shall be administered by the Remuneration Committee with powers to determine, interalia, the following:

(a) persons to be granted Options;

(b) number of Options to be granted; and

(c) recommendations for modifications to the ESOS.

As at the date of this Prospectus, our Remuneration Committee comprises Yang Qingjin, ourChairman and Executive Director, Chan Yin David, Lee Liang Ping and Liao Quanwen, ourIndependent Directors. The Remuneration Committee will consist of Directors (including Directorsor persons who may be participants of the ESOS). A member of the Remuneration Committeewho is also a participant of the ESOS must not be involved in its deliberation in respect of Optionsgranted or to be granted to him.

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(3) Size of the ESOS

The aggregate number of Shares over which the Remuneration Committee may grant Options onany date, when added to the nominal amount of Shares issued and issuable in respect of allOptions granted under the ESOS shall not exceed 15 per cent of our issued share capital on theday immediately preceding the date of the relevant grant.

We believe that this 15 per cent limit set by the SGX-ST gives us sufficient flexibility to decide thenumber of Option Shares to offer to our existing and new employees. 15 per cent of ourpost-Invitation share capital constitutes approximately 99 million Shares. As it is intended that theESOS shall last for ten years, assuming that there is no change in our total issued share capital,the number of Options that may be granted in a year will average approximately 9.9 millionShares. The number of eligible participants is expected to grow over the years. We, in line withits goal of ensuring sustainable growth, are constantly reviewing its position and considering theexpansion of its talent pool which may involve employing new employees. The employee base,and thus the number of eligible participants will increase as a result. If the number of Optionsavailable under the ESOS is limited, we may only be able to grant a small number of Options toeach eligible participant which may not be a sufficiently attractive incentive. We are of the opinionthat we should have sufficient number of Options to offer to new employees as well as to existingones. The number of Options offered must also be significant to serve as a meaningful reward forcontributions to our Group. However, it does not necessarily mean that the RemunerationCommittee will definitely issue Option Shares up to the prescribed limit. The RemunerationCommittee shall exercise its discretion in deciding the number of Option Shares to be granted toeach employee which will depend on the performance and value of the employee to our Group.

(4) Maximum entitlements

The aggregate number of Shares comprised in any Option to be offered to a participant under theESOS shall be determined at the absolute discretion of the Remuneration Committee, which shalltake into account (where applicable) criteria such as rank, past performance, years of service,potential for future development of that participant.

(5) Options, exercise period and exercise price

The Options that are granted under the ESOS may have exercise prices that are, at the discretionof the Remuneration Committee, set at a price (the “Market Price”) equal to the average of the lastdealt prices for the Shares on the Official List of the SGX-ST for the five consecutive Market Daysimmediately preceding the relevant date of grant of the relevant Option; or at a discount to theMarket Price (subject to a maximum discount of 20 per cent). Options which are fixed at theMarket Price (“Market Price Option”) may be exercised after the first anniversary of the date ofgrant of that Option while Options exercisable at a discount to the Market Price (“DiscountedOption”) may only be exercised after the second anniversary from the date of grant of the Option.Options granted under the ESOS will have a life span of ten years. Under no circumstances shallthe exercise price be less than the nominal value of a Share.

(6) Grant of options

Under the rules of the ESOS, there are no fixed periods for the grant of Options. As such, offersfor the grant of Options may be made at any time from time to time at the discretion of theRemuneration Committee. However, no Option shall be granted during the period of 30 daysimmediately preceding the date of announcement of our interim or final results (as the case maybe).

In addition, in the event that an announcement on any matter of an exceptional nature involvingunpublished price sensitive information is imminent, offers may only be made after the secondMarket Day from the date on which the aforesaid announcement is made.

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(7) Termination of Options

Special provisions in the rules of the ESOS deal with the lapse or earlier exercise of Options incircumstances which include the termination of the participant’s employment in our Group, thebankruptcy of the participant, the death of the participant, a take-over of our Company and thewinding-up of our Company.

(8) Acceptance of Options

The grant of Options shall be accepted within 30 days from the date of offer. Offers of Optionsmade to grantees, if not accepted before the closing date, will lapse. Upon acceptance of the offer,the grantee must pay us a consideration of S$1.00.

(9) Rights of Shares arising

Shares arising from the exercise of Options are subject to the provisions of the Memorandum ofAssociation of our Company and the Bye-laws. The Shares so allotted will upon issue rank paripassu in all respects with the then existing issued Shares, save for any dividend, rights, allotmentsor distributions, the record date (“Record Date”) for which is prior to the relevant exercise date ofthe Option. “Record Date’’ means the date as at the close of business on which Shareholdersmust be registered in order to participate in any dividends, rights, allotments or other distributions(as the case may be).

(10) Duration of the ESOS

The ESOS shall continue in operation for a maximum duration of ten years and may be continuedfor any further period thereafter with the approval of our Shareholders by ordinary resolution ingeneral meeting and of any relevant authorities which may then be required.

(11) Abstention from voting

Shareholders who are eligible to participate in the ESOS are to abstain from voting on anyresolution of Shareholders relating to the ESOS.

Grant of Discounted Options

The ability to offer Options to participants of the ESOS with exercise prices set at a discount to theprevailing market prices of the Shares will operate as a means to recognise the performance ofparticipants as well as to motivate them to continue to excel while encouraging them to focus more onimproving the profitability and return of our Group above a certain level which will benefit ourShareholders when these are eventually reflected through share price appreciation. The ESOS will alsoserve to recruit new employees whose contributions are important to the long-term growth andprofitability of our Group. Discounted Options would be perceived in a more positive light by theparticipants, inspiring them to work hard and produce results in order to be offered Discounted Optionsas only employees who have made significant contributions to the success and development of ourGroup would be granted Discounted Options.

The flexibility to grant Discounted Options is also intended to cater to situations where the stock marketperformance has overrun the general market conditions. In such events, the Remuneration Committeewill have absolute discretion to:

(a) grant Options set at a discount to the Market Price of a Share (subject to a maximum discount of20 per cent of the Market Price); and

(b) determine the participants to whom, and the Options to which, such reduction in exercise priceswill apply.

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In determining whether to give a discount and the quantum of the discount, the Remuneration Committeeshall be at liberty to take into consideration factors including the performance of our Group, theperformance of the participant concerned, the contribution of the participant to the success anddevelopment of our Group and the prevailing market conditions.

At present, we foresee that Discounted Options may be granted principally in the following circumstances:

(a) Firstly, where it is considered more effective to reward and retain talented employees by way ofa Discounted Option rather than a Market Price Option. This is to reward the outstandingperformers who have contributed significantly to our Group’s performance and the DiscountedOption serves as additional incentives to such Group employees. Options granted by us on thebasis of market price may not be attractive and realistic in the event of an overly buoyant marketand inflated share prices. Hence during such period the ability to offer Discounted Options wouldallow us to grant Options on a more realistic and economically feasible basis. Furthermore,Discounted Options will give an opportunity to our Group’s employees to realise some tangiblebenefits even if external events cause the Share price to remain largely static.

(b) Secondly, where it is more meaningful and attractive to acknowledge a participant’s achievementsthrough a Discounted Option rather than paying him a cash bonus. For example, DiscountedOptions may be used to compensate employees and to motivate them during economicdownturns when wages (including cash bonuses and annual wage supplements) are frozen orcut, or they could be used to supplement cash rewards in lieu of larger cash bonuses or annualwage supplements. Accordingly, it is possible that merit-based cash bonuses or rewards may becombined with grants of Market Price Options or Discounted Options, as part of eligibleemployees’ compensation packages. The ESOS will provide our Group’s employees with anincentive to focus more on improving the profitability of our Group thereby enhancing shareholdervalue when these are eventually reflected through the price appreciation of our Shares after thevesting period.

(c) Thirdly, where due to speculative forces and having regard to the historical performance of theShare price, the Market Price of our Shares at the time of the grant of the Options may not bereflective of financial performance indicators such as return on equity and/or earnings growth.

The Remuneration Committee will have the absolute discretion to grant Discounted Options, to determinethe level of discount (subject to a maximum discount of 20 per cent of the Market Price) and the granteesto whom, and the Options to which, such discount in the exercise price will apply provided that ourShareholders in general meeting shall have authorised, in a separate resolution, the making of offers andgrants of Options under the ESOS at a discount not exceeding the maximum discount as aforesaid.

We may also grant Options without any discount to the Market Price. Additionally, we may, if we deem fit,impose conditions on the exercise of the Options (whether such Options are granted at the market priceor at a discount to the Market Price), such as restricting the number of Shares for which the Option maybe exercised during the initial years following its vesting.

Rationale for participation of directors (including our Independent Directors) and employees ofour Group

The extension of the ESOS to the executive and non-executive directors (including our IndependentDirectors but excluding Controlling Shareholders or their Associates) and employees of our Groupallows our Group to have a fair and equitable system to reward directors and employees who havemade and who continue to make significant contributions to the long-term growth of our Group.

Non-executive directors bring to our Group their wealth of knowledge, business expertise and contactsin the business community. It is desirable that non-executive directors of our Group be allowed toparticipate in the ESOS to incentivise and retain them and to further align their interests with that of ourGroup.

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Granting eligibility to the non-executive directors of our Group gives us the ability to supplement thecurrent cash-based remuneration by way of director’s fees to the non-executive directors of our Groupfor their services and will help us remain competitive in the remuneration of the non-executive directorsof our Group when other listed companies offer share options to their non-executive directors.

We are of the view that including the non-executive directors of our Group in the ESOS will show ourappreciation for, and further motivate them in their contribution towards our success. However, as werecognise that the services and contributions of the non-executive directors of our Group cannot bemeasured in the same way as those of our full time employees, we envisage that the bulk of the Optionswill be given to our employees. Our non-executive directors will be granted Options at the discretion ofour Remuneration Committee.

Our Remuneration Committee, when deciding on the selection of the non-executive directors of ourGroup to participate in the ESOS and the number of Options to be offered, will take into considerationthe nature and extent of their input, the assistance and expertise rendered by them to the board ofDirectors and the impact thereof on the growth, success and development of our Group, as well as theirinvolvement and commitment to the boards of directors on which they sit. Our RemunerationCommittee may, where it considers relevant, take into account other factors such as the economicconditions and our Group’s performance.

Although our non-executive directors may be appointed as members of our Remuneration Committee,the rules of the ESOS provide that a member is not to be involved in its deliberations in respect of thegrant of Options to him. We will ensure that the number of Options granted to the non-executivedirectors of our Group will be such that any conflict of interests that may potentially arise is kept minimaland that the independence of the non-executive directors of our Group are not compromised.

It is our intention that all our employees whether key employees or not should be treated equally for thepurposes of the ESOS. The main purpose of the ESOS is to align the interests of our directors and allemployees who are involved in our business and prosperity with those of our own. The extension of theESOS to all our employees allows us a fair and equitable system to reward employees who have madeand will continue to make important contributions to our long-term growth, be they key employees orotherwise.

We believe that the ESOS will be an essential part of our strategy for recruiting and retaining capableemployees. The ESOS will provide an incentive to our employees to achieve and maintain a high levelof performance as well as to encourage greater dedication and loyalty by enabling us to giverecognition to past contributions and services as well as to further encourage participants generally tocontribute towards our long term prosperity. To this end, we will determine the number of Options to begranted to an employee by taking into account the appointment, responsibilities, length of service,potential and performance. The level of performance of each employee will be assessed on the basisof an annual appraisal process for all employees.

Cost of Options granted under the ESOS to our Company

The grant of Options under the ESOS will result in an increase in our issued share capital to the extentthat Options are exercised and new Shares are issued. This will in turn depend on, inter alia, thenumber of Shares comprised in the Options granted, the vesting schedules and the prevailing MarketPrice of the Shares on the SGX-ST.

The issue of new Shares upon the exercise of Options granted under the ESOS will have the effect ofincreasing our consolidated NTA by the aggregate exercise price of the new Shares issued. On a perShare basis, the effect would be accretive if the exercise price is above the NTA per Share but dilutiveotherwise.

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Based on the International Financial Reporting Standards, no cash outlays would be expended by usat the time Options are granted by it (as compared with cash bonuses). However, whenever the Optionsare granted to subscribe for new Shares, such Options have a fair value attached to them at the timeof grant. This fair value is the estimated value of the Option on its date of grant and may be derived byapplying a variety of valuation techniques or pricing models developed for valuing traded options.

Under the ESOS, each participant to whom an Option is offered pays a nominal consideration of S$1.00to us on his acceptance of the offer of the Option. Insofar as such Options are granted at aconsideration that is less than their fair value at the time of grant, there will be a cost to us (in that wewill receive from the participant upon the grant of the Option to him, a consideration that is less thanthe fair value of the Option).

The cost to us in granting an Option would vary depending on the number of Options granted pursuantto the ESOS, whether these Options are granted at Market Price or at a discount and the validity periodof the Options. Generally a greater discount and a longer validity period for an Option will result in ahigher potential cost to us. If such costs were to be recognised, it would have to be charged to our profitand loss account at the time the Options are granted.

The issuance of new Shares under the ESOS will have a dilutive impact on our consolidated EPS.However, the impact is not expected to be material in any given financial year as the Options are likelyto be exercised over several years in accordance with the predetermined vesting schedules.

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INTERESTED PERSON TRANSACTIONS

In general, transactions between our Group and any of our interested persons (namely, our Directors,Executive Officers or Controlling Shareholders and their Associates) are known as interested persontransactions. The following discussion on material interested person transactions for the last threefinancial years ended 31 December 2006 and up to the Latest Practicable Date, is based on our Groupand the term “interested persons” is construed accordingly.

Save for the interested person transactions discussed below and as set out under the section“Restructuring Exercise” of this Prospectus, there are no other interested person transactionsundertaken by our Group within the last three financial years and up to the Latest Practicable Date.

The following transactions between our subsidiaries and Xiamen Changtian are considered interestedpersons transactions because Chen Yongfu, our Deputy Chairman and Executive Director, and ChenBaohua (an associate of our Directors, being the wife of Yang Qingjin (our Chairman and ExecutiveDirector) and the sister of Chen Yongfu (our Deputy Chairman and Executive Director)), were theshareholders of Xiamen Changtian at the relevant times.

The following transactions between our subsidiaries and Xiamen Brightforever are consideredinterested persons transactions because Wong Chit Fu, our Executive Director, was a shareholder ofXiamen Brightforever at the relevant times.

PAST INTERESTED PERSONS TRANSACTIONS

(1) Sale of land use rights to Xiamen Brightforever

On 22 June 2005, Xiamen Changtian and Xiamen Brightforever entered into a contract for thesale of Xiamen Changtian’s land use rights in respect of the property situated at 16 XinshengRoad, Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, PRC 361026which is adjacent to the plant of Xiamen Changtian for a consideration of approximately RMB4.63million. The consideration was arrived after arm’s length negotiations, and based on XiamenChangtian’s enquiries with real estate agents and its understanding of the property market at thattime.

Our Executive Director, Wong Chit Fu, is a director and shareholder of Xiamen Brightforever, witha 9.56% direct interest in Xiamen Brightforever. The other shareholders of Xiamen Brightforeverare Xiamen Changkai with a 69.33% interest and Sunwin International Limited with a 21.11%interest. Wong Chit Fu holds 90% of the shares in Sunwin International Limited. None of ourControlling Shareholders or Directors has any interest in Xiamen Changkai.

We believe that the sale and purchase agreement was carried out on an arm’s length basis andon normal commercial terms as Xiamen Changtian recorded a gain of RMB1.4 million.

Our Company does not expect to enter into any future transactions of the above nature.

(2) Lease of factory premises, plant and equipment from Xiamen Brightforever

On 20 March 2005, Xiamen Changtian entered into a lease agreement with Xiamen Brightforeverwhereby Xiamen Changtian agreed to lease from Xiamen Brightforever the manufacturingfacilities for the production of BOPA film (including the factory premises, and plant and equipment)situated at 16 Xinsheng Road, Xinyang Industrial Zone, Haicang District, Xiamen City, FujianProvince, PRC 361026.

The lease was for a period of 9 years commencing 1 April 2005 and ending 31 March 2014. Themonthly rent payable under the lease agreement is RMB0.4 million per month for the first year,

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and RMB0.5 million per month from the second year onwards. We had leased the manufacturingfacilities from Xiamen Brightforever as we did not want to incur substantial capital expenditureassociated with an acqusition of the manufacturing facilities at that time.

We believe that the lease agreement was carried out on an arm’s length basis and on normalcommercial terms.

Following the Initial Asset and Business Transfer Agreement and the acquisition of the BOPA filmplant and equipment used in the manufacture of BOPA film (described further below), the leaseagreement between Xiamen Changtian and Xiamen Brightforever dated 20 March 2005 wasterminated. On 21 May 2007, Changtian Enterprise entered into a lease agreement with XiamenBrightforever for the lease of the premises and the corresponding land use rights (describedfurther below).

(3) Acquisition of the business and assets of Xiamen Changtian

(a) Initial Asset and Business Transfer Agreement

On 14 April 2006, our subsidiary, Jumbo Glories, entered into the Initial Asset and BusinessTransfer Agreement (as amended by the Supplemental Transfer Agreement dated 21 May2007) pursuant to which Jumbo Glories agreed to acquire all of Xiamen Changtian’sbusiness (including its relevant product and sales activities, assets and obligations excludingits land use rights and building ownership) (the “Changtian Assets and Business”). At thetime the Initial Asset and Business Transfer Agreement was entered into, the directors ofXiamen Changtian were Chen Yongfu (our Deputy Chairman and Executive Director), ChenBaohua and Wong Chit Fu. The shareholders of Xiamen Changtian were Chen Yongfu (ourDeputy Chairman and Executive Director), with a 55.7% interest and Chen Baohua with a44.3% interest.

The total purchase consideration was US$18.5 million, which is approximately RMB143.48million, arrived at based on the NAV of the Changtian Assets and Business as at 31December 2005, as determined by an independent valuer, Xiamen Dacheng ValuationOffice in its assets valuation report dated 30 March 2006. The totalpurchase consideration was to be satisfied in full by cash payment.

(b) Supplemental Transfer Agreement

On 21 May 2007, our subsidiaries, Jumbo Glories and Changtian Enterprise, entered intothe Supplemental Transfer Agreement with Xiamen Changtian to amend the Initial Asset andBusiness Transfer Agreement.

Under the Supplemental Transfer Agreement, the parties agreed that the total purchaseconsideration shall remain at US$18.5 million (approximately RMB143.48 million). Theparties also agreed that Changtian Enterprise would assume and be liable for all rights,obligations and benefits of the assets and business acquired from Xiamen Changtian witheffect from 1 January 2007 and all the profits generated by Xiamen Changtian for the periodfrom 1 January 2007 shall belong to Changtian Enterprise.

In arriving at this agreement, the parties have considered the valuation of the ChangtianAssets and Business as at 31 January 2007 of RMB155.14 million by Xiamen DachengValuation Office in its valuation report dated 10 March 2007, and that after deducting theprofits generated by Xiamen Changtian for the period from 1 January 2007 to 31 January2007 amounting to RMB10.93 million from the valuation of RMB155.14 million, the NAV ofthe Changtian Assets and Business as at 31 December 2006 was RMB144.21 million.

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The acquisition as contemplated by the Initial Asset and Business Transfer Agreement (andas amended by the Supplemental Transfer Agreement) was completed on 11 June 2007. Webelieve that the transactions pursuant to the Initial Asset and Business Transfer Agreementand the Supplemental Transfer Agreement were carried out on an arm’s length basis and onnormal commercial terms as the consideration payable under the agreements wasdetermined by independent valuation reports.

(c) Trademark Transfer Agreement

On 21 May 2007, pursuant to the Supplemental Transfer Agreement, Changtian Enterpriseentered into a trademark transfer agreement (the “Trademark Transfer Agreement”) withXiamen Changtian to transfer all of the trademarks already registered and being registeredby Xiamen Changtian to our subsidiary, Changtian Enterprise. As the trademarks were partof the assets transferred under the Initial Business and Assets Transfer Agreement, therewas no further consideration payable under the Trademark Transfer Agreement.

Please refer to the section “Restructuring Exercise” of this Prospectus for more details of theTrademark Transfer Agreement.

(4) Acquisition of plant and machinery from Xiamen Brightforever

On 21 May 2007, Changtian Enterprise entered into a Machinery Acquisition Agreement withXiamen Brightforever to acquire from Xiamen Brightforever plant and machinery used in themanufacture of BOPA film and certain office equipment and motor vehicles for a consideration ofapproximately RMB79.85 million, with effect from 1 April 2007. The consideration was determinedbased on the valuation report dated 8 March 2007 of the plant and machinery as at 31 December2006, conducted by an independent valuer, LCH (Asia-Pacific) Surveyors Limited.

In accordance with the Machinery Acquisition Agreement, an initial payment of 30% of theacquisition price of approximately RMB79.85 million was paid to Xiamen Brightforever within 90days from 1 April 2007, with the balance to be settled in full within one year from 1 April 2007.

We believe that the transactions pursuant to the Machinery Acquisition Agreement was carried outon an arm’s length basis and on normal commercial terms as the consideration payable wasdetermined based on an independent valuation report.

(5) Payments made by Yang Qingjin on our behalf

Yang Qingjin is our Chairman and Executive Director and substantial shareholder. In 2006, YangQingjin paid for certain expenses relating to the Invitation. As at 31 March 2007, the amount owingto Yang Qingjin was approximately RMB84,000. The advance from Yang Qingjin was unsecured,interest-free and repayable on demand. The Company repaid Yang Qingjin in full on 13 July 2007.


(6) Payments made by our Company on behalf of Xiamen Changtian

In January 2007, Changtian Enterprise paid an aggregate amount of approximately RMB18.9million in respect of mainly enterprise taxes and value added tax incurred, due and payable byXiamen Changtian. Xiamen Changtian has repaid the full amount owing to us on 31 July 2007.


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(7) Guarantees given by Xiamen Changtian

(a) In respect of the borrowings of Xiamen Brightforever

Xiamen Changtian had provided a guarantee to the Industrial and Commercial Bank ofChina for a bank loan extended to Xiamen Brightforever. The guarantee provided was for aperiod of 2 years from the day following the first repayment date during the loan period from25 September 2003 to 24 September 2006 for up to a maximum amount of RMB130 million.The interest rate on the loan was 6.138% per annum. The largest aggregate outstandingamount under the guarantee given by Xiamen Changtian from the beginning of theguarantee period and up to 30 September 2006 was approximately RMB25 million.

Xiamen Changtian did not receive any form of consideration for the provision of theguarantee. Xiamen Brightforever had made full repayment of the RMB25 million loan inSeptember 2006 and accordingly, the guarantee has been discharged and is no longersubsisting.

(b) In respect of the borrowings of Xiamen Xin Guan

Xiamen Changtian had provided guarantees with respect to certain bank loans to Xiamen XinGuan by the Industrial and Commercial Bank of China, details of which are set out below. Thelargest aggregate outstanding amount under the guarantees given by Xiamen Changtian from thebeginning of the guarantee period and up to 31 December 2006 was approximately RMB13million.

Bank

Amount of loandrawn down for

which the guaranteeis given (RMB) Guarantee Period

Interest rate on theloan per annum

(%)

Industrial and Commercial Bank ofChina

4,500,000 21 March 2003 to20 December 2005

6.831


4,500,000 26 May 2004 to25 May 2006

6.935


2,000,000 11 January 2004 to10 January 2006

6.903


2,000,000 11 February 2004 to10 February 2006

6.903

Xiamen Xin Guan is a company whose shareholders are Liu Guojin and Ye Meili, who are thebrother-in-law and mother-in-law of Yang Qingjin, our Chairman and Executive Director,respectively. Ye Meili is also the mother of Chen Yongfu, our Deputy Chairman and ExecutiveDirector. Liu Guojin and Ye Meili have been the shareholders of Xiamen Xin Guan since the dateof the guarantee period. Please see the section “History and Development” of this Prospectus forfurther details of the ownership of Xiamen Xin Guan.

Chen Yongfu had also undertaken to bear any liability that Xiamen Changtian may incur arisingfrom the guarantee. Xiamen Changtian did not receive any form of consideration for the provisionof the guarantee. The remaining loan has been fully settled at RMB9 million by Xiamen Changtianpursuant to the guarantee indirectly. This payment was in turn reimbursed fully by Chen Yongfuout of dividends declared by Xiamen Changtian. As at 31 December 2006, none of the aboveguarantees are still subsisting.


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(8) Personal guarantees given by our Executive Directors, Yang Qingjin and Chen Yongfu

Our Chairman and Executive Director, Yang Qingjin, our Deputy Chairman and ExecutiveDirector, Chen Yongfu, and Chen Baohua provided personal guarantees to the Agricultural Bankof China as security for a RMB7.9 million loan extended to Xiamen Changtian. The largestaggregate outstanding amount guaranteed by Yang Qingjin, Chen Yongfu and Chen Baohua fromthe beginning of the guarantee period and up to 31 December 2006 was approximately RMB7.9million. The personal guarantees had been given for no consideration. The said loan had beenrepaid in full and none of the personal guarantees are subsisting as at 31 December 2006.


PRESENT ONGOING INTERESTED PERSONS TRANSACTIONS

(1) Lease of factory premises from Xiamen Changtian

On 21 May 2007, our subsidiary, Changtian Enterprise, entered into the Changtian LeaseAgreement (as amended by the Supplemental Lease Agreement dated 6 July 2007) with XiamenChangtian whereby Changtian Enterprise agreed to lease from Xiamen Changtian the premisesand the underlying land use rights, at 18 Xinsheng Road, Xinyang Industrial Zone, HaicangDistrict, Xiamen City, Fujian Province, PRC 361026 where our production facilities for theproduction of adhesive tapes, release papers and 2-A2MPS are situated. The leased premiseshas an aggregate building floor area of approximately 20,960 sq m comprising factory premises,warehouses and staff quarters.

The lease is for a period of 20 years commencing 1 January 2007 to 31 December 2026, asamended by the Supplemental Lease Agreement, at an annual rent of RMB2.3 million asdetermined by a valuation report dated 5 March 2007 prepared by an independent valuer, LCH(Asia-Pacific) Surveyors Limited. The annual rental is payable on a quarterly basis. However,pursuant to the Supplemental Lease Agreement, the parties agreed that no rent shall be payablefor the period from 1 January 2007 to 31 March 2007. Under the Changtian Lease Agreement,upon the expiry of the initial three year term, the lease may be terminated at the option ofChangtian Enterprise by giving at least three months’ notice to Xiamen Changtian. The annualrental payable after the first three years of the lease is subject to review every three years andmay be adjusted based on an independent valuers’ valuation to ascertain prevailing market price.

Further, under the Changtian Lease Agreement, Changtian Enterprise has the option to acquirethe leased premises from Xiamen Changtian at the prevailing market price to be determined byindependent valuers. We are leasing the premises from Xiamen Changtian as we currently do notwant to incur a substantial capital expenditure associated with an acquisition of the premises.

We believe that the lease agreement was carried out on an arm’s length basis and on normalcommercial terms as the annual rental was determined by reference to an independent valuationreport.

We will comply with the provisions of Chapter 9 of the Listing Manual in respect of this interestedperson transaction and if required, seek shareholders’ approval for this lease.

(2) Lease of factory premises from Xiamen Brightforever

On 21 May 2007, our subsidiary, Changtian Enterprise, entered into the Brightforever LeaseAgreement with Xiamen Brightforever whereby Changtian Enterprise agreed to lease fromXiamen Brightforever the premises and corresponding land use rights, situated at 16 XinshengRoad, Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, PRC 361026where our production facilities for BOPA film are situated. The leased premises has an aggregatebuilding floor area of approximately 11,270.00 sq m.

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The lease is for a period of 20 years commencing from 1 April 2007, at an annual rent of RMB1.2million determined by a valuation report dated 5 March 2007 prepared by an independent valuer,LCH (Asia-Pacific) Surveyors Limited. Under the Brightforever Lease Agreement, upon the expiryof the initial three year term, the lease may be terminated at the option of Changtian Enterpriseby giving at least three months’ notice to Xiamen Brightforever.

The annual rental payable after the first three years of the lease is subject to review once everythree years and may be adjusted based on an independent valuers’ valuation to ascertainprevailing market price.

Further, under the Brightforever Lease Agreement, Changtian Enterprise has the option to acquirethe leased premises from Xiamen Brightforever at the prevailing market price to be determined byindependent valuers. We are leasing the premises from Xiamen Brightforever as we currently donot want to incur a substantial capital expenditure associated with an acquisition of the premises.

We believe that this lease agreement was carried out on an arm’s length basis as the annualrental was determined by an independent valuation report.

We will comply with the provisions of Chapter 9 of the Listing Manual in respect of this interestedperson transaction and if required, seek shareholders’ approval for this lease.

REVIEW PROCEDURES FOR ONGOING AND FUTURE INTERESTED PERSON TRANSACTIONS

Our Audit Committee will review and approve all interested person transactions to ensure that they areon normal commercial terms and arm’s length basis, that is, the transactions are transacted on termsand prices not more favourable to the interested persons than if they were transacted with a third partyand are not prejudicial to the interests of our Shareholders in any way.

During its periodic review or such other review deemed necessary by it, our Audit Committee will carryout a review of records of all interested person transactions to ensure that they are carried out inaccordance with the following internal control procedures:

(a) All interested person transactions above S$100,000 are to be approved by a Director who shallnot be an interested person in respect of that particular transaction. Interested persontransactions below S$100,000 do not require such approval. Any sale or purchase contracts to bemade with an interested person shall not be approved unless the pricing is:

(i) determined in accordance with our usual business practices and policies;

(ii) consistent with the usual margin given or price received by us for the same or substantiallysimilar type of transactions between us and unrelated parties; and

(iii) the terms are no more favourable to the interested person than those extended to orreceived from unrelated third parties.

For the purpose of the above, contracts for the same or substantially similar type of transactionsentered into between us and unrelated third parties, if any, will be used as a basis for comparisonto determine whether the price and terms offered to or received from the interested person are nomore favourable than those extended to unrelated third parties.

(b) In addition, we shall monitor all interested person transactions entered into by us and categorisethese transactions as follows:

(i) a Category 1 interested person transaction is one where the value thereof is in excess of 3.0per cent of the NTA of the Group; and

(ii) a Category 2 interested person transaction is one where the value thereof is below or equalto 3.0 per cent of the NTA of the Group.

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All Category 1 interested person transactions must be approved by our Audit Committee prior to entrywhereas Category 2 interested person transactions need not be approved by our Audit Committee prior toentry but shall be reviewed on a quarterly basis by our Audit Committee.

Before any agreement or arrangement that is not in the ordinary course of business of our Group istransacted, prior approval must be obtained from our Audit Committee. In the event that a member of ourAudit Committee is interested in any of the interested person transactions, he will abstain from reviewingthat particular transaction. Any decision to proceed with such an agreement or arrangement would berecorded for review by our Audit Committee.

Our Audit Committee will also review all interested person transactions to ensure that the prevailing rulesand regulations of the SGX-ST (in particular Chapter 9 of the Listing Manual) are complied with.

We will also comply with the provisions in Chapter 9 of the Listing Manual in respect of all future interestedperson transactions, and if required under the Listing Manual or the Act, we will seek our Shareholders’approval (where necessary) for such transactions. We will also endeavour to comply with the Code ofCorporate Governance 2005 and Chapter 12 of the Listing Manual.

All the Independent Directors, who are members of our Audit Committee, are of the view that the reviewprocedures and systematic monitoring mechanism of all interested person transactions as mentionedabove, are adequate in ensuring that such transactions will be on normal commercial terms and will notbe prejudicial to the interests of our Shareholders in any way.

CONFLICTS OF INTEREST

Save as disclosed in the section “Interested Person Transactions” of this Prospectus respectively, noneof our Directors, Controlling Shareholders and Executive Officers or their Associates has any materialinterest, direct or indirect in:

(a) any company carrying out the same business or a similar trade as our Group, directly or indirectly;

(b) any enterprise or company that is our Group’s customer or supplier of goods or services; and

(c) any transaction to which we were or are a party.

Notwithstanding the absence of any conflict that would materially affect our business and operations, eachof our Executive Directors, Yang Qingjin, Chen Yongfu, Wong Chit Fu and Yan Yilin has entered into a deedof undertaking (the “Deed of Undertaking”). Pursuant to the Deed of Undertaking, each of them hasundertaken to the Company that he will not be interested (directly or indirectly), either on his own accountor in conjunction with or on behalf of any person, firm, or company, directly or indirectly and whether or notfor gain, carry on or be interested in (i) the sale and manufacture of adhesive tapes, release papers, BOPAfilm and 2-A2MPS in the PRC; (ii) any other business in the PRC similar to any business carried on by anymember of our Group; or (iii) be engaged or interested in or concerned with any business in the PRC whichis in any respect in competition with or similar to any business of our Group, and shall procure that eachof their associates (as defined in the Listing Manual) will comply with the terms of the Deed of Undertaking.Each of the Executive Directors is bound by the terms of Deed of Undertaking for as long as our Companyis listed on the SGX-ST.

Our Chairman and Executive Director, Yang Qingjin, owns 100% of the Eastline Investments HoldingLimited, our Company’s Controlling Shareholder with a post-Invitation shareholding of 25.73%. ChenBaohua, the wife of Yang Qingjin (our Chairman and Executive Director) and the sister of Chen Yongfu (ourDeputy Chairman and Executive Director), owns 44.3% of Xiamen Changtian. Our Deputy Chairman andExecutive Director, Chen Yongfu, owns 100% of Goodwise Investments Limited, the ControllingShareholder of our Company with a post-Invitation shareholding of 30.08%. Chen Yongfu also owns 55.7%of Xiamen Changtian. The principal activity of Xiamen Changtian is the lease of properties. As disclosedin the section “Present Ongoing Interested Persons Transaction” of this Prospectus, Xiamen Changtiancurrently leases its premises and certain land use rights to our subsidiary, Changtian Enterprise. Ye Meili

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(mother of Chen Yongfu and mother-in-law of Yang Qingjin) owns 26.56% interest in Xiamen Xin Guan. YeMeili has confirmed that Xiamen Xin Guan is no longer carrying on any business operations.

INTERESTS OF EXPERTS

None of the experts named in this Prospectus:

(a) is employed on a contingent basis by our Company or any of our subsidiaries; or

(b) has a material interest, whether direct or indirect, in our Shares or in the shares of oursubsidiaries; or

(c) has a material economic interest, whether direct or indirect, in our Company, including an interestin the success of the Invitation.

INTERESTS OF UNDERWRITERS OR FINANCIAL ADVISERS

Save as disclosed in the section “Management, Underwriting and Placement Arrangements” of thisProspectus, none of the underwriters or financial advisers in relation to the Invitation has a materialrelationship with our Company in the reasonable opinion of our Directors.

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CORPORATE GOVERNANCE

Our Memorandum of Association and Bye-laws provide that our board of Directors will consist of notless than two Directors. None of our Directors are appointed for any fixed terms, but one-third of ourDirectors are required to retire at every annual general meeting of our Company. Hence, the maximumterm for each Director is three years. Directors who retire are eligible to stand for re-election.

Yang Qingjin is our Chairman and Executive Director. Yang Qingjin plays a key role in our Companybeing responsible for the business direction and development of our Group. With his years of businessexperience, our Company is of the view that he is capable of carrying out both roles concurrently.

In view of Yang Qingjin’s concurrent appointment as our Chairman and Executive Director, we haveappointed Chan Yin David as our lead Independent Director, pursuant to the recommendations inCommentary 3.3 of the Code of Corporate Governance 2005. In accordance with the recommendationsin the said Commentary 3.3, the lead independent director will be available to shareholders where theyhave concerns which contact through the normal channels of our Chairman and Executive Director hasfailed to resolve or for which such contact is inappropriate.

The Directors recognise the importance of corporate governance and the offering of high standards ofaccountability to the Shareholders of our Company. We have therefore, set up the followingcommittees:

Audit Committee

Our Audit Committee comprises Chan Yin David, Lee Liang Ping, and Liao Quanwen. The Chairmanof our Audit Committee is Lee Liang Ping. Our Directors recognise the importance of corporategovernance and the offering of high standards of accountability to the Shareholders of our Company.Our Audit Committee shall meet periodically to perform the following functions:

(a) review the audit plans of our Company’s external auditors, and (where applicable) our internalauditors, including the results of our auditors’ review and evaluation of our system of internalcontrols;

(b) review the external auditors’ reports;

(c) review the co-operation given by our Company’s officers to the external auditors;

(d) review the financial statements of our Company and our Group before their submission to theboard of Directors;

(e) consider the appointment and/or reappointment of external auditors;

(f) review interested person transactions, falling within the scope of Chapter 9 of the Listing Manual,if any;

(g) review and discuss with auditors any suspected fraud, irregularity or infringement of any relevantlaws, rules or regulations, which has or is likely to have a material impact on our Group’s operatingresults or financial position and our management’s response;

(h) review any potential conflicts of interest;

(i) undertake such other reviews and projects as may be requested by our board of Directors andreport to our board of Directors its findings from time to time on matters arising and requiring theattention of our Audit Committee; and

(j) undertake generally such other functions and duties as may be required by law or the ListingManual, as may be applicable from time to time.

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Apart from the above functions, our Audit Committee will also commission and review the findings ofinternal investigations into matters where there is any suspected fraud or irregularity, or failure of internalcontrols or infringement of any law, rule or regulation which has or is likely to have a material impact onour Company’s operating results and/or financial position.

In addition, all future transactions with related parties shall comply with the requirements of the ListingManual. Each member of the Audit Committee shall abstain from voting any resolutions in respect ofmatters in which he is interested.

Nominating Committee

Our Nominating Committee comprises Yang Qingjin, our Chairman and Executive Director, Chan YinDavid, Lee Liang Ping and Liao Quanwen our Independent Directors. The Chairman of the NominatingCommittee is Liao Quanwen. Our Nominating Committee will be responsible for (i) re-nomination of ourDirectors having regard to the Director’s contribution and performance, (ii) determining annuallywhether or not a Director is independent and (iii) deciding whether or not a Director is able to and hasbeen adequately carrying out his duties as a Director. The Nominating Committee will decide how theboard’s performance is to be evaluated and propose objective performance criteria, subject to theapproval of the board, which address how the board has enhanced long-term Shareholders’ value. Theperformance evaluation will also include consideration of the company’s share price performance overa five-year period vis-a-vis the Singapore Straits Times Index and a benchmark index of its industrypeers. The board will also implement a process to be carried out by the Nominating Committee forassessing the effectiveness of the board as a whole and for assessing the contribution by eachindividual Director to the effectiveness of the board. Each member of the Nominating Committee shallabstain from voting any resolutions in respect of the assessment of his performance or re-nominationas Director.

Remuneration Committee

Our Remuneration Committee comprises Yang Qingjin, our Chairman and Executive Director, LeeLiang Ping, Chan Yin David and Liao Quanwen, our Independent Directors. The Chairman of theRemuneration Committee is Chan Yin David. Our Remuneration Committee will recommend to ourboard of Directors a framework of remuneration for the Directors and key executives officers, determinespecific remuneration packages for each Executive Director and administer the ESOS. Therecommendations of our Remuneration Committee on remuneration of Directors and Chairman shouldbe submitted for endorsement by the entire board. All aspects of remuneration, including but not limitedto Directors’ fees, salaries, allowances, bonuses, options and benefits in kind shall be covered by ourRemuneration Committee. Each member of the Remuneration Committee shall abstain from voting anyresolutions in respect of his remuneration package.

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GENERAL AND STATUTORY INFORMATION

INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS

1. The name, address, age and principal occupation of each of our Directors and Executive Officersare set out under the section “Directors, Management and Staff” of this Prospectus.

2. Information on the business and working experience of each of our Directors and ExecutiveOfficers is set out under the section “Directors, Management and Staff” of this Prospectus.

3. Save as disclosed below, none of our Directors or Executive Officers or Controlling Shareholdersis or was involved in any of the following events:

(a) during the last 10 years, an application or a petition under any bankruptcy laws of anyjurisdiction filed against him or against a partnership of which he was a partner at the timewhen he was a partner or at any time within 2 years from the date he ceased to be a partner;

(b) during the last 10 years, an application or a petition under any law of any jurisdiction filedagainst an entity (not being a partnership) of which he was a director or an equivalent personor a key executive, at the time when he was a director or an equivalent person or a keyexecutive of that entity or at any time within 2 years from the date he ceased to be a directoror an equivalent person or a key executive of that entity, for the winding up or dissolution ofthat entity or, where that entity is the trustee of a business trust, that business trust, on theground of insolvency;

(c) any unsatisfied judgements against him;

(d) a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty whichis punishable with imprisonment, or has been the subject of any criminal proceedings(including any pending criminal proceedings which he is aware) for such purpose;

(e) a conviction of any offence, in Singapore or elsewhere, involving a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere, or has been the subject of any criminal proceedings (including pending criminalproceedings which he is aware) for such breach;

(f) during the last 10 years, judgement entered against him in any civil proceedings inSingapore or elsewhere involving a breach of any law or regulatory requirement that relatesto the securities or futures industry in Singapore or elsewhere, or a finding of fraud,misrepresentation or dishonesty on his part, or he has been the subject of any civilproceedings (including any pending civil proceedings which he is aware) involving anallegation of fraud, misrepresentation or dishonesty on his part;

(g) a conviction in Singapore or elsewhere of any offence in connection with the formation ormanagement of any entity or business trust;

(h) disqualification from acting as a director or an equivalent person of any entity (including thetrustee of a business trust), or from taking part directly or indirectly in the management of anyentity or business trust;

(i) the subject of any order, judgement or ruling of any court, tribunal or governmental bodypermanently or temporarily enjoining him from engaging in any type of business practice oractivity;

(j) to his knowledge, been concerned with the management or conduct, in Singapore orelsewhere, of affairs of:

(i) any corporation which has been investigated for a breach of any law or regulatoryrequirement governing corporations in Singapore or elsewhere;

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(ii) any entity (not being a corporation) which has been investigated for a breach of any lawor regulatory requirement governing such entities in Singapore or elsewhere;

(iii) any business trust which has been investigated for a breach of any law or regulatoryrequirement governing business trusts in Singapore or elsewhere; or

(iv) any entity or business trust which has been investigated for a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere,

in connection with any matter occurring or arising during the period when he was soconcerned with the entity or business trust; and

(k) the subject of any current or past investigation or disciplinary proceedings, or has beenreprimanded or issued any warning, by the Authority or any other regulatory authority,exchange, professional body or government agency, whether in Singapore or elsewhere.

4. On 3 August 2005 and 11 April 2006, the Hong Kong Commissioner of Inland Revenue (the “CIR”)issued two writs of summons against our Director, Wong Chit Fu, claiming HK$8,127 as tax forprofits made in the years of assessment 2003/2004, and HK$20,160 as tax for profits made in theyears of assessment 2004/2005 and 2005/2006. Wong Chit Fu, has since clarified the matter withthe CIR and two Notices of Discontinuance were filed by the CIR on 3 May 2006 and 9 May 2006.The CIR has also confirmed in a letter to Wong Chit Fu dated 12 June 2007 that the matter hadbeen settled and regarded as closed.

5. In August 2007, our Independent Director, Lee Liang Ping, was involved in investigations by theAuthority in relation to his trading in shares in a listed company. After considering Lee Liang Ping’swritten explanation as well as all the facts and circumstances, the Authority has in a letter dated8 October 2007 informed Lee Liang Ping that the Authority has decided not to take any furtheraction against him at this juncture.

SHARE CAPITAL

6. Save as disclosed below and set out under the section “Share Capital” of this Prospectus, therewere no changes in the issued and paid-up capital of our Company and our subsidiaries within thethree years preceding the date of lodgement of this Prospectus.

Date Purpose Par Value AmountNumber of

Shares

ResultantIssued Share

Capital

30 March 2007 Incorporation US$0.10 Nil-paid 1 1 (nil-paid)

6 July 2007Issue of new shares toEastline Investments US$0.10 Nil-paid 99 100 (nil-paid)

24 September2007

Crediting as fully paidthe existing 308 nilpaid Shares pursuantto the RestructuringExercise S$0.05 S$15.40 308 308

24 September2007

Issue of New Sharespursuant to theRestructuring Exercise S$0.05 S$24,999,984.60 499,999,692 500,000,000

7. Save as disclosed above, no shares or debentures of our Company or any of our subsidiarieshave been issued, as fully or partly paid for in cash or for a consideration other than cash, withinthe three years preceding the date of this Prospectus.

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8. Save for options that may be granted pursuant to our ESOS, no person has been, or is entitledto be, granted an option to subscribe for shares in, or debentures of, our Company or any of oursubsidiaries.

LITIGATION

9. On 14 March 2003, Xiamen Changtian entered into a loan agreement with the Agriculture Bankof China, Xiamen Branch, Feikuang Sub-branch (“Agriculture Bank of China”), under which theAgriculture Bank of China agreed to extend a loan of RMB7.9 million to Xiamen Changtian,payable within 4 years. However, before the maturity date of the loan, the Agriculture Bank ofChina started an action against Xiamen Changtian in the Xiamen Intermediate People’s Court toget us to repay the loan in full. When this action was dismissed by the Xiamen IntermediatePeople’s Court, the Agriculture Bank of China took the case to the Fujian Province High LevelPeople’s Court.

Consequently, on 30 November 2005, the Fujian Province High Level People’s Court issued ajudgment numbered (2005) Min Min Zhong Zi No. 401 which held that Xiamen Changtian had topay the Agriculture Bank of China the entire loan amount of RMB7.9 million plus applicableinterest. On 25 April 2006, Xiamen Changtian entered into a settlement agreement with theAgriculture Bank of China, according to which the Agriculture Bank of China agreed that XiamenChangtian could pay the RMB7.9 million in 10 equal monthly instalments starting from April 2006.According to the confirmation given by the Agriculture Bank of China dated 11 May 2007 andreceipts provided by Xiamen Changtian, Xiamen Changtian has repaid the entire loan amount ofRMB7.9 million plus all applicable interest.

Save as disclosed above, neither our Company nor any of our subsidiaries is engaged in anyarbitration proceedings or litigation as plaintiff or defendant in respect of any claims or amountswhich are material in the context of the Invitation and to the best of our Directors’ knowledge andbelief, having made all reasonable enquiries, there are no legal or arbitration proceedings,including those which are pending or known to be contemplated, which may have or have had inthe last 12 months before the date of lodgement of the Prospectus with the Authority, a materialeffect on our financial position or profitability.

MATERIAL CONTRACTS

10. The following contracts not being contracts entered into in the ordinary course of business havebeen entered into by our Company and our subsidiaries within the two years preceding the dateof lodgement of this Prospectus and are or may be material:

(a) Initial Asset and Business Transfer Agreement dated 14 April 2006 as amended by theSupplemental Agreement dated 21 May 2007, between Jumbo Glories and XiamenChangtian for the acquisition of the business and assets of Xiamen Changtian for anaggregate consideration of US$18.5 million, which is approximately RMB143.48 million.Please refer to the section “Restructuring Exercise” of this Prospectus for further details;

(b) the Subscription Agreement dated 9 March 2007 between Eastline Investments, GoodwiseInvestments, Chen Baohua, Chen Yongfu and Yang Qingjin as guarantors and thePre-Invitation Investors for the issuance of exchangeable notes amounting in aggregate upto US$18.5 million by Rowview to the Pre-IPO Investors;

(c) the Exchangeable Notes Agreement dated 7 June 2007 between Eastline Investments,Goodwise Investments, Chen Baohua, Chen Yongfu and Yang Qingjin as guarantors and thePre-Invitation Investors for the issuance of exchangeable notes amounting in aggregate upto US$18.5 million by Rowview to the Pre-IPO Investors;

(d) the Machinery Acquisition Agreement dated 21 May 2007 between Changtian Enterpriseand Xiamen Brightforever for the acquisition of plant and equipment for the manufacture ofBOPA film for an aggregate consideration of approximately RMB79.85 million;

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(e) the Changtian Lease Agreement dated 21 May 2007 (as amended by the SupplementalLease Agreement dated 6 July 2007) between our Company and Xiamen Changtian for thelease of premises and underlying land use rights for the production of adhesive tapes,release papers and 2-A2MPS at an annual rent of RMB2.3 million;

(f) the Brightforever Lease Agreement dated 21 May 2007 between our Company and XiamenBrightforever for the lease of premises and underlying land use rights for the production ofBOPA film at an annual rent of RMB1.2 million;

(g) the Trademark Transfer Agreement dated 21 May 2007 between our Company and XiamenChangtian for the transfer of registered and pending registration trademarks under XiamenChangtian’s name pursuant to the Asset and Business Transfer Agreement, as amended bythe Supplemental Transfer Agreement;

(h) the Share Swap Agreement dated 24 September 2007 entered into between our Company,as purchaser, and the shareholders of Jumbo Glories (Eastline Investments, GoodwiseInvestments and the Pre-Invitation Investors), as vendors, for the acquisition of the entireissued and paid-up share capital of Jumbo Glories for a consideration of S$25,000,000 (forfurther details, please refer to the section “Restructuring Exercise’’ of this Prospectus);

(i) the Management and Underwriting Agreement dated 30 October 2007 between ourCompany, the Manager and the Underwriter for the management of the Invitation and theunderwriting of the Invitation Shares; and

(j) the Placement Agreement dated 30 October 2007 between our Company and the PlacementAgent for the placement of the Placement Shares.

MISCELLANEOUS

11. There has not been any public take-over offer by a third party in respect of our Shares Companyor by our Company in respect of shares of another corporation or units of a business trust whichhas occurred between 1 January 2006 and the Latest Practicable Date.

12. No expert is employed on a contingent basis by our Group, has a material interest, whether director indirect, in the Shares of our Group, or has a material economic interest, whether direct orindirect, in our Company, including an interest in the success of the Invitation.

13. Save as disclosed in this Prospectus, our Directors are not aware of any event which has occurredsince 31 March 2007 up to the Latest Practicable Date, which may have a material effect on thefinancial information provided in the Combined Financial Information.

14. Save as disclosed in the sections “Risks relating to our business” and “Licences, Permits andApprovals” of this Prospectus, our business and/or profitability is not materially dependent on anypatent, licence, industrial, commercial or financial contract (including a contract with a customeror supplier) or new manufacturing process.

15. Save as disclosed under the sections “Interested Person Transactions” and “RestructuringExercise” of this Prospectus, none of our Directors is interested, directly or indirectly, in thepromotion of, or in any property or assets which have, within the three years preceding the dateof this Prospectus, been acquired or disposed of by or leased to, our Company or any of oursubsidiaries, or are proposed to be acquired or disposed of by or leased to our Company or anyof our subsidiaries.

16. No sum or benefit has been paid or is agreed to be paid to any Director or expert, or to any firmin which such Director or expert is a partner or any corporation in which such Director or expertholds shares or debentures, in cash or shares or otherwise, by any person to induce him tobecome, or to qualify him as, a Director, otherwise for services rendered by him or by such firmor corporation in connection with the promotion or formation of our Company.

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CONSENTS

17. Each of the Joint Reporting Accountants has given and has not withdrawn their respective writtenconsents to the issue of this Prospectus with the inclusion herein of the Report from the JointReporting Accountants on the Audited Combined Financial Information of the Group for theFinancial Years Ended 31 December 2004, 31 December 2005 and 31 December 2006 and theReview Report from the Joint Reporting Accountants on the Unaudited Combined FinancialInformation of the Group for the Three Months Ended 31 March 2007 in the form and context inwhich they appear in this Prospectus and to act in such capacity in relation to this Prospectus.

Details of the Joint Reporting Accountants are as follows:

Name, Membership and Address Professional BodyPartner-in-charge/Professional Qualification

Foo Kon Tan Grant ThorntonCertified Public Accountants47 Hill Street #05-01Singapore Chinese Chamber ofCommerce & Industry BuildingSingapore 179365

Institute of CertifiedPublic Accountants ofSingapore

Wong Kian Kok(Certified Public Accountant)

Grant ThorntonCertified Public Accountants13th Floor, Gloucester TowerThe Landmark15 Queen’s Road CentralHong Kong

Hong Kong Institute ofCertified PublicAccountants

Lo Ngai HangCertified Public Accountant(Practising)

18. We currently have no intention of changing the auditors of our Company after the listing of ourCompany on the SGX-ST, details of which are set out below:

Name, Membership and Address Professional BodyPartner-in-charge/Professional Qualification

Grant ThorntonCertified Public Accountants13th Floor, Gloucester TowerThe Landmark15 Queen’s Road CentralHong Kong

Hong Kong Institute ofCertified PublicAccountants

Lo Ngai HangCertified Public Accountant(Practising)

19. The Manager and the Underwriter have given and have not withdrawn their written consent to theissue of this Prospectus with the inclusion herein of their names in the form and context in whichthey appear in this Prospectus and to act in such capacity in relation to this Prospectus.

20. Jingtian & Gongcheng, the Legal Advisers to the Company on PRC Laws, has given and has notwithdrawn its written consent to the issue of this Prospectus with the inclusion herein of its nameand the references to its name and its opinion in the sections “Government Regulation, Licencesand Permits — Regulation on the mergers and acquisitions of domestic enterprises by foreigninvestors” and “Appendix F — Summary of Relevant PRC Laws and Regulations — (a) Incometax on foreign investment enterprises” which was prepared for the purposes of this Prospectus inthe form and context in which they appear in this Prospectus and to act in such capacity in relationto this Prospectus.

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21. Xiamen Dacheng Valuation Office , an independent valuer, has givenand has not withdrawn its written consent to the issue of this Prospectus with the inclusion hereinof its name and references to its valuation reports dated 30 March 2006 and 10 March 2007(which were prepared for the purposes of valuing the Changtian Assets and Business as at 31December 2005 and as at 31 December 2006 respectively) in the form and context in which itappears in this Prospectus and to act in such capacity in relation to this Prospectus.

22. LCH (Asia-Pacific) Surveyors Limited, an independent valuer, has given and has not withdrawnits written consent to the issue of this Prospectus with the inclusion herein of its name andreferences to its valuation reports dated 5 March 2007 and 8 March 2007 (which were preparedfor the purposes of determining rent payable under the Changtian Lease Agreement and theBrightforever Lease Agreement and consideration payable under the Machinery AcquisitionAgreement respectively) in the form and context in which it appears in this Prospectus and to actin such capacity in relation to this Prospectus.

23. Each of the Manager, the Underwriter, the Placement Agent, the Solicitors to the Invitation, theLegal Adviser to our Company on Bermuda Law, the Solicitors to the Manager, the Underwriterand the Placement Agent, the Bermuda Share Registrar, the Registrar for the Invitation and theSingapore Share Transfer Agent, the Receiving Bank and the Principal Banker do not make, orpurport to make, any statement in this Prospectus or any statement upon which a statement in thisProspectus is based and, to the maximum extent permitted by law, expressly disclaim and takeno responsibility for any liability to any person which is based on, or arises out of, the statements,information or opinions in this Prospectus.

STATEMENT BY OUR DIRECTORS AND THE VENDORS

24. This Prospectus has been seen and approved by our Directors and the Vendors and theycollectively and individually accept the full responsibility for the accuracy of the information givenin this Prospectus and confirm, having made all reasonable enquires, that to the best of theirknowledge and belief, that the facts stated and the opinions expressed herein are fair andaccurate in all material respects as of the date of this Prospectus and there are no other materialfacts the omission of which would make any statements herein misleading, and that thisProspectus constitutes full and true disclosure of all material facts about the Invitation and ourGroup.

DOCUMENTS AVAILABLE FOR INSPECTION

25. Copies of the following documents may be inspected at Messrs Rajah and Tann, at 4 BatteryRoad, #26-01, Bank of China Building, Singapore 049908 during normal business hours for aperiod of six months from the date of registration of the Prospectus by the Authority:

(a) the Memorandum of Association and Bye-laws of our Company;

(b) the Report from the Joint Reporting Accountants on the Audited Combined FinancialInformation of the Group for the Financial Years Ended 31 December 2004, 31 December2005 and 31 December 2006 as set out in Appendix A of this Prospectus;

(c) the Review Report from the Joint Reporting Accountants on the Unaudited CombinedFinancial Information of the Group for the Three Months Ended 31 March 2007 as set out inAppendix B of this Prospectus;

(d) the material contracts referred to in paragraph 9 under “General and Statutory Information”of this Prospectus;

(e) the letters of consent referred to in paragraphs 16 to 21 under “General and StatutoryInformation” of this Prospectus; and

(f) the Service Agreements referred to in the section “Service Agreements” of this Prospectus.

148

APPENDIX A

REPORT FROM THE JOINT REPORTING ACCOUNTANTSON THE AUDITED COMBINED FINANCIAL INFORMATION OF THE GROUP

FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2004,31 DECEMBER 2005 AND 31 DECEMBER 2006

Date: 30 October 2007

The Board of DirectorsChangtian Plastic & Chemical LimitedCanon’s Court22 Victoria StreetHamilton HM 12Bermuda

Dear Sirs

This report has been prepared for inclusion in the prospectus dated 30 October 2007 (“Prospectus”) inconnection with the invitation in respect of offer of shares of Changtian Plastic & Chemical Limited (the“Company”).

We have audited the accompanying combined financial statements of the Company and its subsidiaries(collectively the “Group”), as set out in Appendix A on pages A-3 to A-42. The combined financialstatements comprise the combined balance sheets of the Group as at 31 December 2004, 2005 and 2006,the combined income statements, combined statements of changes in equity and combined cash flowstatements of the Group for each of the years ended 31 December 2004, 2005 and 2006 (the “RelevantPeriods”) and a summary of significant accounting policies and other explanatory notes (the “CombinedFinancial Information”).

Directors’ responsibility for the Combined Financial Information

The Company’s directors are responsible for the preparation and fair presentation of these CombinedFinancial Information in accordance with International Financial Reporting Standards (“IFRS”). Thisresponsibility includes: designing, implementing and maintaining internal control relevant to thepreparation and fair presentation of the Combined Financial Information that are free from materialmisstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;and making accounting estimates that are reasonable in the circumstances.

Joint Reporting Accountants’ responsibility

Our responsibility is to express an opinion on the Combined Financial Information based on our audit.We conducted our audit in accordance with International Standards on Auditing. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance as to whether the Combined Financial Information are free from material misstatement.

A-1

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the Combined Financial Information. The procedures selected depend on the auditors’ judgement,including the assessment of the risk of material misstatement of the Combined Financial Information,whether due to fraud or error. In making those risk assessments, the auditors consider internal controlrelevant to the entity’s preparation and fair presentation of the Combined Financial Information in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates made by directors, as well as evaluating the overall presentation of the Combined FinancialInformation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.

Opinion

In our opinion, the Combined Financial Information, for the purpose of this report and prepared on thebasis set out in note 3 of the Combined Financial Information, present fairly, in all material respects, theGroup’s combined results, combined statements of changes in equity and combined cash flows foreach of the Relevant Periods, and the Group’s combined financial positions as at 31 December 2004,2005 and 2006 and have been properly prepared in accordance with IFRS.

Yours faithfully

Foo Kon Tan Grant ThorntonCertified Public AccountantsSingapore

Grant ThorntonCertified Public AccountantsHong Kong

Partner: Wong Kian Kok Partner: Lo Ngai Hang

A-2

Combined income statementsFor the three years ended 31 December 2004, 2005 and 2006

Year ended 31 DecemberNotes 2004 2005 2006

RMB’000 RMB’000 RMB’000

Revenue 5 223,246 412,001 540,013

Cost of sales (161,343) (287,332) (351,185)

Gross profit 61,903 124,669 188,828

Other income 5 267 2,016 1,980

Selling and distribution expenses (4,765) (8,233) (9,836)

Administrative expenses (3,046) (3,784) (4,097)

Operating profit 7 54,359 114,668 176,875

Finance costs 8 (2,312) (2,447) (1,777)

Profit before income tax 52,047 112,221 175,098

Income tax expense 9 (7,848) (17,080) (26,156)

Profit attributable to equity holders 44,199 95,141 148,942

Dividends 10 10,000 40,000 72,500

Earnings per share — basic (RMB cents) 11 8.84 19.03 29.79

A-3

Combined balance sheetsAs at 31 December 2004, 2005 and 2006

As at 31 December

Notes 2004 2005 2006

RMB’000 RMB’000 RMB’000

ASSETS AND LIABILITIES

Non-current assets

Property, plant and equipment 12 67,871 64,355 32,866

Land use rights 13 5,972 4,016 —

Deposits 14 11 101 946

73,854 68,472 33,812

Current assets

Inventories 15 31,916 34,664 14,369

Trade receivables 14 50,110 88,355 111,745

Financial assets at fair value through profit orloss 16 — 100 —

Deposits and other receivables 14 19 88 473

Due from related parties 17 39 1,069 39

Pledged bank deposits 18 1,667 6,044 9,894

Cash and bank balances 18 49,672 72,241 58,220

133,423 202,561 194,740

Current liabilities

Trade and bills payables 19 46,487 64,828 47,727

Accrued liabilities and other payables 20 6,665 5,572 3,355

Due to a related party 17 — — 20

Bank loans, secured 21 29,400 27,900 20,000

Provision for tax 985 1,752 —

83,537 100,052 71,102

Net current assets 49,886 102,509 123,638

Total assets less current liabilities 123,740 170,981 157,450

Non-current liabilities

Bank loans, secured 21 7,900 — —

Net assets 115,840 170,981 157,450

EQUITY

Equity attributable to equity holders of theCompany

Share capital 22 39 39 39

Reserves 115,801 170,942 157,411

Total equity 115,840 170,981 157,450

A-4

Combined statements of changes in equityFor the three years ended 31 December 2004, 2005 and 2006

Sharecapital

Mergerreserve

Statutoryreserves

Retainedprofits

Totalequity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000(note 23(a)) (note 23(b))

At 1 January 2004 39 50,000 5,484 26,118 81,641

Profit for the year — — — 44,199 44,199

Total recognised income and expense forthe year — — — 44,199 44,199

Dividends (note 10) — — — (10,000) (10,000)

Transfer to statutory reserves — — 6,609 (6,609) —

At 31 December 2004 and 1 January2005 39 50,000 12,093 53,708 115,840



Dividends (note 10) — — — (40,000) (40,000)


At 31 December 2005 and 1 January2006 39 50,000 26,565 94,377 170,981



Dividends (note 10) — — — (72,500) (72,500)


Deemed distribution to equity owners(note 23(c)) — (89,973) — — (89,973)

Transfers arising on reorganisation — 197,384 (48,797) (148,587) —

At 31 December 2006 39 157,411 — — 157,450

A-5

Combined cash flow statementsFor the three years ended 31 December 2004, 2005 and 2006

Year ended 31 December

Notes 2004 2005 2006

RMB’000 RMB’000 RMB’000

Cash flows from operating activities


Adjustments for:

Interest income 5 (266) (574) (665)

Gain on disposal of land use rights 5 — (1,431) —

Fair value gains on financial assets at fairvalue through profit or loss 5 — (8) (7)

Depreciation 7 4,645 4,738 4,931

Amortisation of land use rights 7 134 113 92

Interest expenses 8 2,312 2,447 1,777

Operating profit before working capital changes 58,872 117,506 181,226

(Increase)/decrease in inventories (11,857) (2,748) 20,295

Increase in trade receivables (26,026) (38,245) (23,390)

Decrease/(increase) in deposits and otherreceivables 42 (69) (385)

Increase/(decrease) in trade and billspayables 21,996 18,341 (17,101)

(Decrease)/increase in accrued liabilities andother payables (1,120) (1,843) 7,580

Increase in amount due to a related party — — 20

Advances to related parties and deemed tobe distributed 23(c) — — (72,500)

Cash generated from operations 41,907 92,942 95,745

Interest received 266 574 665

Income taxes paid (7,382) (16,313) (19,496)

Net cash generated from operating activities 34,791 77,203 76,914

Cash flows from investing activities

Purchases of property, plant and equipment 29 (1,838) (1,211) (5,099)

Deposits paid for purchases of property, plantand equipment (11) (101) (946)

Proceeds from disposal of property, plant andequipment 236 — —

Proceeds from disposal of land use rights — 2,994 1,030

Purchases of financial assets at fair valuethrough profit or loss — (806) —

Proceeds from disposal of financial assets atfair value through profit or loss — 714 107

Increase in pledged bank deposits (1,667) (4,377) (3,850)

Net cash used in investing activities (3,280) (2,787) (8,758)

A-6

Combined cash flow statements (Continued)For the three years ended 31 December 2004, 2005 and 2006


Notes 2004 2005 2006

RMB’000 RMB’000 RMB’000

Cash flows from financing activities

Drawdown of bank loans 29,400 20,000 20,000

Repayments of bank loans (29,400) (29,400) (27,900)

Interest paid (2,312) (2,447) (1,777)

Dividends paid (10,000) (40,000) (72,500)

Net cash used in financing activities (12,312) (51,847) (82,177)

Net increase/(decrease) in cash and cashequivalents 19,199 22,569 (14,021)

Cash and cash equivalents at 1 January 30,473 49,672 72,241

Cash and cash equivalents at 31 December 49,672 72,241 58,220

Analysis of balances of cash and cashequivalents

Cash and bank balances 49,672 72,241 58,220

A-7

Notes to the combined financial statements

1. INTRODUCTION

The combined financial statements of Changtian Plastic & Chemical Limited (the “Company”) andits subsidiaries (collectively the “Group”), which comprise the combined balance sheets of theGroup as at 31 December 2004, 2005 and 2006, the combined income statements, combinedstatements of changes in equity and combined cash flow statements of the Group for the yearsended 31 December 2004, 2005 and 2006 (the “Relevant Periods”) and a summary of significantaccounting policies and other explanatory notes (the “Combined Financial Information”), havebeen prepared for inclusion in the Prospectus of the Company issued for the invitation (the“Invitation”) by the Company in respect of the issue of ordinary shares of S$0.05 each comprising160,000,000 new shares and 55,000,000 vendor shares at S$0.47 per share in the Company forcash.

2. THE COMPANY

The Company was incorporated in Bermuda on 29 March 2007 under the Bermuda CompaniesAct as an exempted company with limited liability under the name of Changtian Plastic &Chemical Limited.

As at the date of incorporation, the authorised share capital of the Company was US$12,000divided into 120,000 ordinary shares of US$0.10 each. On 30 March 2007, 1 ordinary share ofUS$0.10 each in the capital of the Company was allotted and issued nil-paid to EastlineInvestments Holding Limited (“Eastline Investments”), a company incorporated in the BritishVirgin Islands (the “BVI”) and wholly-owned by Mr. Yang Qingjin, a director of the Company.Pursuant to the written resolution dated 6 July 2007 in lieu of a special general meeting, 99ordinary shares of US$0.10 each in the capital of the Company was allotted and issued nil-paidto Eastline Investments.

The registered office of the Company is located at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The principal place of business of the Company is located at 18 Xinsheng Road,Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, the People’s Republic ofChina (the “PRC”). The Company does not have a place of business in Singapore as at the dateof these combined financial statements.

The principal activities of the Company is investment holding. The principal activities of theCompany’s subsidiaries are set out in note 3 to the combined financial statements.

Pursuant to written resolutions dated 6 July 2007 in lieu of a special general meeting, the then soleshareholder of the Company approved, inter alia, the following:


(b) the sub-division of every one ordinary share of S$0.154 each after the ShareRedenomination into 154 ordinary shares of S$0.001 each (the “Share Subdivision”); and

(c) the consolidation of every 50 ordinary share of S$0.001 each after the Share Subdivisioninto one ordinary share of S$0.05 each (the “Share Consolidation”).

Pursuant to written resolutions dated 24 September 2007 in lieu of a special general meeting, thethen sole shareholder of the Company approved, inter alia, the following:

(a) the adoption of a new set of Bye-laws and an employee share option scheme of theCompany;

A-8

Notes to the combined financial statements (Continued)

2. THE COMPANY (Continued)

(b) the increase in the authorised share capital of the Company from S$18,480 divided into369,600 ordinary shares of S$0.05 each to S$75 million divided into 1,500,000,000 ordinaryshares of S$0.05 each;

(c) crediting as fully paid the 308 nil-paid shares registered in the name of Eastline Investmentsand the allotment and issue of 499,999,692 new shares to the shareholders of JumboGlories Limited (“Jumbo Glories”), as part of the Company’s restructuring exercise;

(d) the offer, allotment and issue of the 160,000,000 new shares, which when issued and fullypaid-up, shall rank pari passu in all respects with the existing issued and paid-up shares ofthe Company;

(e) the offer for sale of up to 55,000,000 shares held by Goodwise Investments Limited(“Goodwise Investments”), CIM VIII Limited (“CIM VIII”), Longold Group Limited (“LongoldGroup”) and Hong Kong Investments Group Limited (“Hong Kong Investments”) inconnection with the Invitation, such shares to rank pari passu in all respects with the existingissued and fully paid-up shares; and

(f) that authority be given to the directors of the Company, to:

(i) issue shares whether by ways of rights, bonus or otherwise (including shares as maybe issued pursuant to any Instrument (as defined below) made or granted by thedirectors of the Company while this resolution is in force notwithstanding that theauthority conferred by this resolution may have ceased to be in force at the time ofissue of such shares); and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might orwould require shares to be issued, including but not limited to the creation and issueof warrants, debentures or other instruments convertible into shares of the Company,at any time and upon such terms and conditions and for such purposes and to suchpersons as the directors of the Company may in their absolute discretion deem fit,

provided that the aggregate number of shares issued pursuant to such authority (includingshares issued pursuant to any Instrument), shall not exceed 50% of the post-Invitationissued share capital, and provided further that the aggregate number of such shares to beoffered other than on a pro rata basis in pursuance to such authority (including shares issuedpursuant to any instrument) to the existing shareholders shall not exceed 20% of thepost-Invitation issued share capital, and, unless revoked or varied by the Company ingeneral meeting, such authority shall continue in force until the conclusion of the next annualgeneral meeting of the Company or the date by which the next annual general meeting of theCompany is required by law to be held, whichever is the earlier.

For the purpose of this resolution and pursuant to Rules 806(3) and 806(4) of the SingaporeExchange Securities Trading Limited (the “SGX-ST”) Listing Manual (the “Listing Manual”),the “post-Invitation issued share capital” shall mean the enlarged issued share capital of theCompany immediately after the Invitation, after adjusting for: (i) new shares arising from theconversion or exercise of any convertible securities; (ii) new shares arising from exercisingshare options or vesting of share awards outstanding or subsisting at the time such authorityis given, provided the options or awards were granted in compliance with the Listing Manual;and (iii) any subsequent consolidation or sub-division of shares.

A-9


2. THE COMPANY (Continued) (Continued)

Approval for crediting as fully paid the 308 nil-paid shares and the allotment and issue of499,999,692 new shares was received from the Bermuda Monetary Authority on 30 August 2007.

As at the date of this report, the authorised share capital of the Company is S$75,000,000 dividedinto 1,500,000,000 ordinary shares of S$0.05 each. The issued and paid-up share capital of theCompany is S$25,000,000 divided into 500,000,000 ordinary shares of S$0.05 each.

3. THE REORGANISATION AND BASIS OF PRESENTATION

A reorganisation exercise was undertaken by the Group to rationalise the corporate structure forthe Invitation (the “Reorganisation”). The following steps were taken in the Reorganisation:

3.1 Incorporation of Jumbo Glories

Jumbo Glories was incorporated on 1 April 2005 in the BVI as an investment holdingcompany with an authorised share capital of US$50,000 divided into 50,000 ordinary sharesof US$1.00 each. On 3 January 2006, Ms. Chen Baohua, the spouse of Mr. Yang Qingjin andthe sister of Mr. Chen Yongfu, a director of the Company, and Mr. Chen Yongfu subscribedfor and was allotted and issued 2,215 and 2,785 shares of Jumbo Glories, representing44.3% and 55.7% of the total issued shares capital of Jumbo Glories, respectively.

On 8 March 2007, Mr. Chen Yongfu transferred his entire interest in Jumbo Glories toGoodwise Investments, a company incorporated in the BVI and wholly-owned by Mr. ChenYongfu, for the issue of 1 share in Goodwise Investments.

On 8 March 2007, Ms. Chen Baohua transferred her entire interest in Jumbo Glories toEastline Investments for the issue of 1 share in Eastline Investments. On the same date, Ms.Chen Baohua transferred her entire interest in Eastline Investments to Mr. Yang Qingjin.

Thereafter, Eastline Investments, Goodwise Investments and Rowview Limited (“Rowview”),a company incorporated in the BVI and equally owned by Ms. Chen Baohua and Mr. ChenYongfu, subscribed for and were allotted 1,181, 1,486 and 2,333 shares of Jumbo Glories fora subscription consideration of US$1,181, US$1,486 and US$18.5 million, respectively.

Upon completion of the transfers and subscription, Eastline Investments, GoodwiseInvestments and Rowview respectively held 3,396, 4,271 and 2,333 shares in JumboGlories, representing 33.96%, 42.71% and 23.33% of the total issued share capital of JumboGlories.

3.2 Incorporation of Xiamen Changtian Enterprise Co., Ltd.(“Changtian Enterprise”)

On 21 July 2006, the Xiamen Foreign Investment Bureau granted thecertificate of approval for the establishment by Jumbo Glories of Changtian Enterprise as awholly foreign-owned enterprise in the PRC. Changtian Enterprise was established on 6December 2006 with a registered capital of US$18.0 million and with a business term of 30years from 6 December 2006 to 5 December 2036. Pursuant to a capital verification reporton Changtian Enterprise’s registered capital dated 13 June 2007, the registered capital ofChangtian Enterprise of US$18.0 million was fully paid by Jumbo Glories on 11 June 2007.

A-10


3. THE REORGANISATION AND BASIS OF PRESENTATION (Continued)

3.3 Acquisition of certain assets and business as well as liabilities of Xiamen ChangtianPlastic & Chemical Co., Ltd. (“Xiamen Changtian”) and lease ofpremises

On 14 April 2006, Jumbo Glories as purchaser, and Xiamen Changtian, a companyestablished in the PRC and beneficially owned by Ms. Chen Baohua and Mr. Chen Yongfu,as seller, entered into an asset and business transfer agreement (the “Initial Asset andBusiness Transfer Agreement”) (as amended by a supplemental transfer agreement (the“Supplemental Transfer Agreement”) dated 21 May 2007) pursuant to which Jumbo Gloriesagreed to acquire all Xiamen Changtian’s business together with certain of its assets andliabilities, as further mentioned below (the “Changtian Assets and Business”). The totalconsideration for the acquisition was US$18.5 million, which is approximately RMB143.48million, arrived at based on the net asset value (as at 31 December 2005) of the ChangtianAssets and Business, as valued by an independent valuer, Xiamen Dacheng ValuationOffice (“Xiamen Dacheng”), in its report dated 30 March 2006, to be satisfied in full by cashpayment. The Initial Asset and Business Transfer Agreement was approved by the XiamenForeign Investment Bureau on 21 July 2006.


of Changtian Enterprise was obtained only on 6December 2006.

Pursuant to the Supplemental Transfer Agreement, the parties agreed that the considerationpayable under the Initial Asset and Business Transfer Agreement would remain at US$18.5million (or approximately RMB143.48 million), being the net asset value of the ChangtianAssets and Business at 31 December 2005 as valued by Xiamen Dacheng. The parties alsoagreed that all profits generated by Xiamen Changtian for the period from 1 January 2007shall belong to Changtian Enterprise. In arriving at this agreement, the parties haveconsidered the valuation of the Changtian Assets and Business as at 31 January 2007 ofRMB155.14 million by Xiamen Dacheng in its valuation report dated 10 March 2007, andthat after deducting the profits generated by Xiamen Changtian for the period from 1 January2007 to 31 January 2007 amounting to RMB10.93 million from the valuation of RMB155.14million, the net asset value of the Changtian Assets and Business as at 31 December 2006was RMB144.21 million.

The valuation of the Changtian Assets and Business as at 31 January 2007 included theentire assets and liabilities of Xiamen Changtian but excluding the land and buildings ownedby Xiamen Changtian which will be leased back to Changtian Enterprise, tax payablebalances due to the relevant tax authorities and an amount of RMB72.5 million advanced toshareholders by Xiamen Changtian which will not be transferred to Changtian Enterprise.

As agreed in the Supplemental Agreement, the effective date of the transfer was changedto 1 April 2007 and Changtian Enterprise assumed all rights, obligations and benefits inrespect of the Changtian Assets and Business acquired from Xiamen Changtian with effectretroactively from 1 January 2007.

The transfer of the Changtian Assets and Business by Xiamen Changtian was approved byits shareholders in general meetings held on 10 April 2006 and 22 May 2007. Completion ofthe acquisition of the Changtian Assets and Business took place on 11 June 2007 andChangtian Enterprise has made full payment of the consideration of US$18.5 million.

A-11



3.3 Acquisition of certain assets and business as well as liabilities of Xiamen ChangtianPlastic & Chemical Co., Ltd. (“Xiamen Changtian”) and lease ofpremises (Continued)

The Initial Asset and Business Transfer Agreement and the Supplemental TransferAgreement have been ratified and approved by Xiamen Foreign Investment Bureau

on 21 July 2006 and 24 May 2007 respectively.



On 21 May 2007, Changtian Enterprise entered into a lease agreement with XiamenChangtian (the “Changtian Lease Agreement”) (as amended by a supplemental leaseagreement (the “Supplemental Lease Agreement”) dated 6 July 2007) to lease fromXiamen Changtian the premises and the underlying land use rights, at 18 XinshengRoad, Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, thePRC where the Group’s production facilities for the production of adhesive tapes,release papers and 2-Acrylamido-2-methyl propane sulfonic acid (“2-A2MPS”) aresituated.

The lease is for a term of 20 years commencing from 1 January 2007 to 31 December2026, with a rent free period from 1 January 2007 to 31 March 2007 (as amended bythe Supplemental Lease Agreement), at an annual rent of RMB2.3 million, asdetermined by a valuation report dated 5 March 2007 prepared by an independentvaluer, LCH (Asia-Pacific) Surveyors Limited (“LCH Surveyors”). The annual rental ispayable on a quarterly basis. However, pursuant to the Supplemental LeaseAgreement, the parties agreed that no rent shall be payable for the period from 1January 2007 to 31 March 2007.

Under the Changtian Lease Agreement, upon the expiry of the initial three year term,the lease may be terminated at the option of Changtian Enterprise by giving at leastthree months’ notice to Xiamen Changtian. The annual rental payable after the firstthree years of the lease is subject to review once every three years and may beadjusted based on an independent valuers’ valuation to ascertain prevailing marketprice.

Further, under the Changtian Lease Agreement, Changtian Enterprise has the optionto acquire the leased premises from Xiamen Changtian at the prevailing market priceto be determined by independent valuers.

The Changtian Lease Agreement was filed with the Xiamen Municipal Land Resourcesand Housing Administrative Bureau on 4 June 2007.

A-12




(ii) Property lease agreement with Xiamen Brightforever Plastic Industrial Co., Ltd.(“Xiamen Brightforever”)

On 21 May 2007, Changtian Enterprise entered into a lease agreement with XiamenBrightforever (the “Brightforever Lease Agreement”) to lease from XiamenBrightforever, a company established in the PRC and Mr. Wong Chit Fu, a director ofthe Company, has beneficial interest, the premises and the underlying land use rights,at 16 Xinsheng Road, Xinyang Industrial Zone, Haicang District, Xiamen City, FujianProvince, the PRC where the production facilities for biaxially-oriented polyamide(“BOPA”) film are situated.

The lease is for a term of 20 years commencing from 1 April 2007 at an annual rent ofRMB1.2 million, as determined by a valuation report dated 5 March 2007 prepared byLCH Surveyors. The annual rental is payable on a quarterly basis.

Under the Brightforever Lease Agreement, upon the expiry of the initial three year term,the lease may be terminated at the option of Changtian Enterprise by giving at leastthree months’ notice to Xiamen Brightforever. The annual rental payable after the firstthree years of the lease is subject to review once every three years and may beadjusted based on an independent valuers’ valuation to ascertain prevailing marketprice.

Further, under the Brightforever Lease Agreement, Changtian Enterprise has theoption to acquire the leased premises from Xiamen Brightforever at the prevailingmarket price to be determined by independent valuers.

The Brightforever Lease Agreement was filed with the Xiamen Municipal LandResources and Housing Administrative Bureau on 4 June 2007.

(iii) Non-competition undertaking

On 21 May 2007, Xiamen Changtian, the then shareholders of Xiamen Changtian,namely Ms. Chen Baohua and Mr. Chen Yongfu and the directors, namely Mr. ChenYongfu, and Mr. Wong Chit Fu, and in addition Mr. Yang Qingjin, the husband of Ms.Chen Baohua (collectively, the “Xiamen Changtian Covenantors”) executed a non-competition undertaking (the “Non-Competition Undertaking”) in favour of ChangtianEnterprise.

Under the Non-Competition Undertaking, Xiamen Changtian and the XiamenChangtian Covenantors respectively undertook to Changtian Enterprise, inter alia, witheffect from 1 April 2007:

(a) not to carry out or participate in any business which is similar to the Group’scurrent business including, without limitation, the production, distribution and saleof adhesive tapes, release papers, BOPA film and 2-A2MPS;

(b) not to carry out any business which is in competition or may be in competition,whether directly or indirectly, with the Group and not to in any way solicit anyemployee, customer or distributor of the Group; and

A-13




(iii) Non-competition undertaking (Continued)

(c) not to use the name, trademark or logo of the Group including but not limited tothe words “Changtian” or any of its trademarks, and not to use any name,trademark or logo that are capable of being or likely to be confused with our“Changtian” name.

On 12 June 2007, Xiamen Changtian changed its scope of business to engage only inthe lease of properties.

(iv) Trademark transfer agreement

On 21 May 2007, Changtian Enterprise and Xiamen Changtian entered into atrademark transfer agreement for the purpose of effecting the transfer of the registeredand trademarks pending registration under Xiamen Changtian’s name (the “TrademarkTransfer Agreement”), which Changtian Enterprise has acquired pursuant to the InitialAsset and Business Transfer Agreement, as amended by the Supplemental TransferAgreement. Pursuant to the Trademark Transfer Agreement, the parties agreed tojointly make an application to the Trademark Bureau of the State Administration forIndustry and Commerce and to take the necessary stepsto effect the transfer of the trademarks to Changtian Enterprise (details of thetrademarks are set out in the section “Intellectual Property” of the Prospectus (the“Trademarks”)). Notwithstanding that Xiamen Changtian would still be the registeredowner of the Trademarks prior to the date of the effective transfer of the respectiveTrademarks, the parties agreed that Changtian Enterprise shall have the exclusiverights to use the Trademarks until the registration of the transfers has been effected,following which Changtian Enterprise would be the registered owner of theTrademarks.

3.4 Machinery acquisition agreement between Xiamen Brightforever and ChangtianEnterprise

On 21 May 2007, Changtian Enterprise entered into an acquisition agreement with XiamenBrightforever (the “Machinery Acquisition Agreement”) to acquire from Xiamen Brightforeverthe plant and machinery used in the manufacture of BOPA film and certain office equipmentand motor vehicles for a consideration of approximately RMB79.85 million. Theconsideration was determined based on the valuation report dated 8 March 2007 of the plantand machinery as at 31 December 2006, conducted by LCH Surveyors.

In accordance with the Machinery Acquisition Agreement, an initial payment of 30% of theconsideration has been paid to Xiamen Brightforever on 27 June 2007 with the balance tobe settled in full within one year of the effective date of the Machinery Acquisition Agreement,being 1 April 2007.

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3.5 Subscription and issuance of exchangeable notes

On 9 March 2007, Eastline Investments, Goodwise Investments, Ms. Chen Baohua, Mr.Chen Yongfu and Mr. Yang Qingjin (as guarantors), Rowview, Jumbo Glories and thepre-invitation investors, namely CIM VIII, Longold Group, Hong Kong Investments and EastFortune Development Limited (“East Fortune”), a company incorporated in the BVI andwholly owned by Mr. Yip Man King, an independent third party before this subscription(collectively, the “Pre-Invitation Investors”), entered into a subscription agreement (the“Subscription Agreement”) for the issuance of exchangeable notes amounting to US$18.5million (the “Exchangeable Notes”) by Rowview to the Pre-Invitation Investors.

Under the Subscription Agreement, the parties agreed, inter alia that:

(i) the Exchangeable Notes were exchangeable into 2,333 shares of Jumbo Glories heldby Rowview in the event of the listing of the Company on the SGX-ST, on the terms andconditions of the Subscription Agreement and the exchangeable note instrument dated7 June 2007 entered into by the parties to the Subscription Agreement; and

(ii) Eastline Investments, Goodwise Investments, Ms. Chen Baohua, Mr. Chen Yongfu andMr. Yang Qingjin would guarantee, inter alia, the due payment by Rowview of theprincipal amount and interest accruing on the Exchangeable Notes (if any), as andwhen the same should become due and payable.

On 7 June 2007, Rowview issued the Exchangeable Notes to the Pre-Invitation Investorsand the aggregate consideration of US$18.5 million was satisfied in full by the Pre-InvitationInvestors in cash.

On 18 September 2007, the Pre-Invitation Investors exchanged their Exchangeable Notesfor an aggregate of 2,333 shares of Jumbo Glories held by Rowview (the “Exchange”).

Upon completion of the Exchange, Eastline Investments, Goodwise Investments, CIM VIII,Longold Group, Hong Kong Investments and East Fortune held respectively 33.96%,42.71%, 13.33%, 4.00%, 4.00% and 2.00% of the issued share capital of Jumbo Glories.

3.6 Acquisition of Jumbo Glories and share swap

On 24 September 2007, the Company, as purchaser, and the shareholders of JumboGlories, comprising Eastline Investments, Goodwise Investments and the Pre-InvitationInvestors, as vendors, entered into a share swap agreement (the “Share Swap Agreement”).Pursuant to the Share Swap Agreement, the Company acquired the entire issued andpaid-up share capital of Jumbo Glories comprising 10,000 shares of Jumbo Glories from theshareholders of Jumbo Glories for a consideration of S$25 million. The consideration for thesaid acquisition was satisfied by (i) the crediting as fully paid, at par, 308 nil-paid ordinaryshares of S$0.05 each in the Company held by Eastline Investments; and (ii) the allotmentand issue of an aggregate of 499,999,692 new ordinary shares of S$0.05 each in the capitalof the Company, credited as fully paid.

Upon completion of the Share Swap Agreement on 24 September 2007, EastlineInvestments, Goodwise Investments, CIM VIII, Longold Group, Hong Kong Investments andEast Fortune held respectively 33.96%, 42.71%, 13.33%, 4.00%, 4.00% and 2.00% of theissued share capital of the Company.

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As at the date of this report, the Company has direct and indirect interests in the followingsubsidiaries, each of which is a limited liability company:

Name

Date andplace of

incorporation/establishment

Principal activitiesand place ofoperations

Issued andpaid-upshare/

registeredcapital

Equityinterest

held

Directly held:

Jumbo Glories 1 April 2005,the BVI

Investment holding,the BVI

US$10,000 100%

Indirectly held:

ChangtianEnterprise

21 July 2006,the PRC

Manufacture and saleof adhesive tapes,

release papers, BOPAfilm and 2-A2MPS, the

PRC

US$18,000,000 100%

The operations of the Group were originally carried out by Xiamen Changtian which wasestablished with limited liability in the PRC on 2 February 1999.

In accordance with the Asset and Business Transfer Agreement and the Supplemental TransferAgreement, certain assets and liabilities of Xiamen Changtian were not transferred to the Groupincluding (i) the leasehold interest in leasehold buildings; (ii) the leasehold interest in land userights; (iii) the amounts due from the equity holders of Xiamen Changtian; and (iv) tax payablebalances due to the relevant tax authorities. Items (i) to (iv) described above are retained byXiamen Changtian and they are collectively referred to as the “Non-transferred Operations”.

The Non-transferred Operations were not managed separately from the rest of Xiamen Changtianoperations and no separate accounting records were maintained for their operations. Accordingly,they were recorded and reflected in the Combined Financial Information during the RelevantPeriods up to the date immediately before the agreed effective date of the transfer of theChangtian Assets and Business, i.e., 31 December 2006. Pursuant to the Asset and BusinessTransfer Agreement and the Supplemental Transfer Agreement, the Non-transferred Operationsretained by Xiamen Changtian are reflected in the Combined Financial Information as adistribution made to Xiamen Changtian on 31 December 2006.

The Group is regarded as a continuing entity resulting from the Reorganisation since the assetsand liabilities of Xiamen Changtian except for the Non-transferred Operations (collectively, the“Transferred Operations”) and the Non-transferred Operations were under common control beforeand immediately after the Reorganisation. Consequently, immediately after the Reorganisation,there was a continuation of the risks and benefits to the ultimate shareholders that existed priorto the Reorganisation. The Reorganisation has been accounted for as a reorganisation undercommon control in a manner similar to pooling of interests. Accordingly, the Combined FinancialInformation have been prepared on the basis of merger accounting, and comprise the financialstatements of the subsidiaries and Xiamen Changtian which were under common control of theultimate shareholders that existed prior to the Reorganisation.

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The Combined Financial Information have been prepared based on the audited financialstatements of Xiamen Changtian for the Relevant Periods, and where appropriate, unauditedmanagement accounts of the subsidiaries now comprising the Group. The directors of therespective companies of the Group, who are also the management of Xiamen Changtian, areresponsible for preparing financial statements of Xiamen Changtian and the unauditedmanagement accounts of the subsidiaries now comprising the Group for the Relevant Periods,which give a true and fair view.

4. SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The Combined Financial Information have been prepared in accordance with the Standards andInterpretations of the International Financial Reporting Standards (herein collectively referred toas “IFRS”) issued or adopted by the International Accounting Standards Board (the “IASB”) andthe International Financial Reporting Interpretations Committee (“IFRIC”) of the IASB, and havebeen consistently applied throughout the Relevant Periods.

Basis of preparation of the Combined Financial Information

IFRS 1, First-time Adoption of International Financial Reporting Standards, has been applied inpreparing these Combined Financial Information. These Combined Financial Information are thefirst set of financial statements prepared by the Group in accordance with IFRS.

The accounting policies set out below have been applied consistently to all periods presented inthese Combined Financial Information and in preparing an opening IFRS balance sheet at 1January 2004 for the purpose of the first set of IFRS financial statements. The accounting policieshave been applied consistently by the Group.

The Group has not early adopted the following IFRS that have been issued but are not yeteffective. The directors of the Company anticipate that the adoption of such IFRS will not resultin material financial impact to the Group’s Combined Financial Information.

IAS 1 (Amendment) Capital Disclosures5

IAS 23 (Revised) Borrowing Costs8

IFRS 7 Financial Instruments: Disclosures5

IFRS 8 Operating Segments8

IFRIC 7 Applying the Restatement Approach under IAS 29 FinancialReporting in Hyperinflationary Economies1

IFRIC 8 Scope of IFRS 22

IFRIC 9 Reassessment of Embedded Derivatives3

IFRIC 10 Interim Financial Reporting and Impairment 4

IFRIC 11 Group and Treasury Share Transactions6

IFRIC 12 Service Concession Arrangements7

IFRIC 13 Customer Loyalty Programmes9

IFRIC 14 IAS 19 — The Limit on a Defined Benefit Asset, MinimumFunding Requirements, and their Interaction7

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4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of preparation of the Combined Financial Information (Continued)

Notes:

1 Effective for annual periods beginning on or after 1 March 2006

2 Effective for annual periods beginning on or after 1 May 2006

3 Effective for annual periods beginning on or after 1 June 2006

4 Effective for annual periods beginning on or after 1 November 2006

5 Effective for annual periods beginning on or after 1 January 2007




9 Effective for annual periods beginning on or after 1 July 2008

The Combined Financial Information have been prepared in accordance with the significantaccounting policies set out below and these accounting policies are in accordance with IFRS. TheCombined Financial Information have been prepared under the historical cost convention exceptfor the financial assets at fair value through profit or loss which are stated at their fair values. Themeasurement bases are fully described in the accounting policies below. The preparation of theCombined Financial Information in conformity with IFRS requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgment in the process ofapplying the Group’s accounting policies. The areas involving higher degree of judgment orcomplexity, or areas where assumptions and estimates are significant to the Combined FinancialInformation, are disclosed in note 27. The principal accounting policies adopted are as follows:

4.1 Subsidiaries

Subsidiaries are entities (including special purpose entities) over which the Group has thepower to control the financial and operating policies. The existence and effect of potentialvoting rights that are currently exercisable or convertible are considered when assessingwhether the Group controls another entity. Subsidiaries are fully consolidated from the dateon which control is transferred to the Group. They are excluded from consolidation from thedate that control ceases.

Except for the Reorganisation refer to in note 3 above which has been accounted for byregarding the Company as being the holding company of the subsidiaries from the beginningof the earliest period presented, or since the date when the combining companies first cameunder the control of the controlling shareholders, where it is a shorter period, the purchasemethod of accounting is used to account for the acquisition of subsidiaries by the Group. Thecost of an acquisition is measured as the fair value of the assets given, equity instrumentsissued and liabilities incurred or assumed at the date of exchange, plus costs directlyattributable to the acquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at their fair values at theacquisition date, irrespective of the extent of any minority interests. The excess of the costof acquisition over the fair value of the Group’s share of the identifiable net assets acquiredis recorded as goodwill. If the cost of acquisition is less than the fair value of the net assetsof the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-group transactions, balances and unrealised gains on transactions between groupcompanies are eliminated in preparing the Combined Financial Information. Unrealisedlosses are also eliminated unless the transaction provides evidence of an impairment of theasset transferred.

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4.2 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Providedit is probable that the economic benefits will flow to the Group and the revenue and costs,if applicable, can be measured reliably, revenue is recognised as follows:

Sales of goods are recognised upon transfer of the significant risks and rewards ofownership to the customer. This is usually taken as the time when the goods are deliveredand the customer has accepted the goods.

Interest income is recognised on a time-proportion basis using the effective interest method.

4.3 Property, plant and equipment

Property, plant and equipment, other than construction in progress, are stated at cost lessaccumulated depreciation and impairment losses. The cost of an asset comprises itspurchase price and any directly attributable costs of bringing the asset to its workingcondition and location for its intended use. Subsequent costs are included in the asset’scarrying amount or recognised as a separate asset, as appropriate, only when it is probablethat future economic benefits associated with the item will flow to the Group and the cost ofthe item can be measured reliably. All other costs, such as repairs and maintenance arecharged to the income statement during the financial period in which they are incurred.

Depreciation is provided to write off the cost of the property, plant and equipment, less theirestimated residual values, over their estimated useful lives, using the straight-line method,at the following rate per annum:

Leasehold buildings The shorter of the lease terms and 30 years

Plant and machinery 5 to 12 years

Furniture, fixtures and office equipment 5 to 12 years

Motor vehicles 12 years

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, ateach balance sheet date.

The gain or loss arising on retirement or disposal is determined as the difference betweenthe sales proceeds and the carrying amount of the asset and is recognised in the combinedincome statements.

Construction in progress, which represents buildings under construction, and plant andmachinery pending installation, is stated at cost less impairment losses. Cost comprisesdirect costs incurred during the periods of construction, installation and testing. Nodepreciation is provided on construction in progress. Construction in progress is reclassifiedto the appropriate category of property, plant and equipment and depreciation commenceswhen the construction work is completed and the asset is ready for use.

4.4 Land use rights

Land use rights represent up-front payments to acquire long term interests in the usage ofland. The payments are stated at cost less accumulated amortisation and accumulatedimpairment losses. Amortisation is calculated on straight-line basis over the lease terms.

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4.5 Impairment on assets

Property, plant and equipment and land use rights are subject to impairment testing.

An impairment loss is recognised as an expense immediately for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is thehigher of fair value, reflecting market conditions less costs to sell, and value in use. Inassessing value in use, the estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessment of time value of moneyand the risk specific to the asset.

For the purposes of assessing impairment, where an asset does not generate cash inflowslargely independent from those from other assets, the recoverable amount is determined forthe smallest group of assets that generate cash inflows independently (i.e. a cash-generating unit). As a result, some assets are tested individually for impairment and someare tested at cash-generating unit level.

Impairment loss recognised for cash-generating units are charged on a pro rata basis to theassets in the cash generating unit, except that the carrying value of an asset will not bereduced below its individual fair value less cost to sell, or value in use, if determinable.

An impairment loss is reversed if there has been a favourable change in the estimates usedto determine the asset’s recoverable amount and only to the extent that the asset’s carryingamount does not exceed the carrying amount that would have been determined, net ofdepreciation or amortisation, if no impairment loss had been recognised.

4.6 Leases

Leases where substantially all the rewards and risks of ownership of assets remain with thelessor are accounted for as operating leases. Where the Group has the use of asset’s heldunder operating leases, payments made under the leases are charged to the combinedincome statements on a straight line basis over the lease terms except where an alternativebasis is more representative of the pattern of benefits to be derived from the leased assets.

4.7 Financial assets

The Group’s accounting policies for financial assets are set out below.

The Group’s financial assets include loans and receivables and financial assets at fair valuethrough profit or loss. They are included in the combined balance sheets under the line itemssuch as “Trade receivables”, “Deposits and other receivables” and “Financial assets at fairvalue through profit or loss”.

Management determines the classification of its financial assets at initial recognitiondepending on the purpose for which the financial assets were acquired and where allowedand appropriate, re-evaluates this designation at every reporting date.

All financial assets are recognised when, and only when, the Group becomes a party to thecontractual provisions of the instrument. When financial assets are recognised initially, theyare measured at fair value, plus, in the case of investments not at fair value through profitor loss, directly attributable transaction costs.

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4.7 Financial assets (Continued)

Derecognition of financial assets occurs when the rights to receive cash flows from theinvestments expire or are transferred and substantially all of the risks and rewards ofownership have been transferred. At each balance sheet date, financial assets are reviewedto assess whether there is objective evidence of impairment. If any such evidence exists,impairment loss is determined and recognised based on the classification of the financialasset.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. Loans and receivables aresubsequently measured at amortised cost using the effective interest method, less anyimpairment losses. Amortised cost is calculated taking into account any discount orpremium on acquisition and includes fees that are an integral part of the effectiveinterest rate and transaction cost.

(ii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets held fortrading and financial assets designated upon initial recognition as at fair value throughprofit or loss.

Financial assets are classified as held for trading if they are acquired for the purposeof selling in the near term. Derivatives, including separated embedded derivatives arealso classified as held for trading unless they are designated as effective hedginginstruments or financial guarantee contracts.

Subsequent to initial recognition, the financial assets included in this category aremeasured at fair value with changes in fair value recognised in the combined incomestatements.

Impairment of financial assets

At each balance sheet date, financial assets other than at fair value through profit or loss arereviewed to determine whether there is any objective evidence of impairment. If there isobjective evidence that an impairment loss on loans and receivables carried at amortisedcost has been incurred, the amount of the loss is measured as the difference between theasset’s carrying amount and the present value of estimated future cash flows (excludingfuture credit losses that have not been incurred) discounted at the financial asset’s originaleffective interest rate (i.e. the effective interest rate computed at initial recognition). Theamount of the loss is recognised in profit or loss of the period in which the impairmentoccurs.

If, in subsequent period, the amount of the impairment loss decreases and the decrease canbe related objectively to an event occurring after the impairment was recognised, thepreviously recognised impairment loss is reversed to the extent that it does not result in acarrying amount of the financial asset exceeding what the amortised cost would have beenhad the impairment not been recognised at the date the impairment is reversed. The amountof the reversal is recognised in profit or loss of the period in which the reversal occurs.

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4.8 Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined usingthe weighted average basis, and in the case of work in progress and finished goods,comprise direct materials, direct labour and an appropriate proportion of overheads. Netrealisable value is the estimated selling price in the ordinary course of business less theestimated cost of completion and applicable selling expenses.

4.9 Accounting for income tax

Income tax comprises current and deferred tax.

Current income tax assets and/or liabilities comprise those obligations to, or claims from,fiscal authorities relating to the current or prior reporting period, that are unpaid at thebalance sheet date. They are calculated according to the tax rates and tax laws applicableto the fiscal periods to which they relate, based on the taxable profit for the year. All changesto current tax assets or liabilities are recognised as a component of tax expense in thecombined income statements.

Deferred tax is calculated using the liability method on temporary differences at the balancesheet date between the carrying amounts of assets and liabilities in the financial statementsand their respective tax bases. Deferred tax liabilities are generally recognised for all taxabletemporary differences. Deferred tax assets are recognised for all deductible temporarydifferences, tax losses available to be carried forward as well as other unused tax credits,to the extent that it is probable that taxable profit will be available against which thedeductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is calculated, without discounting, at tax rates that are expected to apply in theperiod the liability is settled or the asset realised, provided they are enacted or substantivelyenacted at the balance sheet date.

4.10 Cash and cash equivalents

For the purpose of the combined cash flow statements, cash and cash equivalents comprisecash on hand and in banks and time deposit with original maturity of three months or less,less bank overdrafts which are repayable in demand and form an integral part of the Group’scash management.

For the purpose of the combined balance sheets classification, cash and bank balancescomprise cash on hand and at banks including term deposits which are not restricted as touse.

4.11 Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal valueof shares that have been issued.

Any transaction costs associated with the issuing of shares deducted from equity (net of anyrelated income tax benefits) to the extent they are incremental costs directly attributable tothe equity transaction.

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4.12 Retirement benefits scheme

Pursuant to the relevant regulations of the PRC government, the Group participates in alocal municipal government retirement benefits scheme (the “Scheme”), whereby thesubsidiary of the Company in the PRC is required to contribute a certain percentage of thebasic salaries of its employees to the Scheme to fund their retirement benefits. The localmunicipal government undertakes to assume the retirement benefits obligations of allexisting and future retired employees of the subsidiary of the Company. The only obligationof the Group with respect to the Scheme is to pay the ongoing required contributions underthe Scheme mentioned above. Contributions under the Scheme are charged to thecombined income statements as incurred. There are no provisions under the Schemewhereby forfeited contributions may be used to reduce future contributions.

4.13 Financial liabilities

The Group’s financial liabilities include bank loans and trade, bills and other payables. Theyare included in balance sheet line items as bank loans, secured under current or non-currentliabilities or trade and bills payables and other payables.

Financial liabilities are recognised when the Group becomes a party to the contractualprovisions of the instrument. All interest related charges are recognised as an expense infinance costs in the combined income statements.

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

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowingsare subsequently stated at amortised cost; any difference between the proceeds (net oftransaction costs) and the redemption value is recognised in the combined incomestatements over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right todefer settlement of the liability for at least 12 months after the balance sheet date.

Trade payables

Trade payables are recognised initially at their fair value and subsequently measured atamortised cost, using the effective interest method.

4.14 Provisions and contingent liabilities

Provisions are recognised when the Group has a present obligation (legal or constructive)as a result of a past event, and it is probable that an outflow of economic benefits will berequired to settle the obligation and a reliable estimate can be made. Where the time valueof money is material, provisions are stated at the present value of the expenditure expectedto settle the obligation.

All provisions are reviewed at each balance sheet date and adjusted to reflect the currentbest estimate.

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4.14 Provisions and contingent liabilities (Continued)

Where it is not probable that an outflow of economic benefits will be required, or the amountcannot be estimated reliably, the obligation is disclosed as a contingent liability, unless theprobability of outflow of economic benefits is remote. Possible obligations, whose existencewill only be confirmed by the occurrence or non-occurrence of one or more uncertain futureevents not wholly within the control of the Group are also disclosed as contingent liabilitiesunless the probability of outflow of economic benefits is remote.

Contingent liabilities are recognised in the course of the allocation of purchase price to theassets and liabilities acquired in a business combination. They are initially measured at fairvalue at the date of acquisition and subsequently measured at the higher of the amount thatwould be recognised in a comparable provision as described above and the amount initiallyrecognised less any accumulated amortisaton, if appropriate.

4.15 Financial guarantee issued

A financial guarantee contract is a contract that requires the issuer (or guarantor) to makespecified payments to reimburse the holder for a loss it incurs because a specified debtorfails to make payment when due in accordance with the terms of a debt instrument.

Where the Group issues a financial guarantee, the fair value of the guarantee is initiallyrecognised as deferred income within other payables. Where consideration is received orreceivable for the issuance of the guarantee, the consideration is recognised in accordancewith the Group’s policies applicable to that category of asset. Where no such considerationis received or receivable, an immediate expense is recognised in profit or loss on initialrecognition of any deferred income.

The amount of the guarantee initially recognised as deferred income is amortised in profit orloss over the term of the guarantee as income from financial guarantees issued. In addition,provisions are recognised if and when it becomes probable that the holder of the guaranteewill call upon the Group under the guarantee and the amount of that claim on the Group isexpected to exceed the current carrying amount i.e. the amount initially recognised lessaccumulated amortisation, where appropriate.

4.16 Government grants

Grants from the government are recognised at their fair value where there is a reasonableassurance that the grants will be received and the Group will comply with all attachedconditions. Government grants relating to costs are deferred and recognised as otherincome in the combined income statements over the period necessary to match them withthe costs that they are intended to compensate. Government grants relating to thepurchasing of property, plant and equipment are included in non-current liabilities asdeferred government grants and are recognised in the income statement on a straight-linebasis over the expected lives of the related assets.

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4.17 Segment report

In accordance with the Group’s internal financial reporting the Group has determined thatbusiness segments be presented as the primary reporting format.

In respect of business segment reporting, unallocated costs represent corporate expenses.Segment assets consist primarily of property, plant and equipment, land use rights,inventories, receivables and operating cash. Segment liabilities comprise operating liabilitiesand exclude items such as taxation and corporate borrowings.

Capital expenditure comprises additions to property, plant and equipment and land userights.

In respect of geographical segment reporting, revenue is based on the country in which thecustomer is located and total assets and capital expenditure are where the assets arelocated.

4.18 Related parties

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

(i) directly, or indirectly through one or more intermediaries, the party (1) controls, iscontrolled, or is under common control with, the Company/Group; (2) has an interestin the Company that gives it significant influence over the Company/Group; or (3) hasjoint control over the Company/Group;

(ii) the party is an associate;

(iii) the party is a jointly-controlled entity;

(iv) the party is a member of the key management personnel of the Company or its parent;

(v) the party is a close member of the family of any individual referred to in (i) or (iv);

(vi) the party is an entity that is controlled, jointly-controlled or significantly influenced by orfor which significant voting power in such entity resides with, directly or indirectly, anyindividual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of theCompany/Group, or of any entity that is a related party of the Company/Group.

4.19 Foreign currencies

(i) Functional and presentation currency

Items included in the Combined Financial Information of each of the Group’s entitiesare measured using the currency of the primary economic environment in which theentity operates (the “functional currency”). The Combined Financial Information arepresented in Renminbi (RMB), which is the Company’s functional and presentationcurrency.

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4.19 Foreign currencies (Continued)

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using theexchange rates prevailing at the dates of the transactions. Foreign exchange gains andlosses resulting from the settlement of such transactions and from the transaction atyear-end exchange rates of monetary assets and liabilities denominated in foreigncurrencies are recognised in the combined income statements.

(iii) Group companies

The results and financial positions of all the group entities (none of which has thecurrency of a hyperinflationary economy) that have presentation currencies differentfrom the presentation currency of the Company are translated into the Company’spresentation currency as follows:

(a) assets and liabilities for each combined balance sheet presented are translatedat the closing rate at the date of that combined balance sheet;

(b) income and expenses for each combined income statement are translated ataverage exchange rates (unless this average is not a reasonable approximationof the cumulative effect of the rates prevailing on the transaction dates, in whichcase income and expenses are translated at the dates of transaction); and

(c) all resulting exchange differences are recognised as a separate component ofequity.

4.20 Borrowing costs

All borrowing costs are expensed as incurred.

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5. REVENUE AND OTHER INCOME

Revenue represents total invoiced value of goods supplied, net of value added taxes, allowancesfor returns and trade discounts. Revenue and other income recognised during the year are asfollows:

Year ended 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Revenue

Sale of goods 223,246 412,001 540,013

Other income

Interest income 266 574 665

Government grants * — — 1,300

Gain on disposal of land use rights ** — 1,431 —

Fair value gains on financial assets at fairvalue through profit or loss — 8 7

Others 1 3 8

267 2,016 1,980

* The amount represents grants received from the PRC government in relation to the Group’s efforts in developing the2-A2MPS products.

** The amount comprises a deduction of land appreciation tax of approximately RMB750,000 which is included inaccrued liabilities and other payables in the combined balance sheets.

6. SEGMENT INFORMATION

The Group is organised into four main business segments:

Adhesive tapes — manufacture and sale of adhesive tapes such as biaxially-orientedpolypropylene tape, stationary tape, masking tape, double-sided tape and kraft paper tape forindustrial, commercial and customer uses.

Release papers — manufacture and sale of release papers such as glassine silicon coated paperand clay coat kraft release paper for use as a protective backing on adhesive paper.

BOPA film — manufacture and sale of BOPA film for packaging in many industries, such as food,pharmaceutical and medical industries and in electrical industrial materials.

2-A2MPS — manufacture and sale of 2-A2MPS for oil industry and water treatment industry.

The Group’s revenue and assets are principally attributable to a single geographical region, whichis the PRC, excluding Hong Kong and Macau.

There are no intersegment sales between the respective segments.

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6. SEGMENT INFORMATION (Continued)

Year ended 31 December 2004Adhesive

tapesReleasepapers BOPA film 2-A2MPS Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Revenue

Net sales to external customers 156,179 55,771 — 11,296 223,246

Segment results 38,880 12,490 — 3,806 55,176

Unallocated income 267

Unallocated expenses (1,084)

Operating profit 54,359

Finance costs (2,312)

Profit before income tax 52,047

Income tax expense (7,848)

Profit for the year 44,199

Capital expenditure 219 — — 48 267

Unallocated 2,042

Total capital expenditure 2,309

Depreciation and amortisation 2,647 418 — 943 4,008

Unallocated 771

Total depreciation and amortisation 4,779

Other non-cash expense — — — — —

As at 31 December 2004Adhesive



Segment assets 93,139 27,409 — 15,072 135,620

Unallocated assets 71,657

Total assets 207,277

Segment liabilities 28,995 15,165 — 2,328 46,488

Unallocated liabilities 44,949

Total liabilities 91,437

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Revenue

Net sales to external customers 229,107 98,301 64,596 19,997 412,001

Segment results 61,293 27,706 16,019 9,248 114,266

Unallocated income 2,016








Unallocated 394



Unallocated 828






Segment assets 106,032 34,693 20,215 17,878 178,818



Segment liabilities 38,779 13,586 11,483 1,729 65,577



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Revenue


Segment results 86,413 39,891 29,277 20,936 176,517

Unallocated income 1,980







Capital expenditure 70 — — 4,771 4,841

Unallocated 359



Unallocated 882






Segment assets 87,574 33,685 25,654 19,900 166,813






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7. OPERATING PROFIT

The Group’s operating profit is arrived at after charging:


RMB’000 RMB’000 RMB’000

Operating lease charges: property, plant andequipment — 3,600 5,700

Cost of inventories recognised as expense 161,343 287,332 351,185

Depreciation 4,645 4,738 4,931

Amortisation of land use rights * 134 113 92

Directors’ remuneration:

Fees — — —

Other emoluments 234 244 329

Staff costs (excluding directors’ remuneration) 3,819 6,068 7,124

Retirement scheme contribution 280 415 471

Total staff costs 4,333 6,727 7,924

Cost of inventories recognised as expense includes thefollowing expenses which are also included in therespective total amounts separately disclosed abovefor each of these expenses:

Depreciation 4,004 4,016 4,137

Staff costs 1,939 3,297 3,713

* Included in administrative expenses.

8. FINANCE COSTS


RMB’000 RMB’000 RMB’000

Interest charges on:

Bank loans wholly repayable within five years 2,312 2,447 1,777

9. INCOME TAX EXPENSE


RMB’000 RMB’000 RMB’000

Current tax:

PRC income tax 7,848 17,080 26,156

A-31


9. INCOME TAX EXPENSE (Continued)

The provision for PRC income tax is calculated based on the statutory income tax rate of 15% ofthe assessable income of Xiamen Changtian as determined in accordance with the relevant PRCincome tax rules and regulations for the Relevant Periods. Xiamen Changtian’s branch operatedin Shanghai, the PRC was subject to the statutory income tax rate of 33% of its assessableincome.

No deferred tax has been provided as the Group did not have any significant temporarydifferences which gave rise to a deferred tax asset or liability at 31 December 2004, 2005 and2006.

Reconciliation between tax expense and accounting profit at applicable tax rates is as follows:


2004 2005 2006

RMB’000 RMB’000 RMB’000


Tax at the applicable tax rate at 15% 7,807 16,833 26,265

Tax effect of non-deductible expenses 2 — —

Effect on different tax rates of branch operating inother jurisdictions 39 30 —

Tax effect of unused tax losses not recognised — — 5

Others — 217 (114)

Income tax expense 7,848 17,080 26,156

10. DIVIDENDS

Dividends disclosed during the Relevant Periods represented dividends declared and paid byXiamen Changtian to its then equity owners. The rates of dividend and the number of sharesranking for dividends are not presented as such information are not meaningful.


RMB’000 RMB’000 RMB’000

Interim dividends 10,000 40,000 72,500

11. EARNINGS PER SHARE

Basic earnings per share is calculated based on profit attributable to equity holders of theCompany for the respective years and the pre-Invitation share capital of the Company. TheCompany’s pre-Invitation share capital of 500,000,000 shares were assumed to be in issuethroughout the entire period presented.

As there are no dilutive potential ordinary shares during each of the years covered in theCombined Financial Information, no diluted earnings per share is presented.

A-32


12. PROPERTY, PLANT AND EQUIPMENT

Leaseholdbuildings

Plant andmachinery

Furniture,fixtures

and officeequipment

Motorvehicles

Constructionin progress Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000At 1 January 2004Cost 30,834 42,514 561 714 324 74,947Accumulated depreciation (894) (3,439) (78) (93) — (4,504)

Net book amount 29,940 39,075 483 621 324 70,443

Year ended 31 December2004

Opening net book amount 29,940 39,075 483 621 324 70,443Additions 26 251 83 2 1,947 2,309Transfer in/(out) 1,218 412 — — (1,630) —Disposal — — — (236) — (236)Depreciation charge (1,039) (3,456) (92) (58) — (4,645)

Closing net book amount 30,145 36,282 474 329 641 67,871

At 31 December 2004 and1 January 2005

Cost 32,078 43,177 644 393 641 76,933Accumulated depreciation (1,933) (6,895) (170) (64) — (9,062)

Net book amount 30,145 36,282 474 329 641 67,871


Opening net book amount 30,145 36,282 474 329 641 67,871Additions — 153 223 — 846 1,222Depreciation charge (1,098) (3,499) (109) (32) — (4,738)

Closing net book amount 29,047 32,936 588 297 1,487 64,355

At 31 December 2005 and1 January 2006

Cost 32,078 43,330 867 393 1,487 78,155Accumulated depreciation (3,031) (10,394) (279) (96) — (13,800)

Net book amount 29,047 32,936 588 297 1,487 64,355


Opening net book amount 29,047 32,936 588 297 1,487 64,355Additions — 1,755 49 277 3,119 5,200Transfer in/(out) 3,610 288 508 — (4,406) —Depreciation charge (1,099) (3,619) (171) (42) — (4,931)Deemed distribution to equity

owners (note 23(c)) (31,558) — — — (200) (31,758)

Closing net book amount — 31,360 974 532 — 32,866

At 31 December 2006Cost — 45,373 1,424 670 — 47,467Accumulated depreciation — (14,013) (450) (138) — (14,601)

Net book amount — 31,360 974 532 — 32,866

A-33


12. PROPERTY, PLANT AND EQUIPMENT (Continued)

All property, plant and equipment held by the Group are located in the PRC.

At 31 December 2004 and 2005, the Group’s entire leasehold buildings and certain plant andmachinery with an aggregate carrying value of approximately RMB45,165,000 andRMB32,447,000 respectively were pledged against bank loans of the Group (note 21).

At 31 December 2004 and 2005, the Group was still in the process of obtaining the buildingownership certificates of the entire leasehold buildings. These buildings were erected on land forwhich the relevant land use rights certificates have been obtained by the Group. As confirmed bythe Group’s legal advisors, the Group has obtained the right to use these buildings.

At 31 December 2006, the entire leasehold buildings of approximately RMB31,558,000 whichwere pledged against bank loans of the Group (note 21) were distributed to Xiamen Changtianupon the Reorganisation.

All leasehold buildings and construction in progress were distributed to Xiamen Changtian uponthe Reorganisation (note 23(c)).

13. LAND USE RIGHTS

2004 2005 2006

RMB’000 RMB’000 RMB’000

At beginning of the year

Cost 6,698 6,698 4,607

Accumulated amortisation (592) (726) (591)

Net book amount 6,106 5,972 4,016

For the year

Opening net book amount 6,106 5,972 4,016

Disposal — (1,843) —

Amortisation (134) (113) (92)

Deemed distribution to equity owners (note 23(c)) — — (3,924)

Closing net book amount 5,972 4,016 —

At end of the year

Cost 6,698 4,607 —

Accumulated amortisation (726) (591) —

Net book amount 5,972 4,016 —

Land use rights represented leasehold interests in land located in the PRC with lease termsexpiring in 2049.

At 31 December 2004 and 2005, the entire land use rights were pledged to secure bank loans ofthe Group (note 21).

A-34


13. LAND USE RIGHTS (Continued)

At 31 December 2006, the entire land use rights of approximately RMB3,924,000 which werepledged against bank loans of the Group (note 21) were distributed to Xiamen Changtian upon theReorganisation.

All land use rights were distributed to Xiamen Changtian upon the Reorganisation (note 23(c)).

14. TRADE RECEIVABLES, DEPOSITS AND OTHER RECEIVABLES

Trade receivables generally have 30 to 90 days’ credit terms. All trade and other receivables aredenominated in RMB.

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Deposits 23 177 1,127

Other receivables 7 12 292

Total deposits and other receivables 30 189 1,419

Less: Deposits paid in respect of purchase of property,plant and equipment — non-current portion (11) (101) (946)

Current portion 19 88 473

15. INVENTORIES, AT COST

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Raw materials 6,775 5,114 8,963

Work-in-progress 2,243 4,355 1,750

Finished goods 22,898 25,195 3,656

31,916 34,664 14,369

16. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Public investment fund in the PRC held for trading, atfair value — 100 —

Changes in fair values of financial assets at fair value through profit or loss are recorded in otherincome in the combined income statements for the years ended 31 December 2005 and 2006.

A-35


17. BALANCES WITH RELATED PARTIES

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Due from related parties

Xiamen Brightforever — 1,030 —

Ms. Chen Baohua 17 17 17

Mr. Chen Yongfu 22 22 22

39 1,069 39

Due to a related party

Xiamen Brightforever — — 20

The balances with related parties are unsecured, interest free and repayable on demand.

18. PLEDGED BANK DEPOSITS, CASH AND BANK BALANCES

As at 31 December 2004, 2005 and 2006, the bank deposits of RMB1,667,000, RMB6,044,000and RMB9,894,000 respectively were pledged to secure the bills payables of the Group (note 19).

The Group’s entire pledged bank deposits and cash and bank balances in the PRC, excludingHong Kong and Macau, are denominated in RMB. RMB is not freely convertible into foreigncurrencies. Under the PRC Foreign Exchange Control Regulations and Administration ofSettlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted toexchange RMB for foreign currencies through banks that are authorised to conduct foreignexchange business.

19. TRADE AND BILLS PAYABLES

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Trade payables 42,319 53,978 27,938

Bills payables 4,168 10,850 19,789

46,487 64,828 47,727

Trade and bills payables are normally settled on 30 to 60 days’ credit term. All trade and billspayables are denominated in RMB.

A-36


20. ACCRUED LIABILITIES AND OTHER PAYABLES

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Accrued liabilities 2,255 4,926 2,207

Other payables 4,410 646 1,148

6,665 5,572 3,355

21. BANK LOANS, SECURED

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Within one year 29,400 27,900 20,000

In the second to fifth years, inclusive * 7,900 — —

37,300 27,900 20,000

As at 31 December 2004 and 2005, the Group’s interest bearing bank loans were secured by thepledge of the entire leasehold buildings, certain plant and machinery (note 12) and the entire landuse rights (note 13) of the Group and bear interests ranging from 6.11% to 7.56% and 6.44% to7.25% per annum as at 31 December 2004 and 2005 respectively.

As at 31 December 2004 and 2005, certain of the Group’s interest bearing bank loans in theamount of RMB7,900,000 were also guaranteed by Ms. Chen Baohua, Mr. Chen Yongfu and Mr.Yang Qingjin which were subsequently repaid in full during the year ended 31 December 2006.

As at 31 December 2006, the Group’s interest bearing bank loans are secured by the pledge ofthe entire leasehold buildings (note 12) and land use rights (note 13) which were distributed toXiamen Changtian upon the Reorganisation and bear interests at 7.25% per annum as at 31December 2006.

The Group’s bank loans are denominated in RMB.

* The bank loan of RMB7,900,000 was borrowed in 2003 and was repayable within four years. However, before thematurity date of the loan, the Agriculture Bank of China (the “ABOC”) started an action against Xiamen Changtian inthe Xiamen Intermediate People’s Court for repayment of the loans in full. When this action was dismissed by theXiamen Intermediate People’s Court, the ABOC took the case to the Fujian Province High Level People’s Court. On30 November 2005, the Fujian Province High Level People’s Court issued a judgement numbered (2005) Min MinZhong Zi No. 401 which held that Xiamen Changtian had to repay the ABOC the entire loan amount of RMB7,900,000plus applicable interest. On 25 April 2006, Xiamen Changtian entered into a settlement agreement with the ABOC thatXiamen Changtian could pay the RMB7,900,000 in 10 equal monthly instalments starting from April 2006. As at 31December 2005, the entire bank loan of RMB7,900,000 was included in current liabilities which was subsequentlyrepaid in full during the year ended 31 December 2006.

A-37


22. SHARE CAPITAL

The Company was incorporated in Bermuda on 29 March 2007. At the date of incorporation, theauthorised share capital of the Company was US$12,000 divided into 120,000 ordinary shares ofUS$0.10 each. On 30 March 2007, 1 ordinary share of US$0.10 each was allotted and issuednil-paid to Eastline Investments.

The share capital balances as at 31 December 2004, 2005 and 2006 represent the issued andpaid-up share capital of Jumbo Glories as if it was the holding company of the Group for theRelevant Periods since 1 January 2004.

23. RESERVES

(a) Merger reserve

The merger reserve of the Group represents (i) the difference between the nominal value ofcombined capital of the Group and the nominal value of the issued share capital of JumboGlories; and (ii) the nominal value of the Transferred Operations as pursuant to theReorganisation.

(b) Statutory reserves

In accordance with the relevant laws and regulations of the PRC, the Group is required totransfer 10% of its profit after taxation prepared in accordance with the accounting regulationin the PRC to the statutory reserve until the reserve balance reaches 50% of the respectiveregistered capital. Such reserve may be used to reduce any losses incurred or forcapitalisation as paid-up capital.

In addition, the Group is required to transfer 5% of its profit after taxation prepared inaccordance with the accounting regulations in the PRC to the statutory public welfarereserve. The use of the statutory public welfare reserve is restricted to capital expenditurefor employees’ facilities. This statutory public welfare reserve is non-distributable exceptupon liquidation.

(c) Deemed distribution to equity owners

This represents the following net book value of Non-transferred Operations as at 31December 2006:

RMB’000

Leasehold buildings (note 12) 31,558

Construction in progress (note 12) 200

Land use rights (note 13) 3,924

Amount due from equity holders of Xiamen Changtian 72,500

Accrued liabilities and other payables * (9,797)

Provision for tax (8,412)

Deemed distribution to equity owners 89,973

* The balance represents other tax payables of the Non-transferred Operations included in accrued liabilitiesand other payables.

A-38


24. COMMITMENTS

Capital commitments

The Group had the following outstanding capital commitments:

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Contracted, but not provided for, in respect of

construction of leasehold buildings 80 3,022 —

Operating lease commitments

The total future minimum lease payments of the Group under non-cancellable operating leases forproperty, plant and equipment are as follows:

As at 31 December2004 2005 2006

RMB’000 RMB’000 RMB’000

Within one year — 5,700 6,000

In the second to fifth years — 24,000 24,000

After five years — 19,500 13,500

— 49,200 43,500

25. FINANCIAL GUARANTEE CONTRACTS

Xiamen Changtian had executed a guarantee with respect to a bank loan to Xiamen Brightforever.The guarantee provided was for the period of two years from the day following the first repaymentdate during the loan period from 25 September 2003 to 24 September 2006 for up to a maximumamount of RMB130,000,000. The largest aggregate outstanding amount under the guaranteegiven by Xiamen Changtian from the beginning of the guarantee period and up to September2006 was approximately RMB25,000,000. Xiamen Brightforever had made full repayment of thebank loan in September 2006. Under such guarantee, the Group would be liable to pay the banksif the banks are unable to recover the loans. At the balance sheet dates, no provision for thisguarantee contract had been made as the bank loan has been fully repaid before the guaranteeperiod commenced.

In addition, Xiamen Changtian had executed guarantees with respect to certain bank loans ofaggregate drawn down amounts of RMB13,000,000 to a company in which the relatives of Mr.Yang Qingjin and Mr. Chen Yongfu have beneficial interest. As at 31 December 2004 and 2005,the aggregate bank loans granted to this company in relation to the guarantee executed byXiamen Changtian approximating RMB9,500,000 and RMB8,500,000 respectively. Under thisguarantee, the Group would be liable to pay the banks if the banks are unable to recover theloans. At 31 December 2004 and 2005, no provision for Xiamen Changtian’s obligation under thisguarantee contract had been made as the directors considered that it was not probable thatXiamen Changtian would suffer significant losses and/or damages in case the repayment of theloans would be in default since Mr. Chen Yongfu had undertaken to bear any liability that XiamenChangtian may incur arising from the guarantee. The guarantees had been released during theyear ended 31 December 2006.

A-39


26. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group does not have written risk management policies and guidelines. However, the boardof directors meets periodically to analyse and formulate measures to manage the Group’sexposure to market risk, including principally changes in interest rates and currency exchangerates. As the Group’s exposure to market risk is kept at a minimum level, the Group has not usedany derivatives or other instruments for hedging purposes. The Group does not hold or issuederivative financial instruments for trading purposes.

As at 31 December 2004, 2005 and 2006, the Group’s financial instruments mainly consisted ofcash and bank balances, trade receivables, financial assets at fair value through profit or loss,deposits and other receivables, pledged bank deposits, balances with related parties, trade andbills payables, accrued liabilities and other payables and bank loans.

(a) Interest rate risk

The Group’s interest rate risk mainly arises from bank loans. The interest rates and terms ofrepayment of the bank loans are disclosed in note 21.

(b) Foreign currency risk

The Group’s exposure to risk resulting from changes in foreign currency exchange rates isminimal.

(c) Credit risk

The carrying amounts of trade and other receivables and amounts due from related partiesrepresent the Group’s maximum exposure to credit risk in relation to its financial assets. TheGroup has no other significant concentration of credit risk. No other financial assets carry asignificant exposure to credit risk.

(d) Fair value

The fair value of the Group’s financial assets and liabilities are not materially different fromtheir carrying amounts because of the immediate or short term maturity of these financialinstruments. The fair value of borrowings is not disclosed because the carrying value is notmaterially different from the fair value.

A-40


27. CRITICAL ACCOUNTING ESTIMATES

Estimates are continually evaluated and are based on historical experiences and other factors,including expectations of future events that are believed to be reasonable under thecircumstances.

The Group makes estimates and assumptions concerning the future. The resulting accountingestimates will, by definition, seldom equal the related actual results. The estimates andassumptions that have a significant risk of causing a material adjustment to the carrying amountsof assets and liabilities within the next financial year are discussed below.

(a) Net realisable value of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course ofbusiness, less estimated costs of completion and selling expenses. These estimates arebased on the current market condition and the historical experience of selling products ofsimilar nature. It could change significantly as a result of competitor actions in response tosevere industry cycles. Management will reassess the estimations at the balance sheetdate.

(b) Impairment of trade receivables

The Group’s management assess the collectibility of trade receivables. This estimate isbased on the credit history of the Group’s customers and the current market condition.Management reassess the impairment loss at the balance sheet date.

28. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions arising from the Reorganisation and transactions andbalances detailed in notes 17, 21 and 25 in these Combined Financial Information, theGroup had the following transactions with a related party at agreed terms.


RMB’000 RMB’000 RMB’000

Disposal of land use rights to XiamenBrightforever — 4,630 —

Rental paid/payable to Xiamen Brightforever — 3,600 5,700

(b) Included in staff costs are compensation of key management personnel of the Group andcomprises the following categories:


RMB’000 RMB’000 RMB’000

Short term employee benefits 446 494 612

Post employment benefits 69 72 83

515 566 695

A-41


29. NOTES TO THE COMBINED CASH FLOW STATEMENT

Major non-cash transactions

During the years ended 31 December 2003, 2004 and 2005, the Group paid deposits ofapproximately RMB471,000, RMB11,000 and RMB101,000 respectively for the acquisition ofcertain property, plant and equipment. The deposits paid of RMB471,000, RMB11,000 andRMB101,000 were transferred to property, plant and equipment during the years ended 31December 2004, 2005 and 2006 respectively upon the delivery of the respectively property, plantand equipment.

30. SUBSEQUENT EVENTS

In addition to those disclosed elsewhere in the Combined Financial Information, the Group hadthe following significant event took place subsequent to 31 December 2006:

On 29 May 2007, Changtian Enterprise has received confirmations issued by Fujian ProvinceXiamen City Haicang District National Tax Bureau that it is qualified to apply for the two-yearexemption and three-year half reduction of income tax with relevant taxation authorities when itstarts to make profit.

A-42

APPENDIX B

REVIEW REPORT FROM THE JOINT REPORTING ACCOUNTANTSON THE UNAUDITED COMBINED FINANCIAL INFORMATION OF THE GROUP

FOR THE THREE MONTHS ENDED 31 MARCH 2007

Date: 30 October 2007

The Board of DirectorsChangtian Plastic & Chemical LimitedCanon’s Court22 Victoria StreetHamilton HM 12Bermuda

Dear Sirs

Introduction

This report has been prepared for inclusion in the prospectus dated 30 October 2007 (“Prospectus”) inconnection with the invitation in respect of offer of shares of Changtian Plastic & Chemical Limited (the“Company”).

We have reviewed the unaudited combined financial statements of the Company and its subsidiaries(collectively the “Group”), as set out in Appendix B on pages B-3 to B-40 which comprise the unauditedcombined income statement, unaudited combined statement of changes in equity and unauditedcombined cash flow statement of the Group for the three months ended 31 March 2007 and theunaudited combined balance sheet of the Group as at 31 March 2007, and a summary of significantaccounting policies and other explanatory notes (the “Unaudited Combined Financial Information”). Thedirectors of the Company are responsible for the preparation and fair presentation of these UnauditedCombined Financial Information in accordance with International Financial Reporting Standards(“IFRS”). Our responsibility is to express a conclusion on the Unaudited Combined FinancialInformation based on our review.

For the purpose of this report, the comparative figures for the corresponding three months ended 31March 2006 were extracted from the unaudited combined management financial information and wehave not carried out a review of those financial information. The unaudited combined managementfinancial information of the Group for the period ended 31 March 2006 are the responsibility of thedirectors of the Company.

Scope of Review

We conducted our review in accordance with International Standards on Review Engagements 2410,“Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A reviewof the Unaudited Combined Financial Information consists of making inquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical and other review procedures.A review of substantially less in scope than an audit conducted in accordance with InternationalStandards on Auditing and consequently does not enable us to obtain assurance that we would becomeaware of all significant matters that might be identified in an audit. Accordingly, we do not express anaudit opinion.

B-1

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the UnauditedCombined Financial Information do not present fairly, in all material respects, the unaudited combinedfinancial position of the Group as at 31 March 2007, and of its unaudited combined results, unauditedcombined statement of changes in equity and unaudited combined cash flows for the three monthsended 31 March 2007 in accordance with IFRS.

Yours faithfully

Foo Kon Tan Grant ThorntonCertified Public AccountantsSingapore

Grant ThorntonCertified Public AccountantsHong Kong

Partner: Wong Kian Kok Partner: Lo Ngai Hang

B-2

Unaudited combined income statement

Three months ended 31 MarchNotes 2006 2007

RMB’000 RMB’000(Unaudited) (Unaudited)

Revenue 5 116,638 151,297

Cost of sales (76,908) (94,933)

Gross profit 39,730 56,364

Other income 5 149 139

Selling and distribution expenses (2,251) (3,468)

Administrative expenses (1,060) (1,020)

Operating profit 7 36,568 52,015

Finance costs 8 (479) (361)

Profit before income tax 36,089 51,654

Income tax expense 9 (5,333) (7,753)

Profit attributable to equity holders 30,756 43,901

Dividends 10 40,000 —

Earnings per share — basic (RMB cents) 11 6.15 8.78

B-3

Unaudited combined balance sheet

Notes

As at 31December

2006As at 31

March 2007RMB’000 RMB’000(Audited) (Unaudited)

ASSETS AND LIABILITIES

Non-current assets

Property, plant and equipment 12 32,866 32,293

Deposits 14 946 583

33,812 32,876

Current assets

Inventories 15 14,369 14,653

Trade receivables 14 111,745 110,651

Deposits and other receivables 14 473 179

Due from related parties 16 39 18,922

Pledged bank deposits 17 9,894 7,533

Cash and bank balances 17 58,220 137,590

194,740 289,528

Current liabilities

Trade and bills payables 18 47,727 55,528

Accrued liabilities and other payables 19 3,355 15,548

Due to related parties 16 20 22,201

Bank loans, secured 20 20,000 20,000

Provision for tax — 7,753

71,102 121,030

Net current assets 123,638 168,498

Net assets 157,450 201,374

EQUITY

Equity attributable to equity holders of the Company

Share capital 21 39 —

Reserves 157,411 201,374

Total equity 157,450 201,374

B-4

Unaudited combined statement of changes in equity

Sharecapital

Mergerreserve

Proposeddividend

Statutoryreserves

Retainedprofits

Totalequity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000(note 22(a)) (note 22(b))

At 31 December 2005(Audited) 39 50,000 — 26,565 94,377 170,981

Profit for the period — — — — 30,756 30,756

Total recognised incomeand expense for theperiod — — — — 30,756 30,756

Dividends (note 10) — — 40,000 — (40,000) —

At 31 March 2006(Unaudited) 39 50,000 40,000 26,565 85,133 201,737

At 31 December 2006(Audited) 39 157,411 — — — 157,450

Profit for the period — — — — 43,901 43,901

Total recognised incomeand expenses for theperiod — — — — 43,901 43,901

Arising on reorganisation 39 (16) — — — 23

Transfer upon incorporationof the Company (78) 78 — — — —

At 31 March 2007(Unaudited) — 157,473 — — 43,901 201,374

B-5

Unaudited combined cash flow statement



Cash flows from operating activities


Adjustments for:

Interest income 5 (134) (139)

Fair value gains on financial assets at fair value throughprofit or loss 5 (7) —

Loss on disposal of property, plant and equipment 7 — 31

Depreciation 7 1,191 994

Amortisation of land use rights 7 23 —

Interest expenses 8 479 361

Operating profit before working capital changes 37,641 52,901

Increase in inventories (6,661) (284)

(Increase)/decrease in trade receivables (11,389) 1,094

(Increase)/decrease in deposits and other receivables (20) 294

Decrease/(increase) in amounts due from related parties 1,030 (18,883)

Increase in trade and bills payables 13,493 7,801

(Decrease)/increase in accrued liabilities and otherpayables (143) 12,193

Increase in amounts due to related parties 170 564

Cash generated from operations 34,121 55,680

Interest received 134 139

Income taxes paid (1,752) —

Net cash generated from operating activities 32,503 55,819

Cash flows from investing activities

Purchases of property, plant and equipment 28 (77) (94)

Deposits paid for purchases of property, plant and equipment (577) —

Proceeds from disposal of property, plant and equipment — 5

Proceeds from disposal of financial assets at fair valuethrough profit or loss 107 —

(Increase)/decrease in pledged bank deposits (1,303) 2,361

Net cash (used in)/generated from investing activities (1,850) 2,272

B-6

Unaudited combined cash flow statement (Continued)



Cash flows from financing activities

Drawdown of bank loans 15,000 20,000

Repayments of bank loans (22,000) (20,000)

Proceeds from issuance of share capital of a subsidiaryarising on reorganisation — 21,640

Interest paid (479) (361)

Net cash (used in)/generated from financing activities (7,479) 21,279

Net increase in cash and cash equivalents 23,174 79,370

Cash and cash equivalents at beginning of financialperiod 72,241 58,220

Cash and cash equivalents at end of financial period 95,415 137,590

Analysis of balances of cash and cash equivalents

Cash and bank balances 95,415 137,590

B-7

Notes to the unaudited combined financial statements

1. INTRODUCTION

The unaudited combined financial statements of Changtian Plastic & Chemical Limited (the“Company”) and its subsidiaries (collectively the “Group”), which comprise the unauditedcombined balance sheet of the Group as at 31 March 2007, the unaudited combined incomestatement, unaudited combined statement of changes in equity and unaudited combined cashflow statement of the Group for the three months ended 31 March 2007 and a summary ofsignificant accounting policies and other explanatory notes (the “Unaudited Combined FinancialInformation”), have been prepared for inclusion in the Prospectus of the Company issued for theinvitation (the “Invitation”) by the Company in respect of the issue of ordinary shares of S$0.05each comprising 160,000,000 new shares and 55,000,000 vendor shares at S$0.47 per share inthe Company for cash.

2. THE COMPANY

The Company was incorporated in Bermuda on 29 March 2007 under the Bermuda CompaniesAct as an exempted company with limited liability under the name of Changtian Plastic &Chemical Limited.

As at the date of incorporation, the authorised share capital of the Company was US$12,000divided into 120,000 ordinary shares of US$0.10 each. On 30 March 2007, 1 ordinary share ofUS$0.10 each in the capital of the Company was allotted and issued nil-paid to EastlineInvestments Holding Limited (“Eastline Investments”), a company incorporated in the BritishVirgin Islands (the “BVI”) and wholly-owned by Mr. Yang Qingjin, a director of the Company.Pursuant to the written resolution dated 6 July 2007 in lieu of a special general meeting, 99ordinary shares of US$0.10 each in the capital of the Company was allotted and issued nil-paidto Eastline Investments.

The registered office of the Company is located at Canon’s Court, 22 Victoria Street, Hamilton HM12, Bermuda. The principal place of business of the Company is located at 18 Xinsheng Road,Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, the People’s Republic ofChina (the “PRC”). The Company does not have a place of business in Singapore as at the dateof these unaudited combined financial statements.

The principal activities of the Company is investment holding. The principal activities of theCompany’s subsidiaries are set out in note 3 to the unaudited combined financial statements.

Pursuant to written resolutions dated 6 July 2007 in lieu of a special general meeting, the then soleshareholder of the Company approved, inter alia, the following:


(b) the sub-division of every one ordinary share of S$0.154 each after the ShareRedenomination into 154 ordinary shares of S$0.001 each (the “Share Subdivision”); and

(c) the consolidation of every 50 ordinary share of S$0.001 each after the Share Subdivisioninto one ordinary share of S$0.05 each (the “Share Consolidation”).

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Notes to the unaudited combined financial statements (Continued)


Pursuant to written resolutions dated 24 September 2007 in lieu of a special general meeting, thethen sole shareholder of the Company approved, inter alia, the following:

(a) the adoption of a new set of Bye-laws and an employee share option scheme of theCompany;

(b) the increase in the authorised share capital of the Company from S$18,480 divided into369,600 ordinary shares of S$0.05 each to S$75 million divided into 1,500,000,000 ordinaryshares of S$0.05 each;

(c) crediting as fully paid the 308 nil-paid shares registered in the name of Eastline Investmentsand the allotment and issue of 499,999,692 new shares to the shareholders of JumboGlories Limited (“Jumbo Glories”), as part of the Company’s restructuring exercise;

(d) the offer, allotment and issue of the 160,000,000 new shares, which when issued and fullypaid-up, shall rank pari passu in all respects with the existing issued and paid-up shares ofthe Company;

(e) the offer for sale of up to 55,000,000 shares held by Goodwise Investments Limited(“Goodwise Investments”), CIM VIII Limited (“CIM VIII”), Longold Group Limited (“LongoldGroup”) and Hong Kong Investments Group Limited (“Hong Kong Investments”) inconnection with the Invitation, such shares to rank pari passu in all respects with the existingissued and fully paid-up shares; and

(f) that authority be given to the directors of the Company, to:

(i) issue shares whether by ways of rights, bonus or otherwise (including shares as maybe issued pursuant to any Instrument (as defined below) made or granted by thedirectors of the Company while this resolution is in force notwithstanding that theauthority conferred by this resolution may have ceased to be in force at the time ofissue of such shares); and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might orwould require shares to be issued, including but not limited to the creation and issueof warrants, debentures or other instruments convertible into shares of the Company,at any time and upon such terms and conditions and for such purposes and to suchpersons as the directors of the Company may in their absolute discretion deem fit,

provided that the aggregate number of shares issued pursuant to such authority (includingshares issued pursuant to any Instrument), shall not exceed 50% of the post-Invitationissued share capital, and provided further that the aggregate number of such shares to beoffered other than on a pro rata basis in pursuance to such authority (including shares issuedpursuant to any instrument) to the existing shareholders shall not exceed 20% of thepost-Invitation issued share capital, and, unless revoked or varied by the Company ingeneral meeting, such authority shall continue in force until the conclusion of the next annualgeneral meeting of the Company or the date by which the next annual general meeting of theCompany is required by law to be held, whichever is the earlier.

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For the purpose of this resolution and pursuant to Rules 806(3) and 806(4) of the SingaporeExchange Securities Trading Limited (the “SGX-ST”) Listing Manual (the “Listing Manual”),the “post-Invitation issued share capital” shall mean the enlarged issued share capital of theCompany immediately after the Invitation, after adjusting for: (i) new shares arising from theconversion or exercise of any convertible securities; (ii) new shares arising from exercisingshare options or vesting of share awards outstanding or subsisting at the time such authorityis given, provided the options or awards were granted in compliance with the Listing Manual;and (iii) any subsequent consolidation or sub-division of shares.

Approval for crediting as fully paid the 308 nil-paid shares and the allotment and issue of499,999,692 new shares was received from the Bermuda Monetary Authority on 30 August 2007.

As at the date of this report, the authorised share capital of the Company is S$75,000,000 dividedinto 1,500,000,000 ordinary shares of S$0.05 each. The issued and paid-up share capital of theCompany is S$25,000,000 divided into 500,000,000 ordinary shares of S$0.05 each.

3. THE REORGANISATION AND BASIS OF PRESENTATION

A reorganisation exercise was undertaken by the Group to rationalise the corporate structure forthe Invitation (the “Reorganisation”). The following steps were taken in the Reorganisation:

3.1 Incorporation of Jumbo Glories

Jumbo Glories was incorporated on 1 April 2005 in the BVI as an investment holdingcompany with an authorised share capital of US$50,000 divided into 50,000 ordinary sharesof US$1.00 each. On 3 January 2006, Ms. Chen Baohua, the spouse of Mr. Yang Qingjin andthe sister of Mr. Chen Yongfu, a director of the Company, and Mr. Chen Yongfu subscribedfor and was allotted and issued 2,215 and 2,785 shares of Jumbo Glories, representing44.3% and 55.7% of the total issued shares capital of Jumbo Glories, respectively.

On 8 March 2007, Mr. Chen Yongfu transferred his entire interest in Jumbo Glories toGoodwise Investments, a company incorporated in the BVI and wholly-owned by Mr. ChenYongfu, for the issue of 1 share in Goodwise Investments.

On 8 March 2007, Ms. Chen Baohua transferred her entire interest in Jumbo Glories toEastline Investments for the issue of 1 share in Eastline Investments. On the same date, Ms.Chen Baohua transferred her entire interest in Eastline Investments to Mr. Yang Qingjin.

Thereafter, Eastline Investments, Goodwise Investments and Rowview Limited (“Rowview”),a company incorporated in the BVI and equally owned by Ms. Chen Baohua and Mr. ChenYongfu, subscribed for and were allotted 1,181, 1,486 and 2,333 shares of Jumbo Glories fora subscription consideration of US$1,181, US$1,486 and US$18.5 million, respectively.

Upon completion of the transfers and subscription, Eastline Investments, GoodwiseInvestments and Rowview respectively held 3,396, 4,271 and 2,333 shares in JumboGlories, representing 33.96%, 42.71% and 23.33% of the total issued share capital of JumboGlories.

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3.2 Incorporation of Xiamen Changtian Enterprise Co., Ltd.(“Changtian Enterprise”)

On 21 July 2006, the Xiamen Foreign Investment Bureau granted thecertificate of approval for the establishment by Jumbo Glories of Changtian Enterprise as awholly foreign-owned enterprise in the PRC. Changtian Enterprise was established on 6December 2006 with a registered capital of US$18.0 million and with a business term of 30years from 6 December 2006 to 5 December 2036. Pursuant to a capital verification reporton Changtian Enterprise’s registered capital dated 13 June 2007, the registered capital ofChangtian Enterprise of US$18.0 million was fully paid by Jumbo Glories on 11 June 2007.

3.3 Acquisition of certain assets and business as well as liabilities of Xiamen ChangtianPlastic & Chemical Co., Ltd. (“Xiamen Changtian”) and lease ofpremises

On 14 April 2006, Jumbo Glories as purchaser, and Xiamen Changtian, a companyestablished in the PRC and beneficially owned by Ms. Chen Baohua and Mr. Chen Yongfu,as seller, entered into an asset and business transfer agreement (the “Initial Asset andBusiness Transfer Agreement”) (as amended by a supplemental transfer agreement (the“Supplemental Transfer Agreement”) dated 21 May 2007) pursuant to which Jumbo Gloriesagreed to acquire all Xiamen Changtian’s business together with certain of its assets andliabilities, as further mentioned below (the “Changtian Assets and Business”). The totalconsideration for the acquisition was US$18.5 million, which is approximately RMB143.48million, arrived at based on the net asset value (as at 31 December 2005) of the ChangtianAssets and Business, as valued by an independent valuer, Xiamen Dacheng ValuationOffice (“Xiamen Dacheng”), in its report dated 30 March 2006, to be satisfied in full by cashpayment. The Initial Asset and Business Transfer Agreement was approved by the XiamenForeign Investment Bureau on 21 July 2006.


of Changtian Enterprise was obtained only on 6December 2006.

Pursuant to the Supplemental Transfer Agreement, the parties agreed that the considerationpayable under the Initial Asset and Business Transfer Agreement would remain at US$18.5million (or approximately RMB143.48 million), being the net asset value of the ChangtianAssets and Business at 31 December 2005 as valued by Xiamen Dacheng. The parties alsoagreed that all profits generated by Xiamen Changtian for the period from 1 January 2007shall belong to Changtian Enterprise. In arriving at this agreement, the parties haveconsidered the valuation of the Changtian Assets and Business as at 31 January 2007 ofRMB155.14 million by Xiamen Dacheng in its valuation report dated 10 March 2007, andthat after deducting the profits generated by Xiamen Changtian for the period from 1 January2007 to 31 January 2007 amounting to RMB10.93 million from the valuation of RMB155.14million, the net asset value of the Changtian Assets and Business as at 31 December 2006was RMB144.21 million.

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The valuation of the Changtian Assets and Business as at 31 January 2007 included theentire assets and liabilities of Xiamen Changtian but excluding the land and buildings ownedby Xiamen Changtian which will be leased back to Changtian Enterprise, tax payablebalances due to the relevant tax authorities and an amount of RMB72.5 million advanced toshareholders by Xiamen Changtian which will not be transferred to Changtian Enterprise.

As agreed in the Supplemental Agreement, the effective date of the transfer was changedto 1 April 2007 and Changtian Enterprise assumed all rights, obligations and benefits inrespect of the Changtian Assets and Business acquired from Xiamen Changtian with effectretroactively from 1 January 2007.

The transfer of the Changtian Assets and Business by Xiamen Changtian was approved byits shareholders in general meetings held on 10 April 2006 and 22 May 2007. Completion ofthe acquisition of the Changtian Assets and Business took place on 11 June 2007 andChangtian Enterprise has made full payment of the consideration of US$18.5 million.

The Initial Asset and Business Transfer Agreement and the Supplemental TransferAgreement have been ratified and approved by Xiamen Foreign Investment Bureau

on 21 July 2006 and 24 May 2007 respectively.



On 21 May 2007, Changtian Enterprise entered into a lease agreement with XiamenChangtian (the “Changtian Lease Agreement”) (as amended by a supplemental leaseagreement (the “Supplemental Lease Agreement”) dated 6 July 2007) to lease fromXiamen Changtian the premises and the underlying land use rights, at 18 XinshengRoad, Xinyang Industrial Zone, Haicang District, Xiamen City, Fujian Province, thePRC where the Group’s production facilities for the production of adhesive tapes,release papers and 2-Acrylamido-2-methyl propane sulfonic acid (“2-A2MPS”) aresituated.

The lease is for a term of 20 years commencing from 1 January 2007 to 31 December2026, with a rent free period from 1 January 2007 to 31 March 2007 (as amended bythe Supplemental Lease Agreement), at an annual rent of RMB2.3 million, asdetermined by a valuation report dated 5 March 2007 prepared by an independentvaluer, LCH (Asia-Pacific) Surveyors Limited (“LCH Surveyors”). The annual rental ispayable on a quarterly basis. However, pursuant to the Supplemental LeaseAgreement, the parties agreed that no rent shall be payable for the period from 1January 2007 to 31 March 2007.

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(i) Property lease agreement with Xiamen Changtian (Continued)

Under the Changtian Lease Agreement, upon the expiry of the initial three year term,the lease may be terminated at the option of Changtian Enterprise by giving at leastthree months’ notice to Xiamen Changtian. The annual rental payable after the firstthree years of the lease is subject to review once every three years and may beadjusted based on an independent valuers’ valuation to ascertain prevailing marketprice.

Further, under the Changtian Lease Agreement, Changtian Enterprise has the optionto acquire the leased premises from Xiamen Changtian at the prevailing market priceto be determined by independent valuers.

The Changtian Lease Agreement was filed with the Xiamen Municipal Land Resourcesand Housing Administrative Bureau on 4 June 2007.

(ii) Property lease agreement with Xiamen Brightforever Plastic Industrial Co., Ltd.(“Xiamen Brightforever”)

On 21 May 2007, Changtian Enterprise entered into a lease agreement with XiamenBrightforever (the “Brightforever Lease Agreement”) to lease from XiamenBrightforever, a company established in the PRC and Mr. Wong Chit Fu, a director ofthe Company, has beneficial interest, the premises and the underlying land use rights,at 16 Xinsheng Road, Xinyang Industrial Zone, Haicang District, Xiamen City, FujianProvince, the PRC where the production facilities for biaxially-oriented polyamide(“BOPA”) film are situated.

The lease is for a term of 20 years commencing from 1 April 2007 at an annual rent ofRMB1.2 million, as determined by a valuation report dated 5 March 2007 prepared byLCH Surveyors. The annual rental is payable on a quarterly basis.

Under the Brightforever Lease Agreement, upon the expiry of the initial three year term,the lease may be terminated at the option of Changtian Enterprise by giving at leastthree months’ notice to Xiamen Brightforever. The annual rental payable after the firstthree years of the lease is subject to review once every three years and may beadjusted based on an independent valuers’ valuation to ascertain prevailing marketprice.

Further, under the Brightforever Lease Agreement, Changtian Enterprise has theoption to acquire the leased premises from Xiamen Brightforever at the prevailingmarket price to be determined by independent valuers.

The Brightforever Lease Agreement was filed with the Xiamen Municipal LandResources and Housing Administrative Bureau on 4 June 2007.

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(iii) Non-competition undertaking

On 21 May 2007, Xiamen Changtian, the then shareholders of Xiamen Changtian,namely Ms. Chen Baohua and Mr. Chen Yongfu and the directors, namely Mr. ChenYongfu, and Mr. Wong Chit Fu, and in addition Mr. Yang Qingjin, the husband of Ms.Chen Baohua (collectively, the “Xiamen Changtian Covenantors”) executed a non-competition undertaking (the “Non-Competition Undertaking”) in favour of ChangtianEnterprise.

Under the Non-Competition Undertaking, Xiamen Changtian and the XiamenChangtian Covenantors respectively undertook to Changtian Enterprise, inter alia, witheffect from 1 April 2007:

(a) not to carry out or participate in any business which is similar to the Group’scurrent business including, without limitation, the production, distribution and saleof adhesive tapes, release papers, BOPA film and 2-A2MPS;

(b) not to carry out any business which is in competition or may be in competition,whether directly or indirectly, with the Group and not to in any way solicit anyemployee, customer or distributor of the Group; and

(c) not to use the name, trademark or logo of the Group including but not limited tothe words “Changtian” or any of its trademarks, and not to use any name,trademark or logo that are capable of being or likely to be confused with our“Changtian” name.

On 12 June 2007, Xiamen Changtian changed its scope of business to engage only inthe lease of properties.

(iv) Trademark transfer agreement

On 21 May 2007, Changtian Enterprise and Xiamen Changtian entered into atrademark transfer agreement for the purpose of effecting the transfer of the registeredand trademarks pending registration under Xiamen Changtian’s name (the “TrademarkTransfer Agreement”), which Changtian Enterprise has acquired pursuant to the InitialAsset and Business Transfer Agreement, as amended by the Supplemental TransferAgreement. Pursuant to the Trademark Transfer Agreement, the parties agreed tojointly make an application to the Trademark Bureau of the State Administration forIndustry and Commerce and to take the necessary stepsto effect the transfer of the trademarks to Changtian Enterprise (details of thetrademarks are set out in the section “Intellectual Property” of the Prospectus (the“Trademarks”)). Notwithstanding that Xiamen Changtian would still be the registeredowner of the Trademarks prior to the date of the effective transfer of the respectiveTrademarks, the parties agreed that Changtian Enterprise shall have the exclusiverights to use the Trademarks until the registration of the transfers has been effected,following which Changtian Enterprise would be the registered owner of theTrademarks.

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3.4 Machinery acquisition agreement between Xiamen Brightforever and ChangtianEnterprise

On 21 May 2007, Changtian Enterprise entered into an acquisition agreement with XiamenBrightforever (the “Machinery Acquisition Agreement”) to acquire from Xiamen Brightforeverthe plant and machinery used in the manufacture of BOPA film and certain office equipmentand motor vehicles for a consideration of approximately RMB79.85 million. Theconsideration was determined based on the valuation report dated 8 March 2007 of the plantand machinery as at 31 December 2006, conducted by LCH Surveyors.

In accordance with the Machinery Acquisition Agreement, an initial payment of 30% of theconsideration has been paid to Xiamen Brightforever on 27 June 2007 with the balance tobe settled in full within one year of the effective date of the Machinery Acquisition Agreement,being 1 April 2007.

3.5 Subscription and issuance of exchangeable notes

On 9 March 2007, Eastline Investments, Goodwise Investments, Ms. Chen Baohua, Mr.Chen Yongfu and Mr. Yang Qingjin (as guarantors), Rowview, Jumbo Glories and thepre-invitation investors, namely CIM VIII, Longold Group, Hong Kong Investments and EastFortune Development Limited (“East Fortune”), a company incorporated in the BVI andwholly owned by Mr. Yip Man King, an independent third party before this subscription(collectively, the “Pre-Invitation Investors”), entered into a subscription agreement (the“Subscription Agreement”) for the issuance of exchangeable notes amounting to US$18.5million (the “Exchangeable Notes”) by Rowview to the Pre-Invitation Investors.

Under the Subscription Agreement, the parties agreed, inter alia that:

(i) the Exchangeable Notes were exchangeable into 2,333 shares of Jumbo Glories heldby Rowview in the event of the listing of the Company on the SGX-ST, on the terms andconditions of the Subscription Agreement and the exchangeable note instrument dated7 June 2007 entered into by the parties to the Subscription Agreement; and

(ii) Eastline Investments, Goodwise Investments, Ms. Chen Baohua, Mr. Chen Yongfu andMr. Yang Qingjin would guarantee, inter alia, the due payment by Rowview of theprincipal amount and interest accruing on the Exchangeable Notes (if any), as andwhen the same should become due and payable.

On 7 June 2007, Rowview issued the Exchangeable Notes to the Pre-Invitation Investorsand the aggregate consideration of US$18.5 million was satisfied in full by the Pre-InvitationInvestors in cash.

On 18 September 2007, the Pre-Invitation Investors exchanged their Exchangeable Notesfor an aggregate of 2,333 shares of Jumbo Glories held by Rowview (the “Exchange”).

Upon completion of the Exchange, Eastline Investments, Goodwise Investments, CIM VIII,Longold Group, Hong Kong Investments and East Fortune held respectively 33.96%,42.71%, 13.33%, 4.00%, 4.00% and 2.00% of the issued share capital of Jumbo Glories.

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3.6 Acquisition of Jumbo Glories and share swap

On 24 September 2007, the Company, as purchaser, and the shareholders of JumboGlories, comprising Eastline Investments, Goodwise Investments and the Pre-InvitationInvestors, as vendors, entered into a share swap agreement (the “Share Swap Agreement”).Pursuant to the Share Swap Agreement, the Company acquired the entire issued andpaid-up share capital of Jumbo Glories comprising 10,000 shares of Jumbo Glories from theshareholders of Jumbo Glories for a consideration of S$25 million. The consideration for thesaid acquisition was satisfied by (i) the crediting as fully paid, at par, 308 nil-paid ordinaryshares of S$0.05 each in the Company held by Eastline Investments; and (ii) the allotmentand issue of an aggregate of 499,999,692 new ordinary shares of S$0.05 each in the capitalof the Company, credited as fully paid.

Upon completion of the Share Swap Agreement on 24 September 2007, EastlineInvestments, Goodwise Investments, CIM VIII, Longold Group, Hong Kong Investments andEast Fortune held respectively 33.96%, 42.71%, 13.33%, 4.00%, 4.00% and 2.00% of theissued share capital of the Company.

As at the date of this report, the Company has direct and indirect interests in the followingsubsidiaries, each of which is a limited liability company:

Name

Date andplace of

incorporation/establishment

Principal activitiesand place ofoperations

Issued andpaid-upshare/

registeredcapital

Equityinterest

held

Directly held:

Jumbo Glories 1 April 2005,the BVI

Investment holding,the BVI

US$10,000 100%

Indirectly held:

ChangtianEnterprise

21 July 2006,the PRC

Manufacture and saleof adhesive tapes,

release papers, BOPAfilm and 2-A2MPS, the

PRC

US$18,000,000 100%

The operations of the Group were originally carried out by Xiamen Changtian which wasestablished with limited liability in the PRC on 2 February 1999.

In accordance with the Asset and Business Transfer Agreement and the Supplemental TransferAgreement, certain assets and liabilities of Xiamen Changtian were not transferred to the Groupincluding (i) the leasehold interest in leasehold buildings; (ii) the leasehold interest in land userights; (iii) the amounts due from the equity holders of Xiamen Changtian; and (iv) tax payablebalances due to the relevant tax authorities. Items (i) to (iv) described above are retained byXiamen Changtian and they are collectively referred to as the “Non-transferred Operations”.

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The Non-transferred Operations were not managed separately from the rest of Xiamen Changtianoperations and no separate accounting records were maintained for their operations. Accordingly,they were recorded and reflected in the Unaudited Combined Financial Information during thethree months ended 31 March 2006. Pursuant to the Asset and Business Transfer Agreement andthe Supplemental Transfer Agreement, the Non-transferred Operations retained by XiamenChangtian are reflected in the Unaudited Combined Financial Information as a distribution madeto Xiamen Changtian on 31 December 2006.

The Group is regarded as a continuing entity resulting from the Reorganisation since the assetsand liabilities of Xiamen Changtian except for the Non-transferred Operations (collectively, the“Transferred Operations”) and the Non-transferred Operations were under common control beforeand immediately after the Reorganisation. Consequently, immediately after the Reorganisation,there was a continuation of the risks and benefits to the ultimate shareholders that existed priorto the Reorganisation. The Reorganisation has been accounted for as a reorganisation undercommon control in a manner similar to pooling of interests. Accordingly, the Unaudited CombinedFinancial Information have been prepared on the basis of merger accounting, and comprise thefinancial statements of the subsidiaries and, where appropriate, Xiamen Changtian which wereunder common control of the ultimate shareholders that existed prior to the Reorganisation.

The Unaudited Combined Financial Information have been prepared based on the unauditedmanagement accounts of Xiamen Changtian for the three months ended 31 March 2007, andwhere appropriate, unaudited management accounts of the subsidiaries now comprising theGroup. The directors of the respective companies of the Group, who are also the management ofXiamen Changtian, are responsible for preparing financial statements of Xiamen Changtian andthe unaudited management accounts of the subsidiaries now comprising the Group for the threemonths ended 31 March 2007, which give a true and fair view.

4. SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The Unaudited Combined Financial Information have been prepared in accordance with theStandards and Interpretations of the International Financial Reporting Standards (hereincollectively referred to as “IFRS”) issued or adopted by the International Accounting StandardsBoard (the “IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”)of the IASB, and have been consistently applied throughout the three months ended 31 March2006 and 2007.

Basis of preparation of the Unaudited Combined Financial Information

From 1 January 2007, the Group has adopted all of the new and amended IFRS issued by theIASB which are first effective on 1 January 2007 and relevant to the Group.

The adoption of these new and amended IFRS did not result in significant changes to the Group’saccounting policies but gave rise to additional disclosures. The specific transitional provisionscontained in some of these new or amended IFRS have been considered.

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Basis of preparation of combined financial statements (Continued)

The Group has not early adopted the following IFRS that have been issued but are not yeteffective. The directors of the Company anticipate that the adoption of such IFRS will not resultin material financial impact to the Group’s Unaudited Combined Financial Information.

IAS 23 (Revised) Borrowing Costs3

IFRS 8 Operating Segments3

IFRIC 11 Group and Treasury Share Transactions1

IFRIC 12 Service Concession Arrangements2

IFRIC 13 Customer Loyalty Programmes4

IFRIC 14 IAS 19 — The Limit on a Defined Benefit Asset, MinimumFunding Requirements, and their Interaction2

Notes:




4 Effective for annual periods beginning on or after 1 July 2008

The Unaudited Combined Financial Information have been prepared in accordance with thesignificant accounting policies set out below and these accounting policies are in accordance withIFRS. The Unaudited Combined Financial Information have been prepared under the historicalcost convention except for the financial assets at fair value through profit or loss which are statedat their fair values. The measurement bases are fully described in the accounting policies below.The preparation of the Unaudited Combined Financial Information in conformity with IFRSrequires the use of certain critical accounting estimates. It also requires management to exerciseits judgment in the process of applying the Group’s accounting policies. The areas involvinghigher degree of judgment or complexity, or areas where assumptions and estimates aresignificant to the Unaudited Combined Financial Information, are disclosed in note 25. Theprincipal accounting policies adopted are as follows:

4.1 Subsidiaries

Subsidiaries are entities (including special purpose entities) over which the Group has thepower to control the financial and operating policies. The existence and effect of potentialvoting rights that are currently exercisable or convertible are considered when assessingwhether the Group controls another entity. Subsidiaries are fully consolidated from the dateon which control is transferred to the Group. They are excluded from consolidation from thedate that control ceases.

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4.1 Subsidiaries (Continued)

Except for the Reorganisation refer to in note 3 above which has been accounted for byregarding the Company as being the holding company of the subsidiaries from the beginningof the earliest period presented, or since the date when the combining companies first cameunder the control of the controlling shareholders, where it is a shorter period, the purchasemethod of accounting is used to account for the acquisition of subsidiaries by the Group. Thecost of an acquisition is measured as the fair value of the assets given, equity instrumentsissued and liabilities incurred or assumed at the date of exchange, plus costs directlyattributable to the acquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at their fair values at theacquisition date, irrespective of the extent of any minority interests. The excess of the costof acquisition over the fair value of the Group’s share of the identifiable net assets acquiredis recorded as goodwill. If the cost of acquisition is less than the fair value of the net assetsof the subsidiary acquired, the difference is recognised directly in the income statement.

Inter-group transactions, balances and unrealised gains on transactions between groupcompanies are eliminated in preparing the Unaudited Combined Financial Information.Unrealised losses are also eliminated unless the transaction provides evidence of animpairment of the asset transferred.

4.2 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Providedit is probable that the economic benefits will flow to the Group and the revenue and costs,if applicable, can be measured reliably, revenue is recognised as follows:

Sales of goods are recognised upon transfer of the significant risks and rewards ofownership to the customer. This is usually taken as the time when the goods are deliveredand the customer has accepted the goods.

Interest income is recognised on a time-proportion basis using the effective interest method.

4.3 Property, plant and equipment

Property, plant and equipment, other than construction in progress, are stated at cost lessaccumulated depreciation and impairment losses. The cost of an asset comprises itspurchase price and any directly attributable costs of bringing the asset to its workingcondition and location for its intended use. Subsequent costs are included in the asset’scarrying amount or recognised as a separate asset, as appropriate, only when it is probablethat future economic benefits associated with the item will flow to the Group and the cost ofthe item can be measured reliably. All other costs, such as repairs and maintenance arecharged to the income statement during the financial period in which they are incurred.

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4.3 Property, plant and equipment (Continued)

Depreciation is provided to write off the cost of the property, plant and equipment, less theirestimated residual values, over their estimated useful lives, using the straight-line method,at the following rate per annum:

Leasehold buildings The shorter of the lease terms and 30 years

Plant and machinery 5 to 12 years

Furniture, fixtures and office equipment 5 to 12 years

Motor vehicles 12 years

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, ateach balance sheet date.

The gain or loss arising on retirement or disposal is determined as the difference betweenthe sales proceeds and the carrying amount of the asset and is recognised in the unauditedcombined income statement.

Construction in progress, which represents buildings under construction, and plant andmachinery pending installation, is stated at cost less impairment losses. Cost comprisesdirect costs incurred during the periods of construction, installation and testing. Nodepreciation is provided on construction in progress. Construction in progress is reclassifiedto the appropriate category of property, plant and equipment and depreciation commenceswhen the construction work is completed and the asset is ready for use.

4.4 Land use rights

Land use rights represented up-front payments to acquire long term interests in the usageof land. The payments were stated at cost less accumulated amortisation and accumulatedimpairment losses. Amortisation was calculated on straight-line basis over the lease terms.

4.5 Impairment on assets

Property, plant and equipment are subject to impairment testing.

An impairment loss is recognised as an expense immediately for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is thehigher of fair value, reflecting market conditions less costs to sell, and value in use. Inassessing value in use, the estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessment of time value of moneyand the risk specific to the asset.

For the purposes of assessing impairment, where an asset does not generate cash inflowslargely independent from those from other assets, the recoverable amount is determined forthe smallest group of assets that generate cash inflows independently (i.e. a cash-generating unit). As a result, some assets are tested individually for impairment and someare tested at cash-generating unit level.

Impairment loss recognised for cash-generating units are charged on a pro rata basis to theassets in the cash generating unit, except that the carrying value of an asset will not bereduced below its individual fair value less cost to sell, or value in use, if determinable.

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4.5 Impairment on assets (Continued)

An impairment loss is reversed if there has been a favourable change in the estimates usedto determine the asset’s recoverable amount and only to the extent that the asset’s carryingamount does not exceed the carrying amount that would have been determined, net ofdepreciation or amortisation, if no impairment loss had been recognised.

4.6 Leases

Leases where substantially all the rewards and risks of ownership of assets remain with thelessor are accounted for as operating leases. Where the Group has the use of assets heldunder operating leases, payments made under the leases are charged to the unauditedcombined income statement on a straight line basis over the lease terms except where analternative basis is more representative of the pattern of benefits to be derived from theleased assets.

4.7 Financial assets

The Group’s accounting policies for financial assets are set out below.

The Group’s financial assets include loans and receivables and financial assets at fair valuethrough profit or loss. They are included in the unaudited combined balance sheet under theline items such as “Trade receivables”, “Deposits and other receivables” and “Financialassets at fair value through profit or loss”.

Management determines the classification of its financial assets at initial recognitiondepending on the purpose for which the financial assets were acquired and where allowedand appropriate, re-evaluates this designation at every reporting date.

All financial assets are recognised when, and only when, the Group becomes a party to thecontractual provisions of the instrument. When financial assets are recognised initially, theyare measured at fair value, plus, in the case of investments not at fair value through profitor loss, directly attributable transaction costs.

Derecognition of financial assets occurs when the rights to receive cash flows from theinvestments expire or are transferred and substantially all of the risks and rewards ofownership have been transferred. At each balance sheet date, financial assets are reviewedto assess whether there is objective evidence of impairment. If any such evidence exists,impairment loss is determined and recognised based on the classification of the financialasset.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. Loans and receivables aresubsequently measured at amortised cost using the effective interest method, less anyimpairment losses. Amortised cost is calculated taking into account any discount orpremium on acquisition and includes fees that are an integral part of the effectiveinterest rate and transaction cost.

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4.7 Financial assets (Continued)

(ii) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial assets held fortrading and financial assets designated upon initial recognition as at fair value throughprofit or loss.

Financial assets are classified as held for trading if they are acquired for the purposeof selling in the near term. Derivatives, including separated embedded derivatives arealso classified as held for trading unless they are designated as effective hedginginstruments or financial guarantee contracts.

Subsequent to initial recognition, the financial assets included in this category aremeasured at fair value with changes in fair value recognised in the unaudited combinedincome statement.

Impairment of financial assets

At each balance sheet date, financial assets other than at fair value through profit or loss arereviewed to determine whether there is any objective evidence of impairment. If there isobjective evidence that an impairment loss on loans and receivables carried at amortisedcost has been incurred, the amount of the loss is measured as the difference between theasset’s carrying amount and the present value of estimated future cash flows (excludingfuture credit losses that have not been incurred) discounted at the financial asset’s originaleffective interest rate (i.e. the effective interest rate computed at initial recognition). Theamount of the loss is recognised in profit or loss of the period in which the impairmentoccurs.

If, in subsequent period, the amount of the impairment loss decreases and the decrease canbe related objectively to an event occurring after the impairment was recognised, thepreviously recognised impairment loss is reversed to the extent that it does not result in acarrying amount of the financial asset exceeding what the amortised cost would have beenhad the impairment not been recognised at the date the impairment is reversed. The amountof the reversal is recognised in profit or loss of the period in which the reversal occurs.

4.8 Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined usingthe weighted average basis, and in the case of work in progress and finished goods,comprise direct materials, direct labour and an appropriate proportion of overheads. Netrealisable value is the estimated selling price in the ordinary course of business less theestimated cost of completion and applicable selling expenses.

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4.9 Accounting for income tax

Income tax comprises current and deferred tax.

Current income tax assets and/or liabilities comprise those obligations to, or claims from,fiscal authorities relating to the current or prior reporting period, that are unpaid at thebalance sheet date. They are calculated according to the tax rates and tax laws applicableto the fiscal periods to which they relate, based on the taxable profit for the year. All changesto current tax assets or liabilities are recognised as a component of tax expense in theunaudited combined income statement.

Deferred tax is calculated using the liability method on temporary differences at the balancesheet date between the carrying amounts of assets and liabilities in the financial statementsand their respective tax bases. Deferred tax liabilities are generally recognised for all taxabletemporary differences. Deferred tax assets are recognised for all deductible temporarydifferences, tax losses available to be carried forward as well as other unused tax credits,to the extent that it is probable that taxable profit will be available against which thedeductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is calculated, without discounting, at tax rates that are expected to apply in theperiod the liability is settled or the asset realised, provided they are enacted or substantivelyenacted at the balance sheet date.

4.10 Cash and cash equivalents

For the purpose of the unaudited combined cash flow statement, cash and cash equivalentscomprise cash on hand and in banks and time deposit with original maturity of three monthsor less, less bank overdrafts which are repayable in demand and form an integral part of theGroup’s cash management.

For the purpose of the unaudited combined balance sheet classification, cash and bankbalances comprise cash on hand and at banks including term deposits which are notrestricted as to use.

4.11 Share capital

Ordinary shares are classified as equity. Share capital is determined using the nominal valueof shares that have been issued.

Any transaction costs associated with the issuing of shares deducted from equity (net of anyrelated income tax benefits) to the extent they are incremental costs directly attributable tothe equity transaction.

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4.12 Retirement benefits scheme

Pursuant to the relevant regulations of the PRC government, the Group participates in alocal municipal government retirement benefits scheme (the “Scheme”), whereby thesubsidiary of the Company in the PRC is required to contribute a certain percentage of thebasic salaries of its employees to the Scheme to fund their retirement benefits. The localmunicipal government undertakes to assume the retirement benefits obligations of allexisting and future retired employees of the subsidiary of the Company. The only obligationof the Group with respect to the Scheme is to pay the ongoing required contributions underthe Scheme mentioned above. Contributions under the Scheme are charged to theunaudited combined income statement as incurred. There are no provisions under theScheme whereby forfeited contributions may be used to reduce future contributions.

4.13 Financial liabilities

The Group’s financial liabilities include bank loans and trade, bills and other payables. Theyare included in balance sheet line items as bank loans, secured under current liabilities ortrade and bills payables and other payables.

Financial liabilities are recognised when the Group becomes a party to the contractualprovisions of the instrument. All interest related charges are recognised as an expense infinance costs in the unaudited combined income statement.

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

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowingsare subsequently stated at amortised cost; any difference between the proceeds (net oftransaction costs) and the redemption value is recognised in the unaudited combinedincome statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right todefer settlement of the liability for at least 12 months after the balance sheet date.

Trade payables

Trade payables are recognised initially at their fair value and subsequently measured atamortised cost, using the effective interest method.

4.14 Provisions and contingent liabilities

Provisions are recognised when the Group has a present obligation (legal or constructive)as a result of a past event, and it is probable that an outflow of economic benefits will berequired to settle the obligation and a reliable estimate can be made. Where the time valueof money is material, provisions are stated at the present value of the expenditure expectedto settle the obligation.

All provisions are reviewed at each balance sheet date and adjusted to reflect the currentbest estimate.

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4.14 Provisions and contingent liabilities (Continued)

Where it is not probable that an outflow of economic benefits will be required, or the amountcannot be estimated reliably, the obligation is disclosed as a contingent liability, unless theprobability of outflow of economic benefits is remote. Possible obligations, whose existencewill only be confirmed by the occurrence or non-occurrence of one or more uncertain futureevents not wholly within the control of the Group are also disclosed as contingent liabilitiesunless the probability of outflow of economic benefits is remote.

Contingent liabilities are recognised in the course of the allocation of purchase price to theassets and liabilities acquired in a business combination. They are initially measured at fairvalue at the date of acquisition and subsequently measured at the higher of the amount thatwould be recognised in a comparable provision as described above and the amount initiallyrecognised less any accumulated amortisation, if appropriate.

4.15 Financial guarantee issued

A financial guarantee contract is a contract that requires the issuer (or guarantor) to makespecified payments to reimburse the holder for a loss it incurs because a specified debtorfails to make payment when due in accordance with the terms of a debt instrument.

Where the Group issues a financial guarantee, the fair value of the guarantee is initiallyrecognised as deferred income within other payables. Where consideration is received orreceivable for the issuance of the guarantee, the consideration is recognised in accordancewith the Group’s policies applicable to that category of asset. Where no such considerationis received or receivable, an immediate expense is recognised in profit or loss on initialrecognition of any deferred income.

The amount of the guarantee initially recognised as deferred income is amortised in profit orloss over the term of the guarantee as income from financial guarantees issued. In addition,provisions are recognised if and when it becomes probable that the holder of the guaranteewill call upon the Group under the guarantee and the amount of that claim on the Group isexpected to exceed the current carrying amount i.e. the amount initially recognised lessaccumulated amortisation, where appropriate.

4.16 Segment report

In accordance with the Group’s internal financial reporting the Group has determined thatbusiness segments be presented as the primary reporting format.

In respect of business segment reporting, unallocated costs represent corporate expenses.Segment assets consist primarily of property, plant and equipment, inventories, receivablesand operating cash. Segment liabilities comprise operating liabilities and exclude items suchas taxation and corporate borrowings.

Capital expenditure comprises additions to property, plant and equipment and land userights.

In respect of geographical segment reporting, revenue is based on the country in which thecustomer is located and total assets and capital expenditure are where the assets arelocated.

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4.17 Related parties

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

(i) directly, or indirectly through one or more intermediaries, the party (1) controls, iscontrolled, or is under common control with, the Company/Group; (2) has an interestin the Company that gives it significant influence over the Company/Group; or (3) hasjoint control over the Company/Group;

(ii) the party is an associate;

(iii) the party is a jointly-controlled entity;

(iv) the party is a member of the key management personnel of the Company or its parent;

(v) the party is a close member of the family of any individual referred to in (i) or (iv);

(vi) the party is an entity that is controlled, jointly-controlled or significantly influenced by orfor which significant voting power in such entity resides with, directly or indirectly, anyindividual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of theCompany/Group, or of any entity that is a related party of the Company/Group.

4.18 Foreign currencies

(i) Functional and presentation currency

Items included in the Unaudited Combined Financial Information of each of the Group’sentities are measured using the currency of the primary economic environment inwhich the entity operates (the “functional currency”). The Unaudited CombinedFinancial Information are presented in Renminbi (RMB), which is the Company’sfunctional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using theexchange rates prevailing at the dates of the transactions. Foreign exchange gains andlosses resulting from the settlement of such transactions and from the transaction atperiod-end exchange rates of monetary assets and liabilities denominated in foreigncurrencies are recognised in the unaudited combined income statement.

(iii) Group companies

The results and financial positions of all the group entities (none of which has thecurrency of a hyperinflationary economy) that have presentation currencies differentfrom the presentation currency of the Company are translated into the Company’spresentation currency as follows:

(a) assets and liabilities for each unaudited combined balance sheet presented aretranslated at the closing rate at the date of that unaudited combined balancesheet;

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4.18 Foreign currencies (Continued)

(iii) Group companies (Continued)

(b) income and expenses for each unaudited combined income statement aretranslated at average exchange rates (unless this average is not a reasonableapproximation of the cumulative effect of the rates prevailing on the transactiondates, in which case income and expenses are translated at the dates oftransaction); and

(c) all resulting exchange differences are recognised as a separate component ofequity.

4.19 Borrowing costs

All borrowing costs are expensed as incurred.

5. REVENUE AND OTHER INCOME

Revenue represents total invoiced value of goods supplied, net of value added taxes, allowancesfor returns and trade discounts. Revenue and other income recognised during the period are asfollows:

Three months ended 31 March2006 2007


Revenue

Sale of goods 116,638 151,297

Other income

Interest income 134 139

Fair value gains on financial assets at fair value through profit orloss 7 —

Others 8 —

149 139

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6. SEGMENT INFORMATION

The Group is organised into four main business segments:

Adhesive tapes — manufacture and sale of adhesive tapes such as biaxially-orientedpolypropylene tape, stationary tape, masking tape, double-sided tape and kraft paper tape forindustrial, commercial and customer uses.

Release papers — manufacture and sale of release papers such as glassine silicon coated paperand clay coat kraft release paper for use as a protective backing on adhesive paper.

BOPA film — manufacture and sale of BOPA film for packaging in many industries, such as food,pharmaceutical and medical industries and in electrical industrial materials.

2-A2MPS — manufacture and sale of 2-A2MPS for oil industry and water treatment industry.

The Group’s revenue and assets are principally attributable to a single geographical region, whichis the PRC, excluding Hong Kong and Macau.

There are no intersegment sales between the respective segments.

Three months ended 31 March 2006 (Unaudited)

Adhesivetapes

Releasepapers BOPA film 2-A2MPS Total


Revenue


Segment results 18,698 8,499 5,655 3,900 36,752


Unallocated expenses (333)


Finance costs (479)



Profit for the period 30,756


Unallocated 95

Total capital expenditure 182

Depreciation and amortisation 668 105 — 238 1,011

Unallocated 203



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As at 31 December 2006 (Audited)Adhesive



Segment assets 87,574 33,685 25,654 19,900 166,813






Three months ended 31 March 2007 (Unaudited)

Adhesivetapes

Releasepapers BOPA film 2-A2MPS Total


Revenue


Segment results 24,475 9,335 13,160 5,368 52,338


Unallocated expenses (462)


Finance costs (361)



Profit for the period 43,901


Unallocated 4

Total capital expenditure 457

Depreciation 537 105 — 272 914

Unallocated 80

Total depreciation 994

Other non-cash expense — — — — 31

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As at 31 March 2007 (Unaudited)Adhesive



Segment assets 72,812 34,423 36,137 20,608 163,980






7. OPERATING PROFIT

The Group’s operating profit is arrived at after charging:



Operating lease charges: property, plant and equipment 1,200 1,500

Operating lease charges: land and buildings — 327

Cost of inventories recognised as expense 76,908 94,933

Depreciation 1,191 994

Amortisation of land use rights * 23 —

Loss on disposal of property, plant and equipment — 31

Directors’ remuneration:

Fees — —

Other emoluments 81 84

Staff costs (excluding directors’ remuneration) 1,551 1,601

Retirement scheme contribution 84 132

Total staff costs 1,716 1,817

Cost of inventories recognised as expense includes the followingexpenses which are also included in the respective totalamounts separately disclosed above for each of these expenses:

Depreciation 1,007 809

Staff costs 884 973

* Included in administrative expenses.

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8. FINANCE COSTS



Interest charges on:

Bank loans wholly repayable within five years 479 361

9. INCOME TAX EXPENSE



Current tax:

PRC income tax 5,333 7,753

The provision for PRC income tax is calculated based on the statutory income tax rate of 15% ofthe assessable income of Xiamen Changtian as determined in accordance with the relevant PRCincome tax rules and regulations for the three months ended 31 March 2006 and 2007. XiamenChangtian’s branch operated in Shanghai, the PRC was subject to the statutory income tax rateof 33% of its assessable income.

No deferred tax has been provided as the Group did not have any significant temporarydifferences which gave rise to a deferred tax asset or liability at 31 March 2006 and 2007.

Reconciliation between tax expense and accounting profit at applicable tax rates is as follows:

Three months ended 31 March

2006 2007

RMB’000 RMB’000

(Unaudited) (Unaudited)


Tax at the applicable tax rate at 15% 5,413 7,748

Effect on different tax rates of branch operating in otherjurisdictions — 15

Tax effect of unused tax losses not recognised 5 —

Others (85) (10)

Income tax expense 5,333 7,753

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10. DIVIDENDS

Dividends disclosed during the three months ended 31 March 2006 represented dividendsdeclared by Xiamen Changtian to its then equity owners. The rates of dividend and the numberof shares ranking for dividends are not presented as such information are not meaningful.

Three months ended 31 March

2006 2007

RMB’000 RMB’000


Interim dividends 40,000 —

11. EARNINGS PER SHARE

Basic earnings per share is calculated based on profit attributable to equity holders of theCompany for the respective periods and the pre-Invitation share capital of the Company. TheCompany’s pre-Invitation share capital of 500,000,000 shares were assumed to be in issuethroughout the entire period presented.

As there are no dilutive potential ordinary shares during each of the periods covered in theUnaudited Combined Financial Information, no diluted earnings per share is presented.

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12. PROPERTY, PLANT AND EQUIPMENT

Leaseholdbuildings

Plant andmachinery

Furniture,fixtures

and officeequipment

Motorvehicles

Constructionin progress Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000At 1 January 2006 (Audited)Cost 32,078 43,330 867 393 1,487 78,155Accumulated depreciation (3,031) (10,394) (279) (96) — (13,800)

Net book amount 29,047 32,936 588 297 1,487 64,355

Year ended 31 December2006 (Audited)

Opening net book amount 29,047 32,936 588 297 1,487 64,355Additions — 1,755 49 277 3,119 5,200Transfer in/(out) 3,610 288 508 — (4,406) —Depreciation charge (1,099) (3,619) (171) (42) — (4,931)Deemed distribution to equity

owners (31,558) — — — (200) (31,758)


At 31 December 2006 and 1January 2006 (Audited)

Cost — 45,373 1,424 670 — 47,467Accumulated depreciation — (14,013) (450) (138) — (14,601)

Net book amount — 31,360 974 532 — 32,866

Period ended 31 March 2007(Unaudited)

Opening net book amount — 31,360 974 532 — 32,866Additions — 451 6 — — 457Disposal — — — (36) — (36)Depreciation charge — (919) (62) (13) — (994)


At 31 March 2007(Unaudited)

Cost — 45,824 1,430 617 — 47,871Accumulated depreciation — (14,932) (512) (134) — (15,578)

Net book amount — 30,892 918 483 — 32,293

All property, plant and equipment held by the Group are located in the PRC.

At 31 December 2006, all leasehold buildings and construction in progress were distributed toXiamen Changtian upon the Reorganisation.

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13. LAND USE RIGHTS

RMB’000

At 1 January 2006 (Audited)

Cost 4,607

Accumulated amortisation (591)

Net book amount 4,016

Year ended 31 December 2006 (Audited)

Opening net book amount 4,016

Amortisation (92)

Deemed distribution to equity owners (3,924)

Closing net book amount —

At 31 December 2006 and 1 January 2007 (Audited) and 31 March 2007 (Unaudited)

Cost —

Accumulated amortisation —

Net book amount —

At 31 December 2006, the entire land use rights of approximately RMB3,924,000 which werepledged against bank loans of the Group (note 20) were distributed to Xiamen Changtian upon theReorganisation.

14. TRADE RECEIVABLES, DEPOSITS AND OTHER RECEIVABLES

Trade receivables generally have 30 to 90 days’ credit terms. All trade and other receivables aredenominated in RMB.


As at31 March 2007

RMB’000 RMB’000(Audited) (Unaudited)

Deposits 1,127 583

Other receivables 292 179

Total deposits and other receivables 1,419 762

Less: Deposits paid in respect of purchase of property, plantand equipment — non-current portion (946) (583)

Current portion 473 179

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15. INVENTORIES, AT COST


As at31 March 2007


Raw materials 8,963 9,933

Work-in-progress 1,750 1,807

Finished goods 3,656 2,913

14,369 14,653

16. BALANCES WITH RELATED PARTIES


As at31 March 2007


Due from related parties

Ms. Chen Baohua 17 —

Mr. Chen Yongfu 22 33

Xiamen Changtian — 18,889

39 18,922

Due to related parties

Xiamen Brightforever 20 500

Mr. Yang Qingjin — 84

Ultimate shareholders — 21,617

20 22,201

The balances with related parties are unsecured, interest free and repayable on demand.

17. PLEDGED BANK DEPOSITS, CASH AND BANK BALANCES

As at 31 December 2006 and 31 March 2007, the bank deposits of RMB9,894,000 andRMB7,533,000 respectively were pledged to secure the bills payables of the Group (note 18).

The Group’s entire pledged bank deposits and certain cash and bank balances in the PRC,excluding Hong Kong and Macau, amounting to approximately RMB137,564,000 (31 December2006: RMB58,220,000) are denominated in RMB. RMB is not freely convertible into foreigncurrencies. Under the PRC Foreign Exchange Control Regulations and Administration ofSettlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted toexchange RMB for foreign currencies through banks that are authorised to conduct foreignexchange business.

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18. TRADE AND BILLS PAYABLESAs at


31 March 2007RMB’000 RMB’000(Audited) (Unaudited)

Trade payables 27,938 40,463

Bills payables 19,789 15,065

47,727 55,528

Trade and bills payables are normally settled on 30 to 60 days’ credit term. All trade and billspayables are denominated in RMB.

19. ACCRUED LIABILITIES AND OTHER PAYABLESAs at



Accrued liabilities 2,207 12,980

Other payables 1,148 2,568

3,355 15,548

20. BANK LOANS, SECUREDAs at




The Group’s interest bearing bank loans are secured by the pledge of the entire leaseholdbuildings and land use rights which were distributed to Xiamen Changtian upon theReorganisation and bear interests at 7.25% and 7.34% as at 31 December 2006 and 31 March2007 respectively.

The Group’s bank loans are denominated in RMB.

21. SHARE CAPITAL

The Company was incorporated in Bermuda on 29 March 2007. At the date of incorporation, theauthorised share capital of the Company was US$12,000 divided into 120,000 ordinary shares ofUS$0.10 each. On 30 March 2007, 1 ordinary share of US$0.10 each were allotted and issuednil-paid to Eastline Investments.

The share capital balances as at 31 December 2006 and 31 March 2007 represent the issued andpaid-up share capital of Jumbo Glories and the Company respectively.

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22. RESERVES

(a) Merger reserve

The merger reserve of the Group represents the nominal value of the TransferredOperations as pursuant to the Reorganisation.

(b) Statutory reserves

In accordance with the relevant laws and regulations of the PRC, the Group is required totransfer 10% of its profit after taxation prepared in accordance with the accounting regulationin the PRC to the statutory reserve until the reserve balance reaches 50% of the respectiveregistered capital. Such reserve may be used to reduce any losses incurred or forcapitalisation as paid-up capital.

In addition, the Group is required to transfer 5% of its profit after taxation prepared inaccordance with the accounting regulations in the PRC to the statutory public welfarereserve. The use of the statutory public welfare reserve is restricted to capital expenditurefor employees’ facilities. This statutory public welfare reserve is non-distributable exceptupon liquidation.

23. OPERATING LEASE COMMITMENTS

The total future minimum lease payments of the Group under non-cancellable operating leases forproperty, plant and equipment are as follows:


As at31 March 2007



In the second to fifth years 24,000 24,000

After five years 13,500 12,000

43,500 42,000

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group does not have written risk management policies and guidelines. However, the boardof directors meets periodically to analyse and formulate measures to manage the Group’sexposure to market risk, including principally changes in interest rates and currency exchangerates. As the Group’s exposure to market risk is kept at a minimum level, the Group has not usedany derivatives or other instruments for hedging purposes. The Group does not hold or issuederivative financial instruments for trading purposes.

As at 31 December 2006 and 31 March 2007, the Group’s financial instruments mainly consistedof cash and bank balances, trade receivables, deposits and other receivables, pledged bankdeposits, balances with related parties, trade and bills payables, accrued liabilities and otherpayables and bank loans.

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24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

(a) Interest rate risk

The Group’s interest rate risk mainly arises from bank loans. The interest rates and terms ofrepayment of the bank loans are disclosed in note 20.

(b) Foreign currency risk

The Group’s exposure to risk resulting from changes in foreign currency exchange rates isminimal.

(c) Credit risk

The carrying amounts of trade and other receivables and amounts due from related partiesrepresent the Group’s maximum exposure to credit risk in relation to its financial assets. Asat 31 March 2007, the Group has a certain concentration of credit risk as approximatelyRMB18,889,000 (31 December 2006: Nil) was due from Xiamen Changtian (note 16). TheGroup intends to collect this outstanding amounts in full prior to the Invitation. No otherfinancial assets carry a significant exposure to credit risk.

(d) Fair value

The fair value of the Group’s financial assets and liabilities are not materially different fromtheir carrying amounts because of the immediate or short term maturity of these financialinstruments. The fair value of borrowings is not disclosed because the carrying value is notmaterially different from the fair value.

25. CRITICAL ACCOUNTING ESTIMATES

Estimates are continually evaluated and are based on historical experiences and other factors,including expectations of future events that are believed to be reasonable under thecircumstances.

The Group makes estimates and assumptions concerning the future. The resulting accountingestimates will, by definition, seldom equal the related actual results. The estimates andassumptions that have a significant risk of causing a material adjustment to the carrying amountsof assets and liabilities within the next financial year are discussed below.

(a) Net realisable value of inventories

Net realisable value of inventories is the estimated selling price in the ordinary course ofbusiness, less estimated costs of completion and selling expenses. These estimates arebased on the current market condition and the historical experience of selling products ofsimilar nature. It could change significantly as a result of competitor actions in response tosevere industry cycles. Management will reassess the estimations at the balance sheetdate.

(b) Impairment of trade receivables

The Group’s management assess the collectibility of trade receivables. This estimate isbased on the credit history of the Group’s customers and the current market condition.Management reassess the impairment loss at the balance sheet date.

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26. CAPITAL MANAGEMENT

The Group’s objectives when managing capital are:

(a) To safeguard the Group’s ability to continue as a going concern, so that it continues toprovide returns for shareholders and benefits for other stakeholders;

(b) To support the Group’s stability and growth; and

(c) To provide capital for the purpose of strengthening the Group’s risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure optimalcapital structure and shareholder returns, taking into consideration the future capital requirementsof the Group and capital efficiency, prevailing and projected profitability, projected operating cashflows, projected capital expenditures and projected strategic investment opportunities. The Groupcurrently does not adopt any formal dividend policy.

Management regards total equity as capital, for capital management purpose. The amount ofcapital as at 31 December 2006 and 31 March 2007 amounted to approximatelyRMB157,450,000 and RMB201,374,000 respectively, which the management considers asoptimal having considered the projected capital expenditures and the projected strategicinvestment opportunities.

27. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions arising from the Reorganisation and transactions andbalances detailed in notes 16 and 20 in these Unaudited Combined Financial Information,the Group had the following transactions with related party at agreed terms.


RMB’000 RMB’000


Rental paid/payable to Xiamen Brightforever 1,200 1,500

Rental payable to Xiamen Changtian — 327

(b) Included in staff costs are compensation of key management personnel of the Group andcomprises the following categories:


RMB’000 RMB’000


Short term employee benefits 149 161

Post employment benefits 19 22

168 183

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28. NOTES TO THE COMBINED CASH FLOW STATEMENT

Major non-cash transactions

During the three months ended 31 March 2007, the deposits paid in prior periods of RMB363,000were transferred to property, plant and equipment upon the delivery of the respectively property,plant and equipment.

29. SUBSEQUENT EVENTS

In addition to those disclosed elsewhere in the Unaudited Combined Financial Information, theGroup had the following significant event took place subsequent to 31 March 2007:

On 29 May 2007, Changtian Enterprise has received confirmations issued by Fujian ProvinceXiamen City Haicang District National Tax Bureau that it is qualified to apply for the two-yearexemption and three-year half reduction of income tax with relevant taxation authorities when itstarts to make profit.

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APPENDIX C

TAXATION

The following is a discussion of certain tax matters arising under the current tax laws in Singapore andBermuda and is not intended to be and does not constitute legal or tax advice. The discussion is based onlaws, regulations and interpretations now in effect and available as of the date of this Prospectus. Theselaws and regulations are subject to changes, which may be retrospective to the date of issuance of ourShares. These laws and regulations are also subject to various interpretations and the relevant taxauthorities or the courts of Singapore could later disagree with the explanations or conclusions set outbelow.

The discussion is limited to a general description of certain tax consequences in Singapore and Bermudawith respect to purchase, ownership and disposal of our Shares, and does not purport to be acomprehensive nor exhaustive description of all tax considerations that may be relevant to a decision topurchase, hold or dispose of our Shares. Prospective investors should consult their own tax advisorsconcerning the tax consequences of owning and disposing our Shares. Neither the Company, theDirectors, the Vendors nor any other persons involved in the Invitation accepts responsibility forany tax effects or liabilities resulting from the subscription for, purchase, holding or disposal ofour Shares.

SINGAPORE TAXATION

INCOME TAX

General

Singapore resident and non-resident corporate taxpayers are subject to Singapore income tax on:

(a) income accruing in or derived from Singapore; and

(b) foreign income received or deemed received in Singapore.

However, foreign income in the form of branch profits, dividends and service income received or deemedreceived in Singapore by a resident corporate taxpayer shall be tax exempt provided the followingconditions are met:

(a) such income is subject to tax of a similar character to income tax under the law of the jurisdictionfrom which such income is received;

(b) at the time the income is received in Singapore, the highest rate of tax of a similar character toincome tax in the jurisdiction from which the income is received is at least 15%; and

(c) the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to therecipient of the foreign income.

Foreign-sourced personal income received or deemed received in Singapore by a Singapore tax residentindividual (except where such income is received through a partnership) on or after 1 January 2004 will beexempt from tax in Singapore. Certain investment income derived from Singapore sources by individualswill also be exempt from tax.

Non-Singapore resident corporate taxpayers, subject to certain exceptions, are subject to Singaporeincome tax on:

(a) income that is accrued in or derived from Singapore; and

(b) foreign income received or deemed received in Singapore.

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Non-Singapore resident individuals who derive certain types of income from Singapore are subject to thewithholding tax currently at 20% or generally 15% in case of interest, royalty and rental of movableproperty, unless reduced or exempted by any applicable tax incentive or double tax treaty.

A company is regarded as a tax resident in Singapore if the control and management of its business isexercised in Singapore. An individual is a tax resident in Singapore if, in the calendar year preceding theyear of assessment, he was physically present in Singapore or exercised employment in Singapore (otherthan as a director of a company) for 183 days or more, or if he ordinarily resides in Singapore.

The corporate tax rate in Singapore is 18% from the Year of Assessment 2008 (i.e. financial year ended2007). In addition, three-quarters of up to the first $10,000 of a company’s normal chargeable income, andone-half of up to the next $290,000 of the company’s normal chargeable income are exempt from tax. Theremaining chargeable income (after the partial tax exemption) will be taxed at the applicable corporate taxrate. The partial tax exemption does not apply to Singapore dividends received by companies.

A tax exemption scheme for qualifying newly incorporated Singapore companies is applicable for Years ofAssessment 2005 to 2009. Under this exemption scheme, the first $100,000 of their normal chargeableincome (excluding Singapore dividends) for each of their first three consecutive years of assessment thatfalls within Years of Assessment 2005 to 2009 would be exempt from tax.

Singapore tax resident individuals are subject to tax based on a progressive scale. The maximum rate oftax is 20% with effect from the Year of Assessment 2007 (i.e. calendar year 2006). The top individualmarginal tax rate will be reduced to 20% with effect from Year of Assessment 2007.

Non-Singapore resident individuals are generally subject to tax at a rate equivalent to the prevailingcorporate tax rate.

There are no reciprocal tax treatment between Bermuda and Singapore.

Dividend Distributions

Dividend Distributions — One Tier Corporate Taxation System (“One-Tier System”)

The previous Imputation System was replaced by a One-Tier Corporate Taxation System (“One-TierSystem”) on 1 January 2003. Under the One-Tier System, the tax paid by a company is a final tax andthe after-tax profits of the company can be distributed to shareholders as Tax Exempt (One-Tier)dividends.

As our Company is a Bermuda company, non-resident in Singapore, dividends paid by our Companywould be exempt from tax in the hands of individual Shareholders regardless of whether theseindividual shareholders are Singapore tax resident, the exemption will not apply to partnership inSingapore. However, corporate shareholders resident in Singapore or having a permanentestablishment in Singapore or carrying on business activities in Singapore will be subject to tax on thereceipt of these dividends.

There is no withholding tax on dividends paid to non-Singapore tax resident shareholders.

Gains on disposal of the Shares

Singapore does not impose tax on capital gains. However, gains arising from the disposal of our Sharesmay be construed to be of an income nature and subject to tax if they arise from activities which theIRAS regards as the carrying on of a trade or business in Singapore.

Any profits from the disposal of our Shares are not taxable in Singapore unless the seller is regardedas carrying on a trade or business of dealing in shares in Singapore. In which case, such gains wouldbe taxable as trading profits and not treated as non-taxable capital gains.

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STAMP DUTY

No stamp duty is payable on the allotment or holding of our Shares.

Stamp duty is payable on an instrument of transfer of our Shares at the rate of $0.20 for every $100or any part thereof of the consideration for our Shares. The purchaser is liable for stamp duty, unlessotherwise agreed. However, no stamp duty is payable if no instrument of transfer is executed (such asin the case of scripless shares, the transfer of shares are through the Central Depository System whichdoes not require instruments of transfer to be executed) or if the instrument of transfer is executedoutside Singapore. However, stamp duty may be payable if the instrument of transfer which is executedoutside Singapore is subsequently received in Singapore.

ESTATE DUTY

Singapore estate duty is imposed on the value of immovable property situated in Singapore and onmovable property, wherever it may be, owned by individuals who are domiciled in Singapore, subjectto specific exemption limits.

Singapore estate duty is imposed on the value of immovable property situated in Singapore and ownedby individuals who are not domiciled in Singapore, subject to specific exemption limits.

Our Shares are considered movable property situated outside Singapore as our Company isincorporated in Bermuda and the register of the shares is kept in Bermuda. Accordingly, our Sharesheld by an individual are subject to Singapore estate duty upon the individual’s death, if the individualis domiciled in Singapore. Singapore estate duty is payable to the extent that the value of the sharesaggregated with any other assets subject to Singapore estate duty exceeds $600,000. Any excessbeyond $600,000 will be taxed at 5% on the first $12,000,000 of the individual’s Singapore dutiableassets and any excess over $12,000,000 will be taxed at 10%. It should be noted that certain assets,although dutiable, are not included in this aggregation. For example, dwelling houses are assessedseparately and subject to a different exemption limit.

Individuals, whether or not domicile in Singapore, should consult their own tax advisors regarding theSingapore estate duty consequences of their ownership of our Shares.

GOODS AND SERVICES TAX (“GST”)

The sale of the Shares by an investor belonging in Singapore through a SGX-ST member or to anotherperson belonging in Singapore is an exempt supply not subject to GST. Where the Shares are sold bythe investor to a person belonging outside Singapore, the sale is generally a taxable supply subject toGST at zero-rate. Any GST incurred by a GST-registered investor in the making of this supply in thecourse of furtherance of a business may be recovered from the Comptroller of GST. Services such asbrokerage, handling and clearing services rendered by a GST-registered person to an investorbelonging in Singapore in connection with the investor’s purchase, sale or holding of the Shares will besubject to GST at the current rate of seven percent. Similar services rendered to an investor belongingoutside Singapore would generally be zero-rated i.e. subject to GST at zero percent.

BERMUDA TAXATION

Our Company is incorporated in Bermuda. Dividends remitted to shareholders resident outsideBermuda will not be subject to withholding tax in Bermuda. Further details are set out in Appendix E —“Summary of Bermuda Company Law” of this Prospectus.

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APPENDIX D

SUMMARY OF CONSTITUTION OF OUR COMPANY

This appendix provides information about certain provisions of our Memorandum of Association andBye-laws and Bermuda company law. The description below is only a summary and is qualified in itsentirety by reference to our Memorandum of Association and Bye-laws and the Bermuda CompaniesAct.

The instruments that constitute and define our Company are the Memorandum of Association and theBye-laws of our Company.

1. MEMORANDUM OF ASSOCIATION AND REGISTRATION NUMBER

The registration number with which our Company was incorporated is 39836. Our Memorandumof Association states that the liability of shareholders of our Company is limited to the amount, ifany, for the time being unpaid on the shares respectively held by them and that our Company isan exempted company as defined in the Bermuda Companies Act. Our Memorandum ofAssociation also sets out the objects for which our Company was formed, including acting as aholding and investment company, and the powers of our Company, including the powers set outin the First Schedule to the Bermuda Companies Act. As an exempted company, our Company willbe carrying on business outside Bermuda from a place of business within Bermuda.

2. DIRECTORS

(a) Ability of interested directors to vote

Subject to the Bermuda Companies Act and any further disclosure required thereby, if ageneral notice to our board of Directors is given by a Director or officer declaring that he isa director or officer or has an interest in a person and is to be regarded as interested in anytransaction or arrangement made with that person, it shall be a sufficient declaration ofinterest in relation to any transaction or arrangement so made. Our Directors shall not votein respect of any contract, proposed contract or arrangement in which he has a personalmaterial interest, although he may be counted in the quorum present at the meeting.

(b) Remuneration

Fees payable to non-executive Directors shall be a fixed sum (not being a commission onor a percentage of profits or turnover of our Company) as shall from time to time bedetermined by our Company in general meeting. Fees payable to Directors shall not beincreased except at a general meeting convened by a notice specifying the intention topropose such increase.

The board of Directors may grant special remuneration to any Director who, being calledupon, shall perform any special or extra services to or at the request of the Company. Suchspecial remuneration may be made payable to such Director in addition to or in substitutionfor his ordinary remuneration as a Director, as the board of Directors may determine.

The remuneration of a Managing Director, Joint Managing Director, Deputy ManagingDirector or an Executive Director of our Company or a Director appointed to any other officein the management of our Company may from time to time be fixed by our board of Directorsand with such other benefits (including pension and/or gratuity and/or other benefits onretirement) and allowances as our board of Directors may from time to time decide. Suchremuneration shall be in addition to his ordinary remuneration as a Director of our Company.

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We are required to obtain shareholders’ approval for any payments to our Directors of anysum by way of compensation for loss of office or as consideration for or in connection withhis retirement from office (not being a payment to which our Directors are contractuallyentitled).

(c) Borrowing

Our board of Directors may, at its discretion, exercise all the powers of our Company to raiseor borrow or to secure the payment of any sum or sums of money for the purposes of ourCompany and to mortgage or charge our undertaking, property and uncalled capital or anypart thereof.

These powers conferred on our Board of Directors may be varied by amending the relevantBye-laws of our Company.

(d) Retirement age limit

There is no retirement age limit for Directors.

(e) Shareholding qualification

There are no shareholding qualifications for Directors in the Bye-laws of the Company.

3. SHARE RIGHTS AND RESTRICTIONS

Our Company currently has one class of shares, namely, ordinary shares. Under the BermudaCompanies Act, only persons who are registered on our register of members are recognised asour Shareholders. Shareholders who are named as depositors in the depository registermaintained by CDP will not be recognised as Shareholders under Bermuda law and will hold theirshares and exercise their rights through CDP.

(a) Dividends and distribution

We may, by ordinary resolution, declare dividends at a general meeting, but we may not paydividends in excess of the amount recommended by our board of Directors. All dividends wedeclare must be paid out of our profits, which would generally comprise retained earnings,or pursuant to Section 40(2)(a) of the Bermuda Companies Act, which permits theapplication of the share premium attributable to our issued shares to the payment ofdividends in the form of shares. Our Board of Directors may also declare an interim dividendwithout the approval of our shareholders. All dividends are paid pro rata among theshareholders in proportion to the amount paid up on each shareholder’s ordinary shares,unless the rights attaching to an issue of any share provide otherwise. All dividends orbonuses unclaimed for one year after having been declared may be invested or otherwisemade use of by our Board of Directors for the benefit of our Company until claimed and ourCompany shall not be constituted a trustee in respect thereof. All dividends or bonusesunclaimed for six years after having been declared may be forfeited by our Board ofDirectors and shall revert to our Company.

Our Board of Directors may retain any dividends or other monies payable on or in respectof a share upon which our Company has a lien, and may apply the same in or towardssatisfaction of the debts, liabilities or engagements in respect of which the lien exists. OurBoard of Directors may also deduct from any dividend or bonus payable to any shareholderall sums of money (if any) presently payable by him to our Company on account of calls,instalments or otherwise.

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(b) Voting rights

A Shareholder is entitled to attend, speak and vote at any general meeting in person and aShareholder who is the holder of two or more shares may appoint not more than two proxiesto attend on the same occasion. Notwithstanding the foregoing provision, CDP may appointmore than two proxies or a corporate representative to attend and vote at the same generalmeeting. A proxy need not be a Shareholder.

Our Bye-laws do not provide for cumulative voting for entire shareholders and directors.

4. CHANGE IN CAPITAL

Under the Bermuda Companies Act, changes in the capital structure of our Company (forexample, an increase, a consolidation or a sub-division of our share capital) require shareholderapproval at general meetings which requires a minimum period of 14 days with resolutions beingpassed by a simple majority. However, we are required to obtain our Shareholders’ consent byway of a special resolution for any reduction of our share capital, redemption reserve, fund or anyshare premium account or other undistributable reserve, subject to the conditions prescribed bylaw.

Our Bye-laws provide a distinction between an “ordinary resolution” and a “special resolution”, adistinction which is not made in the Bermuda Companies Act. A resolution shall be an “ordinaryresolution” when it has been passed by a simple majority of the votes cast by our shareholdersat a general meeting held in accordance with these presents and of which not less than 14 days’notice has been duly given. A resolution shall be a “special resolution” when it has been passedby a majority of 3/4 of the votes cast by our Shareholders at a general meeting of which not lessthan 21 days’ notice, specifying (without prejudice to the power contained in these presents toamend the same) the intention to propose the resolution as a Special Resolution, has been dulygiven.

5. VARIATION OF RIGHTS OF EXISTING SHARES OR CLASSES OF SHARES

Subject to the Bermuda Companies Act, if at any time our share capital is divided into differentclasses of shares, all or any of the special rights attached to any class (unless otherwise providedfor by the terms of issue of the shares of that class) may, subject to the provisions of the BermudaCompanies Act, be varied or abrogated either with the consent in writing of the holders of not lessthan three-fourths in nominal value of the issued shares of that class or with the sanction of aspecial resolution passed at a separate general meeting of the holders of the shares of that class.To every such separate general meeting the provisions of these Bye-laws relating to generalmeetings shall mutatis mutandis apply, but so that the necessary quorum shall be not less thantwo persons holding or representing by proxy or by corporate representative one-third in nominalvalue of the issued shares of that class, and that any holder of shares of the class present inperson or by proxy or by duly authorised corporate representative may demand a poll. Thisprovisions will also apply to the variation or abrogation of the special rights attached to the sharesof any class as if each group of shares of the class differently treated formed a separate class therights whereof are to be varied or abrogated.

The relevant Bye-law does not impose more significant conditions than the Bermuda CompaniesAct in this regard.

6. LIMITATIONS ON SHAREHOLDERS REGARDED AS NON-RESIDENTS OF BERMUDA

There are no limitations on the rights of our Shareholders who are regarded as non-residents ofBermuda to hold or vote their shares. As our Company has been designated by the BermudaMonetary Authority as non-resident of Bermuda for exchange control purposes, our Company isfree to acquire, hold and sell foreign currency and securities without restriction.

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APPENDIX E

SUMMARY OF BERMUDA COMPANY LAW

The Company is incorporated in Bermuda and therefore, operates subject to Bermuda law. Set outbelow is a summary of certain provisions of Bermuda company law. This summary does not purport tocontain all applicable qualifications and exemptions and does not purport to be a complete review of allmatters of Bermuda company law or a comparison of provisions that may differ from the laws of otherjurisdictions, with which interested parties may be more familiar.

(a) Share capital

The Bermuda Companies Act provides for the giving of financial assistance by a company for theacquisition of its own or its holding company’s shares in specific circumstances.

The Bermuda Companies Act provides that where a company issues shares at a premiumwhether for cash or otherwise, a sum equal to the aggregate amount or value of the premium onthose shares shall be transferred to an account, to be called “the share premium account” and theprovisions of the Bermuda Companies Act relating to a reduction of share capital shall, except asprovided in section 40 of the Bermuda Companies Act, apply as if the share premium accountwere paid up share capital of the company. An exception is made to this rule in the case of anexchange of shares where the excess value of the shares acquired over the nominal value of theshares being issued may be credited to a contributed surplus account of the issuing company.Contributed surplus is a North American concept recognised under the generally acceptedaccounting principles of the Canadian Institute of Chartered Accountants which accountingprinciples are applied in Bermuda.

The Bermuda Companies Act permits a company to issue preference shares and under certaincircumstances to convert those preference shares into redeemable shares.

(b) Alteration of share capital

A company may if authorised by a general meeting of the shareholders of the company and by itsbye-laws, alter the conditions of its memorandum of association to increase its share capital,divide its shares into several classes and attach thereto respectively any preferential, deferred,qualified or special rights, privileges or conditions, consolidate and divide all or any of its sharecapital into shares of a larger amount than is fixed by the memorandum of association, makeprovision for the issue and allotment of shares which do not carry any voting rights, cancel shareswhich have not been taken or agreed to be taken by any person, diminish the amount of its sharecapital by the amount of the shares so cancelled and change the currency denomination of itsshare capital. With the exception of an increase in capital, cancellation of shares andredenomination of currency of capital, there are no filing requirements for any of the above-mentioned alterations.

Furthermore, a company may, if authorised by a general meeting of the shareholders, reduce itsshare capital. There are certain requirements, including a requirement prior to the reduction topublish a notice in an appointed newspaper stating the amount of the share capital as lastdetermined by the company, the amount to which the share capital is to be reduced and the dateon which the reduction is to have effect.

The Bermuda Companies Act provides that a company shall not reduce the amount of its sharecapital if on the date the reduction is to be effected there are reasonable grounds for believing thatthe company is, and after the reduction would be, unable to pay its liabilities as they become due.

The Bermuda Companies Act includes certain protections for holders of special classes of shares,requiring their consent to be obtained before their rights may be varied.

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The Bermuda Companies Act requires that as soon as practicable after the allotment of any of itsshares a company must complete and have ready for delivery share certificates in relation tothose shares allotted unless the conditions of issue of the shares otherwise provide. A certificateunder the common seal of the company shall be prima facie evidence of the title of theshareholder to the shares. The Bermuda Companies Act prohibits bearer shares.

(c) Financial assistance to purchase shares of a company or its holding company

A company is prohibited from providing financial assistance for the purpose of an acquisition of itsown or its holding company’s shares. However, in certain circumstances, the prohibition fromgiving financial assistance may be excluded such as where the company’s principal purpose ingiving that assistance is not to give it for the purpose of any such acquisition, or the giving of theassistance for that purpose is but an incidental part of some larger purpose of the company, andthe assistance is given in good faith in the interests of the company. In addition, a company is onlyprohibited from granting financial assistance if on the date from which the financial assistance isto be given, there are reasonable grounds for believing that the company is, or after the giving ofsuch financial assistance would be, unable to pay its liabilities as they become due.

(d) Purchase by the company of its own shares and warrants

The Bermuda Companies Act permits the company, if authorised to do so by its memorandum ofassociation or by its bye-laws, to purchase its own shares. It should be noted that the companyis authorised by its bye-laws, subject to certain approvals, to purchase its own shares. Suchpurchases may only be effected out of the capital paid up on the purchased shares, profitsotherwise available for dividend or distribution (see “Dividends and distributions” below) or out ofthe proceeds of a new issue of shares made for the purpose. Any premium payable on arepurchase over the par value of the shares to be repurchased must be provided for out of theprofits otherwise available for dividends, out of the company’s share premium account, or out ofcontributed surplus. A purchase by the company of its own shares may be authorised by its boardof directors or otherwise by or in accordance with the provisions of its bye-laws. The BermudaCompanies Act provides that no purchase by the company of its own shares may be effected if,on the date on which the purchase is to be effected, there are reasonable grounds for believingthat the company is, or after the purchase would be, unable to pay its liabilities as they becomedue. The shares purchased pursuant to the Bermuda Companies Act shall be treated as cancelledand the amount of the company’s issued capital shall be diminished by the nominal amount ofthose shares accordingly. It shall not be taken as reducing the amount of the company’sauthorised share capital.

The company is not prevented from purchasing and may purchase its own warrants. There is norequirement of Bermuda Law that the company’s memorandum of association or its bye-lawscontain a specific enabling provision authorising any such purchase and the directors may relyupon the general power contained in its memorandum of association to buy and sell and deal inpersonal property of all kinds.

A company has power to hold and purchase shares of its holding company. A distinction must bedrawn between the purchase of shares in the holding company by the holding company itself andthe purchase by a subsidiary. A holding company can only purchase its own shares in accordancewith the provisions referred to above. When a subsidiary acquires shares in its holding company,the shares, once purchased, may be voted by the subsidiary for its own benefit.

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(e) Transfer of securities

Title to securities of companies whose securities are traded or listed on an appointed stockexchange may, where permitted by regulations made by the Minister or where such transfer iseffected through the mechanism required or permitted by an appointed stock exchange, beevidenced and transferred without a written instrument.

(f) Dividends and distributions

The Bermuda Companies Act provides that a company shall not declare or pay a dividend ormake a distribution out of contributed surplus, if there are reasonable grounds for believing that(a) the company is, or would after the payment be, unable to pay its liabilities as they become due;or (b) the realisable value of the company’s assets would thereby be less than the aggregate ofits liabilities and its issued share capital and share premium accounts.

Contributed surplus for these purposes is defined as including proceeds arising from donatedshares, credits resulting from the redemption or conversion of shares at less than the amount setup as nominal capital, the excess value of shares acquired over those issued in a share exchangeshould the Board elect to treat it as such and donations of cash and other assets to the company.

(g) Charges on the assets of the company

The Bermuda Companies Act established a register of charges at the office of the Registrar ofCompanies permitting any charges on the assets of a company to be registered. Registration isnot mandatory but does govern priority in Bermuda, giving a registered charge priority over anysubsequently registered charge and over all unregistered charges save those in effect prior to thecoming into effect of the Bermuda Companies Act in July 1983. The register of charges isavailable for inspection by members of the public. The Bermuda Companies Act also makesprovision for the registration of a series of debentures.

(h) Management and administration

The management and administration of a Bermuda company is essentially governed by Part VIof the Bermuda Companies Act and provides that the management and administration of aBermuda company shall be vested in the hands of not less than two (2) directors duly elected bythe shareholders. The Bermuda Companies Act requires that a Bermuda company maintain either(a) a Bermuda resident secretary and a Bermuda resident representative; or (b) a Bermudaresident secretary and a Bermuda resident director; or (c) two (2) Bermuda resident directors, allof whom must be individuals. Exempted companies, the shares of which are listed on anappointed stock exchange, may appoint a resident representative in Bermuda in place of the otherBermuda resident officers, who or which may be either an individual or a corporate entity, whosestatutory right, duties and obligations are established by the Bermuda Companies Act.

The Bermuda Companies Act contains no specific restrictions on the power of the directors toresolve to dispose of assets of a company although it specifically requires that every officer (whichincludes a director and managing director and secretary) of a company, in exercising his powersand discharging his duties, shall act honestly and in good faith with a view to the best interests ofthe company and exercise the care, diligence and skill that a reasonably prudent person wouldexercise in comparable circumstances. Furthermore, it requires that every officer should complywith the Bermuda Companies Act, regulations passed pursuant to the Bermuda Companies Actand the bye-laws of the company.

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(i) Accounting requirements under the Bermuda Companies Act

The Bermuda Companies Act requires that a company shall cause to be kept proper records ofaccount with respect to:

(i) all sums of money received and expended by the company and the matters in respect ofwhich the receipt and expenditure take place;

(ii) all sales and purchases of goods by the company; and

(iii) the assets and liabilities of the company.

It further requires that the records of account shall be kept at the registered office of the companyor at such other place as the Board thinks fit and shall at all times be open to inspection by thedirectors. The Bermuda Companies Act also requires that, these records of account also bemaintained at the office of the resident representative where the company is listed on anappointed stock exchange and the company has appointed a resident representative. There is aproviso in the Bermuda Companies Act to the effect that if the records of account are kept at someplace outside Bermuda, there shall be kept at an office of the company in Bermuda such recordsas will enable the Board to ascertain with reasonable accuracy the financial position of thecompany at the end of each three (3) month period. Power is vested in the courts of Bermuda toorder the company to make available the records of account to any of the directors of the companyshould the company for some reason refuse to do so. Furthermore, the Bermuda Companies Actimposes a fine in the event of failure to comply with the aforementioned requirements which fineis limited to the sum of BD$500.00 (approximately equivalent in value to US$500.00), for the timebeing.

(j) Auditing requirements

The Bermuda Companies Act requires that the board of every company shall, at least once inevery year, lay before the company in general meeting:

(i) financial statements for the period, which shall include:

(a) a statement of the results of operations for such period;

(b) a statement of retained earnings or deficits;

(c) a balance sheet at the end of such period;

(d) a statement of changes in the financial position for the period;

(e) notes to the financial statements; and

(f) such further information as required by the Bermuda Companies Act and thecompany’s memorandum of association and its bye-laws;

(ii) the report of the auditor in respect of the financial statements described above based uponthe results of the audit made in accordance with generally accepted accounting principles;and

(iii) the notes referred to in paragraph (a) above shall include a description of the generallyaccepted accounting principles used in the preparation of the financial statements andwhere the accounting principles used are those of a country or jurisdiction other thanBermuda the notes shall disclose this fact and shall name the country or jurisdiction.

Financial statements to be laid before the shareholders in general meeting shall be signed on thebalance sheet by two (2) of the directors of the company.

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If for some reason it becomes impossible, for reasons beyond the reasonable control of thedirectors, to lay the financial statements before the shareholders, it shall be lawful for the meetingto adjourn the meeting for a period of up to ninety (90) days or such longer period as theshareholders may agree.

All shareholders of a company are entitled to receive a copy of the financial statements preparedin accordance with the aforementioned requirements, at least seven (7) days before the generalmeeting of the company at which the financial statements would be tabled. The BermudaCompanies Act also provides that companies listed on an appointed stock exchange (includingthe SGX-ST) may send summarized financial statements instead of the unabridged financialstatements mentioned above. Each shareholder can elect to receive unabridged financialstatements for that period and/or any subsequent period. The summarized financial statementstogether with auditors report and notice to elect to receive the unabridged financial statementsmust be sent to shareholders twenty-one days before the general meeting. A company shall sendthe full financial statements to a member within seven days of receipt of the member’s election toreceive the full financial statements.

The summarized financial statements must be derived from the company’s financial statementsand shall include:

(i) a summarized report of the unabridged financial statements;

(ii) such further information extracted from the financial statements as the board of directorsconsiders appropriate; and

(iii) a statement that it is only a summarized version of the company’s financial statements anddoes not contain sufficient information to allow as full an understanding of the financialposition, results of operations or changes in financial position or cash flows of the companyas would be provided by unabridged financial statements.

There are certain exceptions in the case of shareholders not entitled to receive notices of generalmeetings, joint holders of shares or where the address of a person is not known to the company.

The Bermuda Companies Act also makes provision vesting power in the shareholders in generalmeeting to waive the laying of the financial statements and auditors’ report and to waive theappointment of an auditor. In order to do so, it is required that all shareholders and directors of thecompany agree either in writing or at a general meeting, that in respect of a particular interval nofinancial statement or auditors’ report thereon need be laid before a general meeting.

The Bermuda Companies Act contains specific requirements in section 89 in relation to theappointment and disqualification of an auditor.

By way of general reference, the provisions of sections 83, 84, 87, 88, 89 and 90 govern thepreparation and maintenance of accounting records and audited financial statements.

(k) Exchange control

Although incorporated in Bermuda, the company has been classified as non-resident in Bermudafor exchange control purposes by the Bermuda Monetary Authority. Accordingly, the companymay convert currency (other than Bermudian currency) held for its account to any other currencywithout restriction.

Persons, firms or companies regarded as residents of Bermuda for exchange control purposesrequire specific consent under the Exchange Control Act 1972 of Bermuda, and regulationsthereunder, to purchase or sell shares or warrants of the company which are regarded as foreigncurrency securities by the Bermuda Monetary Authority. Under the terms of the consent given tothe company by the Bermuda Monetary Authority, the issue of shares pursuant to this document

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and any transactions in issued shares between persons, firms or companies regarded asnon-resident in Bermuda for exchange control purposes may be effected without furtherpermission from that Authority. Before the company can issue any further shares beyond theconsent given from the Bermuda Monetary Authority, the company must first obtain the priorwritten consent of that Authority.

In granting such permission, the Bermuda Monetary Authority accepts no responsibility for thefinancial soundness of any proposals or for the correctness of any statements made or opinionsexpressed in this document with regard to them.

(l) Taxation

In Bermuda, there are no taxes on profits, income or dividends, nor is there any capital gains tax,estate duty or death duty. Profits can be accumulated and it is not obligatory for a company to paydividends. The company is required to pay an annual government fee (the “Government Fee”),which is determined on a sliding scale by reference to a company’s authorised share capital andshare premium account, with the minimum fee being BD$1,780 and the maximum BD$27,825(the BD$ is treated at par with the US$). The Government Fee is payable at the end of Januaryin every year and is based on the authorised share capital and share premium account as theystood at 31 August in the preceding year.

The Bermuda Government has enacted legislation under which the Minister of Finance isauthorised to give an assurance to an exempted company or a partnership that, in the event ofthere being enacted in Bermuda any legislation imposing tax computed on profits or income orcomputed on any capital asset, gain or appreciation, then the imposition of any such tax shall notbe applicable to such entities or any of their operations. In addition, there may be included anassurance that any such tax or any tax in the nature of estate duty or inheritance tax, shall not beapplicable to the shares, debentures or other obligations of such entities. This assurance hasbeen obtained by the company for a period ending 28 March 2016.

(m) Stamp duty

The law relating to stamp duties has been fundamentally changed as a result of the enactment ofcertain legislation that came into force on 1 April 1990. Stamp duty is no longer chargeable inrespect of the incorporation, registration or licensing of an exempted company, nor, subject tocertain minor exceptions, on their transactions. Accordingly, no stamp duty will be payable on theincrease in or the issue or transfer of the share capital of the company.

(n) Loans to directors

The Bermuda Companies Act prohibits the making of loans by the company to any of its directorsor to their families or companies in which they hold a 20 per cent interest, without the consent ofshareholders of the company holding in the aggregate not less than nine-tenths (9/10) of the totalvoting rights of all shareholders having the right to vote at any meeting of the shareholders of thecompany. These prohibitions do not apply to anything done to provide a director with funds tomeet expenditure incurred or to be incurred by him for the purposes of the company, provided thatthe company gives its prior approval at a general meeting or, if not, the loan is made on conditionthat it shall be repaid within six (6) months of the next annual general meeting if the loan is notapproved at such meeting. If the approval of the company is not given for a loan, the directors whoauthorised it will be jointly and severally liable for any loss arising.

However, under the Bermuda Companies Act, a company may advance monies to an officer orauditor for the costs, charges and expenses incurred by the officer or auditor in defending any civilor criminal proceedings against them, on condition that the officer or auditor shall repay theadvance if any allegation of fraud or dishonesty is proved against them.

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(o) The investigation of the affairs of a company and the protection of minorities

The Bermuda Companies Act makes specific provision with regard to the foregoing and providesthat the Minister of Finance may, at any time of his own volition, appoint one or more inspectorsto investigate the affairs of an exempted company and to report thereon in such manner as hemay direct. The Bermuda Companies Act requires that such an investigation be conducted inprivate unless the company requests that it be held in public. Furthermore, any shareholder of acompany who complains that the affairs of the company are being conducted or have beenconducted in a manner oppressive or prejudicial to the interests of some part of the shareholders,including himself, or where a report has been made to the Minister of Finance under the foregoing,the Registrar on behalf of the Minister, may make an application to the court by petition for anorder that the company’s affairs are being conducted or have been conducted in a manneroppressive or prejudicial to the interests of some part of the shareholders and that to wind up thecompany would unfairly prejudice that part of the shareholders but otherwise the facts wouldjustify the making of a winding up order on the ground that it would be just and equitable that thecompany should be wound up. If the court is of this opinion, then it may, with a view to bringingto an end the matters complained of, make such order as it thinks fit whether for regulating theconduct of the company’s affairs in future or for the purchase of shares of any shareholders of thecompany by other shareholders of the company or by the company and in the case of a purchaseby the company, for the reduction accordingly of the company’s capital, or otherwise.

Class actions and derivative actions are generally not available to shareholders under the laws ofBermuda; however, the Bermuda courts ordinarily would expect to follow English case lawprecedent which would permit a shareholder to commence an action in the name of the companyto remedy a wrong done to the company where the act complained of is alleged to be beyond thecorporate power of the company or is illegal or would result in the violation of a company’smemorandum of association and bye-laws. Furthermore, consideration would be given by thecourt to acts that are alleged to constitute a fraud against the minority shareholders or, forinstance, where an act requires the approval of a greater percentage of the company’sshareholders than that which actually approved it.

In addition to the above, the shareholders may be able to bring claims against a company; suchclaims must, however, be based on the general laws of contract or tort applicable in Bermuda.

A statutory right of action is conferred on subscribers to shares of a company against persons(including directors and officers) responsible for the issue of a prospectus in respect of damagesuffered by reason of an untrue statement therein (see above) but this confers no right of actionagainst the company itself. In addition, the company itself (as opposed to its shareholders) maytake action against the officers (including directors) for breach of their statutory and fiduciary dutyto act honestly and in good faith with a view to the best interests of the company (as mentionedabove).

(p) Inspection of corporate records

Members of the general public have the right to inspect the public documents of the companyavailable at the office of the Registrar of Companies in Bermuda which will include the company’scertificate of incorporation, its memorandum of association (including its objects and powers) andany alteration to the company’s memorandum of association and documents relating to anincrease or reduction of authorised capital. The shareholders have the additional right to inspectthe bye-laws of the company, minutes of general (i.e. shareholders) meetings and auditedfinancial statements of the company, which must be presented to the annual general meeting ofshareholders. The register of shareholders of the company is also open to inspection byshareholders and to members of the general public without charge. The company is required tomaintain its share register in Bermuda but may establish a branch register outside Bermuda. Thecompany is required to keep at its registered office a register of its directors and officers which isopen for inspection by members of the public without charge.

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(q) Winding up and liquidation provisions of Bermuda legislation

(i) Introduction

The winding up of Bermuda companies is governed by the provisions of the BermudaCompanies Act and by the Companies (Winding Up) Rules 1982 (the “Rules”) and may bedivided into the following two types:

(a) Voluntary winding up which commences with the shareholders’ resolution or upon thehappening of a specified event (fixed or limited life company) and which itself can besub-divided into a shareholders’ voluntary winding up and a creditors’ voluntarywinding up; and

(b) Compulsory winding up, by petition presented to the courts of Bermuda followed bywinding up order.

(ii) Voluntary winding up

(a) Shareholders’ voluntary winding up

A shareholders’ voluntary winding up is only possible if a company is solvent. AStatutory Declaration of Solvency to the effect that a company is able to meet its debtswithin twelve (12) months from the date of the commencement of its winding up issworn by a majority of the company’s directors and filed with the Registrar ofCompanies.

A general meeting of shareholders is then convened which resolves that the companybe wound up voluntarily and that a liquidator (responsible for collecting in the assets ofthe company, determining its liabilities and distributing its assets amongst its creditorsand the surplus to the shareholders) be appointed.

Once the affairs of the company are fully wound up, the liquidator prepares a fullaccount of the liquidation which he then presents to the company’s shareholders at ageneral meeting called for that purpose. This special general meeting must beadvertised in an appointed newspaper in Bermuda at least one (1) month before it isheld and within one (1) week after it is held, the liquidator notifies the Registrar ofCompanies that the company has been dissolved.

(b) Creditors’ voluntary winding up

A creditors’ voluntary winding up may occur where a company is insolvent and aDeclaration of Solvency cannot be sworn.

A board meeting is convened which resolves to recommend to the shareholders of thecompany that the company be placed into a creditors’ voluntary winding up. Thisrecommendation is then considered and, if thought fit, approved at a special generalmeeting of the company’s shareholders and, subsequently, at a meeting of thecompany’s creditors.

Notice of the creditors’ meeting must appear in an appointed newspaper on at least two(2) occasions and the directors must provide this meeting with a list of the company’screditors and a full report of the position of the company’s affairs.

At their respective meetings, the creditors and shareholders are entitled to nominate aperson or persons to serve as liquidator(s) and whose responsibilities includecollecting in the assets of the company, ascertaining its liabilities and distributing itsassets rateably amongst its creditors in accordance with their proofs of debt. In additionto the liquidator, the creditors are entitled to appoint a Committee of Inspection which,under Bermuda Law, is a representative body of creditors who assist the liquidatorduring the liquidation.

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As soon as the affairs of the company are fully wound up, the liquidator prepares hisfinal account explaining the liquidation of the company and the distribution of its assetswhich he then presents to the company’s shareholders in a special general meetingand to the company’s creditors in a meeting. Within one (1) week after the last of thesemeetings, the liquidator sends a copy of the account to the Registrar of Companies inBermuda who proceeds to register it in the appropriate public records and the companyis deemed dissolved three (3) months after the registration of this account.

(iii) Compulsory winding up

The courts of Bermuda may wind up a Bermuda company on a petition presented bypersons specified in the Bermuda Companies Act and which include the company, itself andany creditor or creditors of the company (including contingent or prospective creditors) andany shareholder or shareholders of the company.

Any such petition must state the grounds upon which the Bermuda court has been asked towind up the company and may include either one of the following:

(a) that the company has by resolution resolved that it be wound up by the Bermuda court;

(b) that the company is unable to pay its debts; or

(c) that the Bermuda court is of the opinion that it is just and equitable that the companybe wound up.

The winding up petition seeks a winding up order and may include a request for theappointment of a provisional liquidator.

Prior to a winding up order being granted and the appointment of the provisional liquidator,(who under Bermuda Law, may or may not be the Official Receiver — a Governmentappointed officer) an interim provisional liquidator may be appointed to administer the affairsof the company with a view to its winding up until he is relieved of these duties by theappointment of the provisional liquidator. (Often, the interim provisional liquidator isappointed the provisional liquidator).

As soon as a winding up order has been made, the provisional liquidator summons separatemeetings of the company’s creditors and shareholders in order to determine whether or nothe should serve as the permanent liquidator or be replaced by some other person who willserve as the permanent liquidator and also to determine whether or not a Committee ofInspection should be appointed and, if appointed, the shareholders of that Committee. Theprovisional liquidator notifies the Court of the decisions made at these meetings and theCourt makes the appropriate orders.

A permanent liquidator’s powers are prescribed by the Act and include the power to bring ordefend actions or other legal proceedings in the name and on behalf of the company and thepower to carry on the business so far as may be necessary for the beneficial winding up ofthe company. His primary role and duties are the same as a liquidator in a creditors’voluntary winding up i.e. to distribute the company’s assets rateably amongst its creditorswhose debts have been admitted.

As soon as the affairs have been completely wound up, the liquidator applies to the courtsof Bermuda for an order that the company be dissolved and the company is deemeddissolved from the date of this order being made.

Any person wishing to have a detailed summary of Bermuda company law or advice on thedifferences between it and the laws of any jurisdiction with which he is more familiar isrecommended to seek independent legal advice.

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APPENDIX F

SUMMARY OF RELEVANT PRC LAWS AND REGULATIONS

1. PRC legal system

The PRC legal system is based on the PRC Constitution and is made up of written laws,regulations and directives. Decided court cases do not constitute binding precedents.

The National People’s Congress of the PRC (“NPC”) and the Standing Committee of the NPC areempowered by the PRC Constitution to exercise the legislative power of the state. The NPC hasthe power to amend the PRC Constitution and to enact and amend primary laws governing thestate organs, civil affairs and criminal offences and other matters. The Standing Committee of theNPC is empowered to interpret, enact and amend laws other than those required to be enactedby the NPC.

The State Council of the PRC is the highest organ of state administration and has the power toenact administrative rules and regulations. Ministries and commissions under the State Council ofthe PRC are also vested with the power to issue orders, directives and regulations within thejurisdiction of their respective departments. Administrative rules, regulations, directives andorders promulgated by the State Council and its ministries and commissions must not be inconflict with the PRC Constitution or the national laws and, in the event that any conflict arises,the Standing Committee of the NPC has the power to annul such administrative rules andregulations enacted by the State Council and the State Council has the power to annul suchdirectives, orders and regulations issued by its ministries and commissions.

At the regional level, the people’s congresses of provinces and municipalities and their standingcommittees may enact local rules and regulations and the people’s government may promulgateadministrative rules and directives applicable to their own administrative area. These local rulesand regulations may not be in conflict with the PRC Constitution, any national laws or anyadministrative rules and regulations promulgated by the State Council.

Rules, regulations or directives may be enacted or issued at the provincial or municipal level orby the State Council of the PRC or its ministries and commissions in the first instance forexperimental purposes. After sufficient experience has been gained, the State Council maysubmit legislative proposals to be considered by the NPC or the Standing Committee of the NPCfor enactment at the national level.

The power to interpret laws is vested by the PRC Constitution in the Standing Committee of theNPC. According to the Decision of the Standing Committee of the NPC Regarding theStrengthening of Interpretation of Laws passed on 10 June 1981, the Supreme People’s Courthas the power to give general interpretation on the application of laws in judicial proceedings apartfrom its power to issue specific interpretation in specific cases. The State Council and itsministries and commissions are also vested with the power to give interpretation of the rules andregulations which they promulgated. At the regional level, the power to give interpretation ofregional laws is vested in the regional legislative and administration organs which promulgatesuch laws. All such interpretations carry legal effect.

2. Judicial system

The People’s Courts are the judicial organs of the PRC. Under the PRC Constitution and the Lawof Organization of the People’s Courts of the People’s Republic of China, the People’s Courtscomprise the Supreme People’s Court, the local people’s courts, military courts and other specialcourts. The local people’s courts are divided into three levels, namely, the basic people’s courts,intermediate people’s courts and higher people’s courts. The basic people’s courts are divided

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into civil, criminal and administrative divisions. The intermediate people’s courts have divisionssimilar to those of the basic people’s courts and, where the circumstances so warrant, may haveother special divisions (such as intellectual property divisions). The judicial functions of people’scourts at lower levels are subject to supervision of people’s courts at higher levels. The people’sprocuratorates also have the right to exercise legal supervision over the proceedings of people’scourts of the same and lower levels. The Supreme People’s Court is the highest judicial organ ofthe PRC. It supervises the administration of justice by the people’s courts of all levels.

The people’s courts adopt a two-tier final appeal system. A party may before the taking effect ofa judgment or order appeal against the judgment or order of the first instance of a local people’scourt to the people’s court at the next higher level. Judgments or orders of the second instanceat the next higher level are final and binding. Judgments or orders of the first instance of theSupreme People’s Court are also final and binding. If, however, the Supreme People’s Court ora people’s court at a higher level finds an error in a final and binding judgment which has takeneffect in any people’s court at a lower level, a retrial of the case may be conducted according tothe judicial supervision procedures. Or if the president of a people’s court at any level finds adefinite error in a legally effective judgment or written order of his court and deems it necessaryto have the case retried, he shall refer it to the judicial committee for discussion and decision.

The PRC civil procedures are governed by the Civil Procedure Law of the People’s Republic ofChina (the “Civil Procedure Law”) adopted on 9 April 1991. The Civil Procedure Law containsregulations on the institution of a civil action, the jurisdiction of the people’s courts, the proceduresin conducting a civil action, trial procedures and procedures for the enforcement of a civiljudgment or order. All parties to a civil action conducted within the territory of the PRC mustcomply with the Civil Procedure Law. A civil case is generally heard by a court located in thedefendant’s place of domicile. The jurisdiction may also be selected by express agreement by theparties to a contract provided that the jurisdiction of the people’s court selected has some actualconnection with the dispute, that is to say, the plaintiff or the defendant is located or domiciled, orthe contract was executed or implemented in the jurisdiction selected, or the subject-matter of theproceedings is located in the jurisdiction selected. A foreign national or foreign enterprise isaccorded the same litigation rights and obligations as a citizen or legal person of the PRC. If anyparty to a civil action refuses to comply with a judgment or order made by a people’s court or anaward made by an arbitration body in the PRC, the aggrieved party may apply to the people’scourt to enforce the judgment, order or award. There are time limits on the right to apply for suchenforcement. Where at least one of the parties to the dispute is an individual, the time limit is oneyear. If both parties to the dispute are legal persons or other entities, the time limit is six months.

A party seeking to enforce a judgment or order of a people’s court against a party who or whoseproperty is not within the PRC may apply to a foreign court with jurisdiction over the case forrecognition and enforcement of such judgment or order. A foreign judgment or ruling may also berecognised and enforced according to PRC enforcement procedures by the people’s courts inaccordance with the principle of reciprocity or if there exists an international or bilateral treaty withor acceded to by the foreign country that provides for such recognition and enforcement, unlessthe people’s court considers that the recognition or enforcement of the judgment or ruling willviolate fundamental legal principles of the PRC or its sovereignty, security or social or publicinterest.

3. Arbitration and enforcement of arbitral awards

The Arbitration Law of the PRC (the “Arbitration Law”) was promulgated by the StandingCommittee of the NPC on 31 August 1994 and came into effect on 1 September 1995. It isapplicable to, among other matters, trade disputes involving foreign parties where the partieshave entered into a written agreement to refer the matter to arbitration before an arbitrationcommittee constituted in accordance with the Arbitration Law. Under the Arbitration Law, anarbitration committee may, before the promulgation by the PRC Arbitration Association of

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arbitration regulations, formulate interim arbitration rules in accordance with the Arbitration Lawand the PRC Civil Procedure Law. Where the parties have by an agreement provided arbitrationas a method for dispute resolution, the parties are not permitted to institute legal proceedings ina people’s court.

Under the Arbitration Law, an arbitral award is final and binding on the parties and if a party failsto comply with an award, the other party to the award may apply to the people’s court forenforcement. A people’s court may refuse to enforce an arbitral award made by an arbitrationcommittee if there were mistakes, an absence of material evidence or irregularities over thearbitration proceedings, or the jurisdiction or constitution of the arbitration committee.

A party seeking to enforce an arbitral award of a foreign affairs arbitration body of the PRC againsta party who or whose property is not within the PRC may apply to a foreign court with jurisdictionover the case for enforcement. Similarly, an arbitral award made by a foreign arbitration body maybe recognised and enforced by the PRC courts in accordance with the principles of reciprocity orany international treaty concluded or acceded to by the PRC.

In respect of contractual and non-contractual commercial law related disputes which arerecognised as such for the purposes of PRC law, the PRC has acceded to the Convention on theRecognition and Enforcement of Foreign Arbitral Award (“New York Convention”) adopted on 10June 1958 pursuant to a resolution of the Standing Committee of the NPC passed on 2 December1986. The New York Convention provides that all arbitral awards made by a state which is a partyto the New York Convention shall be recognised and enforced by other parties to the New YorkConvention subject to their right to refuse enforcement under certain circumstances includingwhere the enforcement of the arbitral award is against the public policy of the state to which theapplication for enforcement is made. It was declared by the Standing Committee of the NPC at thetime of the accession of the PRC that (1) the PRC would only recognise and enforce foreignarbitral awards on the principle of reciprocity and (2) the PRC would only apply the New YorkConvention in disputes considered under PRC laws to be arising from contractual and non-contractual mercantile legal relations.

4. Taxation

The applicable income tax laws, regulations, notices and decisions (collectively referred to as“Applicable Foreign Enterprises Tax Law”) related to foreign investment enterprises and theirinvestors include the follows:

(a) Income Tax Law of the PRC on Foreign Investment Enterprises and Foreign Enterprisesadopted by the NPC on 9 April 1991;

(b) Implementing Rules of the Income Tax Law of the PRC on Foreign Investment Enterprisesand Foreign Enterprises promulgated by the State Council, which came into effect on 1 July1991;

(c) Notice Relating to taxes Applicable to Foreign Investment Enterprises/Foreign Enterprisesand Foreign Nationals in Relation to Dividends and Gains obtained from Holding andTransferring of Shares promulgated by State Tax Bureau on 2 July 1993;

(d) Notice on Some Policy Questions Concerning Individual Income Tax issued by Ministry ofFinance and the State Tax Bureau on 13 May 1994;

(e) Notice on Relevant Policies Concerning the Reduction of Income Tax on Interest and OtherIncome of Foreign Enterprises Derived from Sources in China issued by the State Council,which came into effect on 1 January 2000;

(f) The third amendments to the Income Tax Law Applicable to Individuals of the PRCpromulgated by Standing Committee of NPC on 27 October 2005;

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(g) the NPC promulgated the PRC Corporate Income Tax Law on 16 March2007, which stipulates that corporate income tax will be standardised to 25% for all PRCresident enterprises, such law coming into effect on 1 January 2008.

(a) Income tax on foreign investment enterprises

According to the Applicable Foreign Enterprises Tax Law, foreign investment enterprises(including sino-foreign equity joint ventures, sino-foreign co-operative joint ventures andwholly foreign owned enterprises established in the territory of the PRC) are required to paya national income tax at a rate of 30% of their taxable income and a local income tax at arate of 3% of their taxable income.

A foreign investment enterprise engaged in production having a period of operation of notless than ten years shall be exempted from income tax for the first two profit-making yearsand a 50% reduction in the income tax payable for the next three years.

Foreign investment enterprises established in special economic zones, foreign enterpriseshaving an establishment in special economic zones engaged in production or businessoperations and foreign investment enterprises engaged in production in economic andtechnological zones may pay income tax at a reduced rate of 15%. Foreign investmententerprises engaged in production established in coastal economic open zones or in the oldurban districts of cities where the special economic zones or the economic and technologicaldevelopment zones are located may pay income taxes at a reduced rate of 24%. A reducedincome tax rate of 15% may apply to an enterprise located in such regions which is engagedin energy, communication, harbour, wharf or other projects encouraged by the State.

Losses incurred in a tax year may be carried forward for not more than five years.

The people’s governments of provinces, autonomous regions and municipalities directlyunder the central government may grant exemptions from or reduced local income tax for aforeign investment enterprise engaged in an industry or a project encouraged by the State.

On 16 March 2007, a new PRC Enterprise Income Tax Law was passed by the People’sCongress according to which the income tax rate applicable to all PRC enterprises (includingforeign invested enterprises) will be fixed at 25%, effective as of 1 January 2008.

However, under the new PRC Enterprise Income Tax Law, enterprises established before 16March 2007 which currently enjoy the preferential tax treatment of a two-year tax exemption,followed by a three-year 50% reduced tax rate, will be granted a five-year transition periodduring which they will still enjoy such preferential tax treatment.

(b) Value added tax

The Provisional Regulations of the People’s Republic of China Concerning Value Added Taxpromulgated by the State Council came into effect on 1 January 1994. Under theseregulations and the Implementing Rules of the Provisional Regulations of the People’sRepublic of China Concerning Value Added Tax, value added tax is imposed on goods soldin or imported into the PRC and on processing, repair and replacement services providedwithin the PRC.

Value added tax payable in the PRC is charged on an aggregated basis at a rate of 13% or17% (depending on the type of goods involved) on the full price collected for the goods soldor, in the case of taxable services provided, at a rate of 17% on the charges for the taxableservices provided but excluding, in respect of both goods and services, any amount paid in

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respect of value added tax included in the price or charges, and less any deductible valueadded tax already paid by the taxpayer on purchases of goods and services in the samefinancial year.

(c) Business tax

With effect from 1 January 1994, businesses that provide services (except entertainmentbusinesses), assign intangible assets or sell immovable property became liable to businesstax at a rate ranging from 3% to 5% of the charges for the services provided, intangibleassets assigned or immovable property sold, as the case may be.

(d) Tax on dividends from PRC enterprise with foreign investment

According to the Applicable Foreign Enterprises Tax Law, income such as rental, interestand royalty from the PRC derived by a foreign enterprise which has no establishment in thePRC or has establishment but the income has no relationship with such establishment issubject to a 10% withholding tax, subject to reduction as provided by any applicable doubletaxation treaty, unless the relevant income is specifically exempted from tax under theApplicable Foreign Enterprises Tax Law. The dividends derived by a foreign investor from aPRC enterprise with foreign investment are exempted from PRC withholding tax accordingto the Applicable Foreign Enterprises Tax Law. With the effectiveness of New Tax Law since1 January 2008, dividends derived by a foreign enterprise, which has no establishment in thePRC or has establishment but the dividends have no relationship with such establishment,from a PRC enterprise with foreign investment shall pay income tax at the rate of 20%,subject to possible preferential treatment provided by the State Council of the PRC.

5. Wholly foreign-owned enterprise

Wholly foreign-owned enterprises are governed by the Law of the People’s Republic of China onForeign-Capital Enterprises and its amendment, which were promulgated on 12 April 1986 and 31October 2000 respectively, and its Implementation Regulations promulgated on 12 December1990 and 12 April 2001 (together the “Foreign Enterprises Law”).

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

The establishment of a wholly foreign-owned enterprise will have to be approved by Ministryof Commerce of the PRC (or its delegated authorities). If two or more foreign investors jointlyapply for the establishment of a wholly foreign-owned enterprise, a copy of the contractbetween the parties must also be submitted to Ministry of Commerce of the PRC (or itsdelegated authorities) for its record. A wholly foreign-owned enterprise must also obtain abusiness licence from the Administration for Industry and Commerce Authority before it cancommence business.

(b) Nature

A wholly foreign-owned enterprise is a limited liability company under the Foreign EnterpriseLaw. It is a legal person which may independently assume civil obligations, enjoy civil rightsand has the right to own, use and dispose of property. It is required to have a registeredcapital contributed by the foreign investor(s). The liability of the foreign investor(s) is limitedto the amount of registered capital contributed. A foreign investor may make its contributionsby instalments and the registered capital must be contributed within the period as approvedby Ministry of Commerce of the PRC (or its delegated authorities) in accordance withrelevant regulations.

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(c) Profit distribution

The Foreign Enterprise Law provides that after payment of taxes, a wholly foreign-ownedenterprise must make contributions to a reserve fund and an employee bonus and welfarefund. The allocation ratio for the employee bonus and welfare fund may be determined bythe enterprise. However, at least 10% of the after tax profits must be allocated to the reservefund. If the cumulative total of allocated reserve funds reaches 50% of an enterprise’sregistered capital, the enterprise will not be required to make any additional contribution. Theenterprise is prohibited from distributing dividends unless the losses (if any) of previousyears have been made up.

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APPENDIX G

RULES OF THE CHANGTIAN EMPLOYEE SHARE OPTION SCHEME

1. NAME OF THE ESOS

The ESOS shall be called the “Changtian Employee Share Option Scheme’’.

2. DEFINITIONS

2.1 In the ESOS, unless the context otherwise requires, the following words and expressions shallhave the following meanings:

“Act” The Companies Act, Chapter 50 of Singapore asamended, modified or supplemented from time totime.

“Auditors” The auditors of the Company for the time being.

“Bermuda Companies Act” The Companies Act 1981 of Bermuda, as amended,supplemented or modified from time to time.

“Board” The board of directors of the Company.

“Bye-Laws” The Bye-Laws of the Company, as amended from timeto time.

“CDP” The Central Depository (Pte) Limited.

“CPF” Central Provident Fund.

“Committee” The remuneration committee of the Company, or suchother committee comprising directors of the Companyduly authorised and appointed by the Board toadminister this ESOS.

“Company” Changtian Plastic & Chemical Limited.

“control” The capacity to dominate decision making, directly orindirectly, in relation to the financial and operatingpolicies of the Company.

“Controlling Shareholder” A shareholder exercising control over the Companyand unless rebutted, a person who controls directly orindirectly fifteen (15) per cent or more of theCompany’s issued share capital shall be presumed tobe a Controlling Shareholder of the Company.

“Date of Grant” In relation to an Option, the date on which the Optionis granted to a Participant pursuant to Rule 7.

“Director” A person holding office as a director for the time beingof the Company and/or its Subsidiaries, as the casemay be.

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“ESOS” The Changtian Employee Share Option Scheme, asthe same may be modified or altered from time to time.

“Executive Director” A director of the Company and/or its Subsidiaries, asthe case may be, who performs an executive functionwithin the Company or the relevant Subsidiary, as thecase may be.

“Exercise Price” The price at which a Participant shall subscribe foreach Share upon the exercise of an Option which shallbe the price as determined in accordance with Rule 9,as adjusted in accordance with Rule 10.

“Grantee” A person to whom an offer of an Option is made.

“Group” The Company and its Subsidiaries.

“Group Employee” Any confirmed employee of the Group (including anyExecutive Director) selected by the Committee toparticipate in the ESOS in accordance with Rule 4.

“Market Day” A day on which the SGX-ST is open for trading insecurities.

“Market Price” A price equal to the average of the last dealt prices forthe Shares on the SGX-ST over the five consecutiveTrading Days immediately preceding the Date of Grantof that Option, as determined by the Committee byreference to the daily official list or any otherpublication published by the SGX-ST, rounded to thenearest whole cent in the event of fractional prices.

“Non-Executive Director” A director of the Company and/or its Subsidiaries, asthe case may be, other than an Executive Director butincluding the independent Directors of the Company.

“Offer Date” The date on which an offer to grant an Option is madepursuant to the ESOS.

“Offeree” The person to whom an offer of an Option is made.

“Option” The right to subscribe for Shares granted or to begranted to a Group Employee pursuant to the ESOSand for the time being subsisting.

“Option Period” The period for the exercise of an Option being:

(a) in the case of an Option granted at Market Priceto a Group Employee, a period commencingafter the first anniversary of the Date of Grantand expiring on the tenth anniversary of suchDate of Grant, subject as provided in Rules 11and 15 and any other conditions as may beintroduced by the Committee from time to time;

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(b) in the case of an Option granted at Market Price toa Non-Executive Director, a period commencingafter the first anniversary of the Date of Grant andexpiring on the fifth anniversary of such Date ofGrant, subject as provided in Rules 11 and 15 andany other conditions as may be introduced by theCommittee from time to time;

(c) in the case of an Option granted at a discount toMarket Price to a Group Employee, a periodcommencing after the second anniversary of theDate of Grant and expiring on the tenthanniversary of such Date of Grant, subject asprovided in Rules 11 and 15 and any otherconditions as may be introduced by theCommittee from time to time;

(d) in the case of an Option granted at a discount toMarket Price to a Non-Executive Director, aperiod commencing after the second anniversaryof the Date of Grant and expiring on the fifthanniversary of such Date of Grant, subject asprovided in Rules 11 and 15 and any otherconditions as may be introduced by theCommittee from time to time.

“Participant” The holder of an Option.

“Record Date” The date as at the close of business on which theShareholders must be registered in order toparticipate in any dividends, rights, allotments or otherdistributions.

“Rules” Rules of the Changtian Employee Share OptionScheme.

“S$” Singapore Dollars.

“Securities Account” The securities account maintained by a Depositor withCDP.

“Shareholders” Registered holders of Shares, except where theregistered holder is CDP, the term “Shareholders”shall, in relation to such Shares, mean the Depositorswhose Securities Accounts are credited with Shares.

“Shares” Ordinary shares of par value S$0.05 each in thecapital of the Company.

“Subsidiaries” Companies which are for the time being subsidiariesof the Company as defined by Section 5 of the Act;and “Subsidiary” means each of them.

“SGX-ST” Singapore Exchange Securities Trading Limited.

“Trading Day” A day on which the Shares are traded on the SGX-ST.

“US$” United States Dollars.

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2.2 The term “Depositor”, “Depository Register” and “Depository Agent” shall have the meaningsascribed to it by Section 130A of the Act and the term “associate” shall have the meaning ascribedto it by the SGX-ST Listing Manual or any other publication prescribing rules or regulations forcorporations admitted to the Official List of the SGX-ST (as modified, supplemented or amendedfrom time to time).

2.3 Words importing the singular number shall, where applicable, include the plural number and viceversa. Words importing the masculine gender shall, where applicable, include the feminine andneuter gender.

2.4 Any reference to a time of a day in the ESOS is a reference to Singapore time.

2.5 Any reference in the ESOS to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any word defined under the Bermuda Companies Act or any statutorymodification thereof and used in the ESOS shall have the meaning assigned to it under theBermuda Companies Act.

3. OBJECTIVES OF THE ESOS

The ESOS will provide an opportunity for Group Employees who have contributed significantly tothe growth and performance of the Group (including Executive and Non-Executive Directors) andwho satisfy the eligibility criteria as set out in Rule 4 of the ESOS, to participate in the equity ofthe Company.

The ESOS is primarily a share incentive scheme. It recognises the fact that the services of suchGroup Employees are important to the success and continued well-being of the Group.Implementation of the ESOS will enable the Company to give recognition to the contributionsmade by such Group Employees. At the same time, it will give such Group Employees anopportunity to have a direct interest in the Company at no direct cost to its profitability and will alsohelp to achieve the following positive objectives:

(a) the motivation of each Participant to optimise his performance standards and efficiency andto maintain a high level of contribution to the Group;

(b) the retention of key employees and Executive Directors of the Group whose contributionsare essential to the long-term growth and profitability of the Group;

(c) to instil loyalty to, and a stronger identification by the Participants with the long-termprosperity of, the Company;

(d) to attract potential employees with relevant skills to contribute to the Group and to createvalue for the Shareholders; and

(e) to align the interests of the Participants with the interests of the Shareholders.

4. ELIGIBILITY

4.1 Confirmed Group Employees (including Executive and Non-Executive Directors) who haveattained the age of twenty-one (21) years on or prior to the relevant Offer Date and are notundischarged bankrupts and have not entered into a composition with their respective creditors,shall be eligible to participate in the ESOS at the absolute discretion of the Committee.

4.2 Controlling Shareholders and their associates shall not be eligible to participate in the ESOS.

4.3 There will be no restriction on the eligibility of any Participant to participate in any other shareoption or share incentive schemes implemented by any other companies within the Group.

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4.4 Subject to the Act, Bermuda Companies Act and any requirement of the SGX-ST, the terms ofeligibility for participation in the ESOS may be amended from time to time at the absolutediscretion of the Committee, which would be exercised judiciously.

5. MAXIMUM ENTITLEMENT

Subject to RuIe 4 and Rule 10, the aggregate number of Shares in respect of which Options maybe offered to a Grantee for subscription in accordance with the ESOS shall be determined at thediscretion of the Committee who shall take into account criteria such as rank, past performance,years of service and potential development of the Participant.

6. LIMITATION ON SIZE OF THE ESOS

The aggregate nominal amount of Shares over which the Committee may grant Options on anydate, when added to the nominal amount of Shares issued and issuable in respect of all Optionsgranted under the ESOS shall not exceed fifteen (15) per cent of the issued share capital of theCompany on the day immediately preceding the Offer Date of the Option.

7. OFFER DATE

7.1 The Committee may, save as provided in Rule 4, Rule 5 and Rule 6, offer to grant Options to suchGrantees as it may select in its absolute discretion at any time during the period when the ESOSis in force, except that no Option shall be granted during the period of thirty (30) days immediatelypreceding the date of announcement of the Company’s interim and/or final results (whichever thecase may be). In addition, in the event that an announcement on any matter of an exceptionalnature involving unpublished price sensitive information is made, offers to grant Options may onlybe made on or after the second Market Day on which such announcement is released.

7.2 An offer to grant the Option to a Grantee shall be made by way of a letter (the “Letter of Offer’’)in the form or substantially in the form set out in Schedule A, subject to such amendments as theCommittee may determine from time to time.

8. ACCEPTANCE OF OFFER

8.1 An Option offered to a Grantee pursuant to Rule 7 may only be accepted by the Grantee withinthirty (30) days after the relevant Offer Date and not later than 5.00 p.m. on the thirtieth (30th) dayfrom such Offer Date (a) by completing, signing and returning to the Company the AcceptanceForm in or substantially in the form set out in Schedule B, subject to such modification as theCommittee may from time to time determine, accompanied by payment of S$1.00 asconsideration and (b) if, at the date on which the Company receives from the Grantee theAcceptance Form in respect of the Option as aforesaid, he remains eligible to participate in theESOS in accordance with these Rules.

8.2 If a grant of an Option is not accepted strictly in the manner as provided in this Rule 8, such offershall, upon the expiry of the thirty (30) days period, automatically lapse and shall forthwith bedeemed to be null and void and be of no effect.

8.3 The Company shall be entitled to reject any purported acceptance of a grant of an Option madepursuant to this Rule 8 or Exercise Notice given pursuant to Rule 12 which does not strictly complywith the terms of the ESOS.

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8.4 Options are personal to the Grantees to whom they are granted and shall not be sold, mortgaged,transferred, charged, assigned, pledged or otherwise disposed of or encumbered in whole or inpart or in any way whatsoever without the Committee’s prior written approval, but may beexercised by the Grantee’s duly appointed personal representative as provided in Rule 11.6 in theevent of the death of such Grantee.

8.5 The Grantee may accept or refuse the whole or part of the offer. If only part of the offer isaccepted, the Grantee shall accept the offer in multiples of 1,000 Shares.

8.6 In the event that a grant of an Option results in a contravention of any applicable law or regulation,such grant shall be null and void and be of no effect and the relevant Participant shall have noclaim whatsoever against the Company.

8.7 Unless the Committee determines otherwise, an Option shall automatically lapse and becomenull, void and of no effect and shall not be capable of acceptance if:

(a) it is not accepted in the manner as provided in Rule 8.1 within the thirty (30) day period; or

(b) the Grantee dies prior to his acceptance of the Option; or

(c) the Grantee is adjudicated a bankrupt or enters into composition with his creditors prior tohis acceptance of the Option; or

(d) the Grantee being a Group Employee ceases to be in the employment of the Group or (beinga Director) ceases to be a Director of the Company, in each case, for any reason whatsoeverprior to his acceptance of the Option; or

(e) the Company is liquidated or wound-up prior to the Grantee’s acceptance of the Option.

9. EXERCISE PRICE

9.1 Subject to any adjustment pursuant to Rule 10, the Exercise Price for each Share in respect ofwhich an Option is exercisable shall be determined by the Committee, in its absolute discretion,on the Date of Grant, at:

(a) a price equal to the Market Price; or

(b) a price which is set at a discount to the Market Price, provided that:

(i) the maximum discount shall not exceed twenty (20) per cent of the Market Price (orsuch other percentage or amount as may be determined by the Committee andpermitted by the SGX-ST); and

(ii) the Shareholders in general meeting shall have authorised, in a separate resolution,the making of offers and grants of Options under the ESOS at a discount not exceedingthe maximum discount as aforesaid.

9.2 In making any determination under Rule 9.1(b) on whether to give a discount and the quantum ofsuch discount, the Committee shall be at liberty to take into consideration such criteria as theCommittee may, at its absolute discretion, deem appropriate, including but not limited to:

(a) the performance of the Company and/or its Subsidiaries, as the case may be;

(b) the years of service and individual performance of the eligible Group Employee or Director;

(c) the contribution of the eligible Group Employee or Director to the success and developmentof the Company and/or the Group; and

(d) the prevailing market conditions.

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10. ALTERATION OF CAPITAL

10.1 If a variation in the issued share capital of the Company (whether by way of a capitalisation ofprofits or reserves or rights issue or reduction (including any reduction arising by reason of theCompany purchasing or acquiring its issued Shares), subdivision, consolidation or distribution, orotherwise howsoever) should take place, then:

(a) the Exercise Price in respect of the Shares and class and/or number of Shares comprisedin the Options to the extent unexercised and the rights attached thereto; and/or

(b) the class and/or number of Shares in respect of which additional Options may be granted toParticipants, may, be adjusted in such manner as the Committee may determine to beappropriate including retrospective adjustments where such variation occurs after the dateof exercise of an Option but the Record Date relating to such variation precedes such dateof exercise and, except in relation to a capitalisation issue, upon the written confirmation ofthe Auditors (acting only as experts and not as arbitrators), that in their opinion, suchadjustment is fair and reasonable.

10.2 Notwithstanding the provisions of Rule 10.1 above, no such adjustment shall be made (a) if as aresult, the Participant receives a benefit that a Shareholder does not receive; and (b) unless theCommittee after considering all relevant circumstances considers it equitable to do so.

10.3 Unless the Committee considers an adjustment to be appropriate, the issue of securities asconsideration for an acquisition of any assets by the Company or a private placement of securitiesfor cash, or the cancellation of issued Shares purchased or acquired by the Company by way ofa market purchase of such Shares undertaken by the Company on the SGX-ST during the periodwhen a share purchase granted by the Shareholders of the Company (including any renewal ofsuch mandate) is in force, will not be regarded as a circumstance requiring adjustment under theprovisions of this Rule 10.

10.4 The restriction on the number of Shares to be offered to any Grantee under Rule 5 above, shallnot apply to the number of additional Shares or Options over additional Shares issued by virtueof any adjustment to the number of Shares and/or Options pursuant to this Rule 10.

10.5 Upon any adjustment required to be made, the Company shall notify each Participant (or his dulyappointed personal representative(s)) in writing and deliver to him (or, where applicable, his dulyappointed personal representative(s)) a statement setting forth the new Exercise Price thereafterin effect and the class and/or number of Shares thereafter comprised in the Option so far asunexercised. Any adjustment shall take effect upon such written notification being given.

11. OPTION PERIOD

11.1 Options granted with the Exercise Price set at Market Price shall only be exercisable, in whole orin part (provided that an Option may be exercised in part only in respect of 1,000 Shares or anymultiple thereof), at any time, by a Participant after the first anniversary of the Date of Grant of thatOption, Provided Always that the Options shall be exercised before the expiry of the relevantOption Period, or such earlier date as may be determined by the Committee, failing which allunexercised Options shall immediately lapse and become null and void and a Participant shallhave no claim against the Company.

11.2 Options granted with the Exercise Price set at a discount to Market Price shall only be exercisable,in whole or in part (provided that an Option may be exercised in part only in respect of 1,000Shares or any multiple thereof), at any time, by a Participant after the second anniversary from theDate of Grant of that Option, Provided always that the Options shall be exercised before the expiryof the relevant Option Period, or such earlier date as may be determined by the Committee, failingwhich all unexercised Options shall immediately lapse and become null and void and a Participantshall have no claim against the Company.

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11.3 An Option shall, to the extent unexercised, immediately lapse and become null and void and aParticipant shall have no claim against the Company:

(a) subject to Rules 11.4, 11.5 and 11.6, upon the Participant ceasing to be in the employmentof the Company or any of the companies within the Group for any reason whatsoever; or

(b) upon the bankruptcy of the Participant or the happening of any other event which results inhis being deprived of the legal or beneficial ownership of such Option; or

(c) in the event of misconduct on the part of the Participant, as determined by the Committeein its absolute discretion.

For the purpose of Rule 11.4(a), a Participant shall be deemed to have ceased to be so employedas of the date the notice of termination of employment is tendered by or is given to him, unlesssuch notice shall be withdrawn prior to its effective date.

11.4 If a Participant ceases to be employed by the Group by reason of his:

(a) ill health, injury or disability, in each case, as certified by a medical practitioner approved bythe Committee;

(b) redundancy;

(c) retirement at or after a normal retirement age; or

(d) retirement before that age with the consent of the Committee,

or for any other reason approved in writing by the Committee, he may, at the absolute discretionof the Committee exercise any unexercised Option within the relevant Option Period and upon theexpiry of such period, the Option shall immediately lapse and become null and void.

11.5 If a Participant ceases to be employed by a Subsidiary:

(a) by reason of the Subsidiary, by which he is principally employed ceasing to be a companywithin the Group or the undertaking or part of the undertaking of such Subsidiary, beingtransferred otherwise than to another company within the Group; or

(b) for any other reason, provided the Committee gives its consent in writing, he may, at theabsolute discretion of the Committee, exercise any unexercised Options within the relevantOption Period and upon the expiry of such period, the Option shall immediately lapse andbecome null and void.

11.6 If a Participant dies and at the date of his death holds any unexercised Option, such Option may,at the absolute discretion of the Committee, be exercised by the duly appointed legal personalrepresentatives of the Participant within the relevant Option Period and upon the expiry of suchperiod, the Option shall immediately lapse and become null and void.

11.7 If a Participant, who is also an Executive Director, ceases to be a Director for any reasonwhatsoever, he may, at the absolute discretion of the Committee, exercise any unexercisedOption within the relevant Option Period and upon the expiry of such period, the Option shallimmediately lapse and become null and void.

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12. EXERCISE OF OPTIONS, ALLOTMENT AND LISTING OF SHARES

12.1 An Option may be exercised, in whole or in part (provided that an Option may be exercised in partonly in respect of 1,000 Shares or any multiple thereof), by a Participant giving notice in writingto the Company in or substantially in the form set out in Schedule C (the “Exercise Notice”),subject to such amendments as the Committee may from time to time determine. Every ExerciseNotice must be accompanied by a remittance for the full amount of the aggregate Exercise Pricein respect of the Shares which have been exercised under the Option, the relevant CDP charges(if any) and any other documentation the Committee may require. All payments shall be made bycheque, cashier’s order, bank draft or postal order made out in favour of the Company. An Optionshall be deemed to be exercised upon the receipt by the Company of the abovementioned Noticeduly completed and the receipt by the Company of the full amount of the aggregate Exercise Pricein respect of the Shares which have been exercised under the Option.

12.2 Subject to:

(a) such consents or other actions required by any competent authority under any regulationsor enactments for the time being in force as may be necessary (including any approvalsrequired from the SGX-ST); and

(b) compliance with the Rules, the Bermuda Companies Act, the Memorandum of Associationand Bye-Laws of the Company, the Company shall, as soon as practicable after the exerciseof an Option by a Participant but in any event within ten (10) Market Days after the date ofthe exercise of the Option in accordance with Rule 12.1, allot the Shares in respect of whichsuch Option has been exercised by the Participant and within five (5) Market Days from thedate of such allotment, despatch the relevant share certificates to CDP for the credit of thesecurities account of that Participant by ordinary post or such other mode of delivery as theCommittee may deem fit.

12.3 The Company shall, if necessary, as soon as practicable after the exercise of an Option, apply tothe SGX-ST or any other stock exchange on which the Shares are quoted or listed for permissionto deal in and for quotation of the Shares which may be issued upon exercise of the Option andthe Shares (if any) which may be issued to the Participant pursuant to any adjustments made inaccordance with Rule 10.

12.4 Shares which are all allotted on the exercise of an Option by a Participant shall be issued, as theParticipant may elect, in the name of CDP to the credit of the securities account of the Participantmaintained with CDP or the Participant’s securities sub-account with a CDP Depository Agent.

12.5 Shares allotted and issued upon the exercise of an Option shall be subject to all provisions of theMemorandum of Association and Bye-Laws of the Company and shall rank pari passu in allrespects with the then existing issued Shares in the capital of the Company except for anydividends, rights, allotments or other distributions, the Record Date for which is prior to the datesuch Option is exercised.

12.6 The Company shall keep available sufficient unissued Shares to satisfy the full exercise of allOptions for the time being remaining capable of being exercised.

13. MODIFICATIONS TO THE ESOS

13.1 Any or all the provisions of the ESOS may be modified and/or altered at any time and from timeto time by resolution of the Committee, except that:

(a) any modification or alteration which shall alter adversely the rights attaching to any Optiongranted prior to such modification or alteration and which in the opinion of the Committee,materially alters the rights attaching to any Option granted prior to such modification oralteration may only be made with the consent in writing of such number of Participants who,

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if they exercised their Options in full, would thereby become entitled to not less thanthree-quarters (3/4) in nominal amount of all the Shares which would fall to be allotted uponexercise in full of all outstanding Options;

(b) any modification or alteration which would be to the advantage of Participants under theESOS shall be subject to the prior approval of the Shareholders in general meeting; and

(c) no modification or alteration shall be made without the prior approval of the SGX-ST or (ifrequired) any other stock exchange on which the Shares are quoted and listed, and suchother regulatory authorities as may be necessary.

For the purposes of Rule 13.1(a), the opinion of the Committee as to whether any modification oralteration would alter adversely the rights attaching to any Option shall be final and conclusive.

13.2 Notwithstanding anything to the contrary contained in Rule 13.1, the Committee may at any timeby resolution (and without other formality, save for the prior approval of the SGX-ST) amend oralter the ESOS in any way to the extent necessary to cause the ESOS to comply with anystatutory provision or the provision or the regulations of any regulatory or other relevant authorityor body (including the SGX-ST).

13.3 Written notice of any modification or alteration made in accordance with this Rule 13 shall begiven to all Participants.

14. DURATION OF THE ESOS

14.1 The ESOS shall continue to be in force at the discretion of the Committee, subject to a maximumperiod of ten (10) years, commencing on the date on which the ESOS is adopted by Shareholders.Subject to compliance with any applicable laws and regulations in Singapore, the ESOS may becontinued beyond the above stipulated period with the approval of the Shareholders by ordinaryresolution at a general meeting and of any relevant authorities which may then be required.

14.2 The ESOS may be terminated at any time by the Committee or by resolution of the Shareholdersat a general meeting subject to all other relevant approvals which may be required and if theESOS is so terminated, no further Options shall be offered by the Company hereunder.

14.3 The termination, discontinuance or expiry of the ESOS shall be without prejudice to the rightsaccrued to Options which have been granted and accepted as provided in Rule 8, whether suchOptions have been exercised (whether fully or partially) or not.

15. TAKE-OVER AND WINDING UP OF THE COMPANY

15.1 In the event of a take-over offer being made for the Company, Participants (including Participantsholding Options which are then not exercisable pursuant to the provisions of Rules 11.1 and 11.2)holding Options as yet unexercised shall, notwithstanding Rules 11 and 12 but subject to Rule15.5, be entitled to exercise such Options in full or in part in the period commencing on the dateon which such offer is made or, if such offer is conditional, the date on which the offer becomesor is declared unconditional, as the case may be, and ending on the earlier of:

(a) the expiry of six (6) months thereafter, unless prior to the expiry of such six (6) month period,at the recommendation of the offeror and with the approvals of the Committee and theSGX-ST, such expiry date is extended to a later date (being a date falling not later than thedate of expiry of the Option Period relating thereto); or

(b) the date of the expiry of the Option Period relating thereto,

whereupon any Option then remaining unexercised shall immediately lapse and become null andvoid.

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Provided Always that if during such period the offeror becomes entitled or bound to exercise therights of compulsory acquisition of the Shares under the provisions of the Act or the BermudaCompanies Act and, being entitled to do so, gives notice to the Participants that it intends toexercise such rights on a specified date, the Option shall remain exercisable by the Participantsuntil such specified date or the expiry of the Option Period relating thereto, whichever is earlier.Any Option not so exercised by the said specified date shall lapse and become null and void.

Provided that the rights of acquisition or obligation to acquire stated in the notice shall have beenexercised or performed, as the case may be. If such rights of acquisition or obligations have notbeen exercised or performed, all Options shall, subject to Rule 11.3, remain exercisable until theexpiry of the Option Period.

15.2 If, under any applicable laws, the court sanctions a compromise or arrangement proposed for thepurposes of, or in connection with, a scheme for the reconstruction of the Company or itsamalgamation with another company or companies, Participants (including Participants holdingOptions which are then not exercisable pursuant to the provisions of Rule 11.1 and 11.2) shallnotwithstanding Rules 11 and 12 but subject to Rule 15.5, be entitled to exercise any Option thenheld by them during the period commencing on the date upon which the compromise orarrangement is sanctioned by the court and ending either on the expiry of sixty (60) daysthereafter or the date upon which the compromise or arrangement becomes effective, whicheveris later (but not after the expiry of the Option Period relating thereto), whereupon any unexercisedOption shall lapse and become null and void, Provided always that the date of exercise of anyOption shall be before the tenth anniversary of the Offer Date.

15.3 If an order or an effective resolution is passed for the winding up of the Company on the basis ofits insolvency, all Options, to the extent unexercised, shall lapse and become null and void.

15.4 In the event a notice is given by the Company to its members to convene a general meeting forthe purposes of considering and, if thought fit, approving a resolution to voluntarily wind-up theCompany, the Company shall on the same date as or soon after it dispatches such notice to eachmember of the Company give notice thereof to all Grantees (together with a notice of theexistence of the provision of this Rule 15.4) and thereupon, each Grantee (or his personalrepresentative) shall be entitled to exercise all or any of his Options at any time not later than twobusiness days prior to the proposed general meeting of the Company by giving notice in writingto the Company, accompanied by a remittance for the aggregate Exercise Price for the shares inrespect of which the notice is given whereupon the Company shall as soon as possible and in anyevent, no later than the business day immediately prior to the date of the proposed generalmeeting referred to above, allot the relevant Shares to the Grantee credited as fully paid.

15.5 If in connection with the making of a general offer referred to in Rule 15.1 above or the schemereferred to in Rule 15.2 above or the winding up referred to in Rule 15.4 above, arrangements aremade (which are confirmed in writing by the Auditors, acting only as experts and not as arbitrators,to be fair and reasonable) for the compensation of Participants, whether by the continuation oftheir Options or the payment of cash or the grant of other options or otherwise, a Participantholding an Option, which is not then exercisable, may not, at the discretion of the Committee, bepermitted to exercise that Option as provided for in this Rule 15.

15.6 To the extent that an Option is not exercised within the periods referred to in this Rule 15, it shalllapse and become null and void.

16. ADMINISTRATION OF THE ESOS

16.1 The ESOS shall be administered by the Committee in its absolute discretion with such powers andduties as are conferred on it by the Board.

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16.2 The Committee shall have the power, from time to time, to make or vary such regulations (notbeing inconsistent with the ESOS) for the implementation and administration of the ESOS as itthinks fit.

16.3 Any decision of the Committee, made pursuant to any provision of the ESOS (other than a matterto be certified by the Auditors), shall be final and binding (including any decisions pertaining todisputes as to the interpretation of the ESOS or any rule, regulation, or procedure thereunder oras to any rights under the ESOS).

16.4 A Director who is a member of the Committee shall not be involved in its deliberation in respectof Options to be granted to him.

17. NOTICES

17.1 Any notice given by a Participant to the Company shall be sent by post or delivered to theregistered office of the Company or such other address as may be notified by the Company to theParticipant in writing.

17.2 Any notice or documents given by the Company to a Participant shall be sent to the Participantby hand or sent to him at his home address stated in the records of the Company or the last knownaddress of the Participant, and if sent by post shall be deemed to have been given on the dayimmediately following the date of posting.

18. TERMS OF EMPLOYMENT UNAFFECTED

18.1 The ESOS or any Option shall not form part of any contract of employment between the Companyor any Subsidiary (as the case may be) and any Participant and the rights and obligations of anyindividual under the terms of the office or employment with such company within the Group shallnot be affected by his participation in the ESOS or any right which he may have to participate init or any Option which he may hold and the ESOS or any Option shall afford such an individualno additional rights to compensation or damages in consequence of the termination of such officeor employment for any reason whatsoever.

18.2 The ESOS shall not confer on any person any legal or equitable rights (other than thoseconstituting the Options themselves) against the Company and/or any Subsidiary directly orindirectly or give rise to any cause of action at law or in equity against the Company or anySubsidiary.

19. TAXES

All taxes (including income tax) arising from the exercise of any Option granted to any Participantunder the ESOS shall be borne by that Participant.

20. COSTS AND EXPENSES OF THE ESOS

20.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issueand allotment of any Shares pursuant to the exercise of any Option in CDP’s name, the depositof share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’ssecurities sub-account with a Depository Agent or CPF investment account with a CPF agentbank and all taxes referred to in Rule 19 which shall be payable by the relevant Participant.

20.2 Save for such costs and expenses expressly provided in the ESOS to be payable by theParticipants, all fees, costs and expenses incurred by the Company in relation to the ESOSincluding but not limited to the fees, costs and expenses relating to the allotment and issue ofShares pursuant to the exercise of any Option shall be borne by the Company.

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21. CONDITION OF OPTION

Every Option shall be subject to the condition that no Shares shall be issued pursuant to theexercise of an Option if such issue would be contrary to any law or enactment, or any rules orregulations of any legislative or non-legislative governing body for the time being in force inSingapore or any other relevant country.

22. DISCLAIMER OF LIABILITY

Notwithstanding any provisions herein contained and subject to the Act, the Board, the Committeeand the Company shall not under any circumstances be held liable for any costs, losses,expenses and damages whatsoever and howsoever arising in respect of any matter under or inconnection with the ESOS, including but not limited to the Company’s delay in allotting and issuingthe Shares or in applying for or procuring the listing of the Shares on the SGX-ST.

23. DISCLOSURE IN ANNUAL REPORT

The Company shall make the following disclosure in its annual report:

(a) The names of the members of the Committee;

(b) The information required in the table below for the following Participants (which for theavoidance of doubt, shall include Participants who have exercised all their Options in anyparticular financial year):

(i) participants who are Directors of the Company; and

(ii) participants, other than those in (i) who receive five (5) per cent or more of the totalnumber of Options available under the ESOS.

Name ofParticipant

Options grantedduring financial

year under review(including terms)

Aggregate Optionsgranted since

commencement ofthe ESOS to end offinancial year under

review

Aggregate Optionsexercised since

commencement ofthe ESOS to end offinancial year under

review

Aggregate Optionsoutstanding as atend of financial

year under review

(c) The number and proportion of Options granted at the following discounts to average marketvalue of the Shares in the financial year under review:

(i) Options granted at up to 10 per cent discount; and

(ii) Options granted at between 10 per cent but not more than 20 per cent discount.

24. ABSTENTION FROM VOTING

Grantees who are Shareholders are to abstain from voting on any Shareholders’ resolutionrelating to the ESOS.

25. DISPUTES

Any disputes or differences of any nature arising hereunder shall be referred to the Committeeand its decision shall be final and binding in all respects.

26. GOVERNING LAW

The ESOS shall be governed by, and construed in accordance with, the laws of the Republic ofSingapore. The Participants, by accepting Options in accordance with the ESOS, and theCompany submit to the exclusive jurisdiction of the courts of the Republic of Singapore.

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Schedule A


LETTER OF OFFER

Serial No:

Date:

To: NameDesignationAddress

Private and Confidential

Dear Sir/Madam,

1. We have the pleasure of informing you that, pursuant to the Changtian Employee Share OptionScheme (“ESOS”), you have been nominated to participate in the ESOS by the Committee (the“Committee”) appointed by the Board of Directors of Changtian Plastic & Chemical Limited (the“Company”) to administer the ESOS. Terms as defined in the ESOS shall have the same meaningwhen used in this letter.

2. Accordingly, in consideration of the payment of a sum of S$1.00, an offer is hereby made to grantyou an option (the “Option”), to subscribe for and be allotted Shares at the priceof S$ for each Share.

3. The Option is personal, to you and shall not be transferred, charged, pledged, assigned orotherwise disposed of by you, in whole or in part, except with the prior approval of the Committee.

4. The Option shall be subject to the terms of the ESOS, a copy of which is available for inspectionat the business address of the Company.

5. If you wish to accept the offer of the Option on the terms of this letter, please sign and return theenclosed Acceptance Form with a sum of S$1.00 not later than 5.00 p.m. onfailing which this offer will lapse.

Yours faithfully,For and on behalf ofChangtian Plastic & Chemical Limited

Name:

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Schedule B


ACCEPTANCE FORM

Serial No:

Date:

To: The Committee,Changtian Employee Share Option Scheme

Closing Date for Acceptance of Offer:

Number of Shares Offered:

Exercise Price for each Share: S$

Total Amount Payable: S$

I have read your Letter of Offer dated and agree to be bound by the terms of theLetter of Offer and ESOS referred to therein. Terms defined in your Letter of Offer shall have the samemeanings when used in this Acceptance Form.

I hereby accept the Option to subscribe for Shares at S$for each Share. I enclose cash for S$1.00 in payment for the purchase of the Option/I authorise myemployer to deduct the sum of S$1.00 from my salary in payment for the purchase of the Option.

I understand that I am not obliged to exercise the Option.

I confirm that my acceptance of the Option will not result in the contravention of any applicable law orregulation in relation to the ownership of shares in the Company or options to subscribe for suchshares.

I agree to keep all information pertaining to the grant of the Option to me confidential.

I further acknowledge that you have not made any representation to induce me to accept the offer andthat the terms of the Letter of Offer and this Acceptance Form constitute the entire agreement betweenus relating to the offer.

Please print in block letters

Name in full :

Designation :

Address :

Nationality :

*NRIC/Passport No. :

SignatureDate

Note:

* Delete accordingly

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Schedule C


FORM OF EXERCISE OF OPTION

Total number of ordinary shares of S$0.05 each (the “Shares”)offered at S$ for each Share (the “ExercisePrice”) under the ESOS on (Date of Grant)

:

Number of Shares previously allotted thereunder :

Outstanding balance of Shares to be allotted thereunder :

Number of Shares now to be subscribed :

To: The Committee,Changtian Employee Share Option Scheme

1. Pursuant to your Letter of Offer dated and my acceptance thereof, Ihereby exercise the Option to subscribe for Shares in Changtian Plastic &Chemical Limited (the “Company”) at S$ for each Share.

2. I enclose a *cheque/cashiers order/banker’s draft/postal order no. forS$ by way of subscription for the total number of the said Shares.

3. I agree to subscribe for the said Shares subject to the terms of the Letter of Offer, the ChangtianEmployee Share Option Scheme and the Memorandum of Association and the Bye-Laws of theCompany.

4. I declare that I am subscribing for the said Shares for myself and not as a nominee for any otherperson.

5. I request the Company to allot and issue the Shares in the name of The Central Depository (Pte)Limited (“CDP”) for credit of my *Securities Account with CDP/Sub-Account with the DepositoryAgent/CPF investment account with my Agent Bank specified below and I hereby agree to bearsuch fees or other charges as may be imposed by CDP in respect thereof.

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Please print in block letters

Name in full :

Designation :

Address :

Nationality :

*NRIC/Passport No :

*Direct SecuritiesAccount No.

:

OR

*Sub Account No. :

Name of DepositoryAgent

:

OR

*CPF InvestmentAccount No.

:

Name of Agent Bank :

Signature :

Date :

Note:

* Delete accordingly

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APPENDIX H

TERMS, CONDITIONS AND PROCEDURESFOR APPLICATION AND ACCEPTANCE

You are invited to apply and subscribe for and/or purchase the Invitation Shares at the Issue Price foreach Invitation Share, subject to the following terms and conditions:

1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 INVITATION SHARES ORINTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OFINVITATION SHARES WILL BE REJECTED.

2. Your application for the Offer Shares may be made by way of the printed Offer Shares ApplicationForms or by way of electronic applications through ATMs (“ATM Electronic Applications”) orthrough the IB websites of the relevant Participating Banks (“Internet Electronic Applications”which, together with ATM Electronic Applications, shall be referred to as “Electronic Applications”).

Your application for the Placement Shares may only be made by way of the Placement SharesApplication Forms.

YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE INVITATION SHARES.

3. You are allowed to submit only one application in your own name for the Offer Shares.

If you submit an application for the Offer Shares by way of an Application Form, you maynot submit another application for the Offer Shares by way of an Electronic Application andvice versa. Such separate applications shall be deemed to be multiple applications and willbe liable to be rejected at the discretion of the Company, the Vendors, the Manager or theUnderwriter and Placement Agent.

If you submit an application for the Offer Shares by way of an Internet ElectronicApplication, you may not submit another application for the Offer Shares by way of an ATMElectronic Application and vice versa. Such separate applications shall be deemed to bemultiple applications and shall be rejected.

If you (not being an approved nominee company) have submitted an application for theOffer Shares in your own name, you should not submit any other application for the OfferShares, whether by way of an Application Form or by way of an Electronic Application, forany other person. Such separate applications shall be deemed to be multiple applicationsand will be liable to be rejected at the discretion of the Company, the Vendors, the Manageror the Underwriter and Placement Agent.

You are allowed to submit only one application in your own name for the PlacementShares. Any separate applications by you for the Placement Shares shall be deemed to bemultiple applications and the Company, the Vendors, the Manager or the Underwriter andPlacement Agent have the discretion whether to accept or reject such multipleapplications.

If you, being other than an approved nominee company, have submitted an application forPlacement Shares in your own name, you should not submit any other application forPlacement Shares for any other person. Such separate applications shall be deemed to bemultiple applications and will be liable to be rejected at the discretion of the Company, theVendors, the Manager or the Underwriter and Placement Agent.

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If you have made an application for Placement Shares, and you have also made a separateapplication for Offer Shares either by way of an Application Form or through an ElectronicApplication, the Company, the Vendors, the Manager or the Underwriter and PlacementAgent shall have the discretion to either (i) reject both of such separate applications or (ii)accept any one (but not the other) out of such separate applications.

Conversely, if you have made an application for Offer Shares either by way of anApplication Form or through an Electronic Application, and you have also made a separateapplication for Placement Shares, the Company, the Vendors, the Manager or theUnderwriter and Placement Agent shall have the discretion to either (i) reject both of suchseparate applications or (ii) accept any one (but not the other) out of such separateapplications.

Joint applications shall be rejected. Multiple applications for Invitation Shares will be liableto be rejected at the discretion of the Company, the Vendors, the Manager or theUnderwriter and Placement Agent. If you submit or procure submissions of multiple shareapplications for Offer Shares, Placement Shares or both Offer Shares and PlacementShares, you may be deemed to have committed an offence under the Penal Code (Chapter224) of Singapore and the Securities and Futures Act (Chapter 289) of Singapore, and yourapplications may be referred to the relevant authorities for investigation. Multipleapplications or those appearing to be or suspected of being multiple applications may beliable to be rejected at the discretion of our Company, the Vendors, the Manager or theUnderwriter and Placement Agent.

4. We will not accept applications from any person under the age of 21 years, undischargedbankrupts, sole-proprietorships, partnerships, chops or non-corporate bodies, joint SecuritiesAccount holders of CDP and from applicants whose addresses (furnished in their printedApplication Forms or, in the case of Electronic Applications, contained in the records of therelevant Participating Banks, as the case may be) bear post office box numbers. No person actingor purporting to act on behalf of a deceased person is allowed to apply under the SecuritiesAccount with CDP in the deceased name at the time of application.

5. We will not recognise the existence of a trust. Any application by a trustee or trustees must bemade in his/their own name(s) and without qualification or, where the application is made by wayof an Application Form, in the name(s) of an approved nominee company or approved nomineecompanies after complying with paragraph 6 below.

6. WE WILL ONLY ACCEPT APPLICATIONS FROM APPROVED NOMINEE COMPANIES.Approved nominee companies are defined as banks, merchant banks, finance companies,insurance companies, licensed securities dealers in Singapore and nominee companiescontrolled by them. Applications made by persons acting as nominees other than approvednominee companies shall be rejected.

7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN ASECURITIES ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOURAPPLICATION. If you do not have an existing Securities Account with CDP in your own name atthe time of your application, your application will be rejected (if you apply by way of an ApplicationForm), or you will not be able to complete your Electronic Application (if you apply by way of anElectronic Application). If you have an existing Securities Account but fail to provide yourSecurities Account number or provide an incorrect Securities Account number in Section B of theApplication Form or in your Electronic Application, as the case may be, your application is liableto be rejected. Subject to paragraph 8 below, your application shall be rejected if your particulars,such as name, NRIC/passport number, nationality and permanent residence status and CDPSecurities Account number provided in your Application Form or in the records of the relevantParticipating Bank at the time of your Electronic Application, as the case may be, differ from those

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particulars in your Securities Account as maintained with CDP. If you possess more than oneindividual direct Securities Account with CDP, your application shall be rejected.

8. If your address as stated in the Application Form or, in the case of an ElectronicApplication, contained in the records of the relevant Participating Bank, as the case maybe, is different from the address registered with CDP, you must inform CDP of your updatedaddress promptly, failing which the notification letter on successful allotment will be sentto your address last registered with CDP.

9. We reserve the right to reject any application which does not conform strictly to theinstructions set out in the Application Form or the instructions for Electronic Applicationsand in this Prospectus or with the terms and conditions of this Prospectus, which isillegible, incomplete, incorrectly completed or which is accompanied by an improperlydrawn up or improper form of remittance. Our Company and the Vendors further reservethe right to treat as valid any applications not completed or submitted or effected in allrespects in accordance with the instructions set out in the Application Forms or theinstructions for Electronic Applications or the terms and conditions of this Prospectus,and also to present for payment or other processes all remittances at any time after receiptand to have full access to all information relating to, or deriving from, such remittances orthe processing thereof.

10. Our Company and the Vendors reserve the right to reject or to accept, in whole or in part, or toscale down or to ballot any application, without assigning any reason therefore, and our Companyand the Vendors will not entertain any enquiry and/or correspondence on our decision. This rightapplies to applications made by way of Application Forms and by way of Electronic Applications.In deciding the basis of allotment, our Company and the Vendors will give due consideration to thedesirability of allotting the Invitation Shares to a reasonable number of applicants with a view toestablishing an adequate market for the Shares.

11. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It isexpected that CDP will send to you, at your own risk, within 15 Market Days after the close of theApplication List, a statement of account stating that your Securities Account has been creditedwith the number of Invitation Shares allotted to you. This will be the only acknowledgement ofapplication monies received and is not an acknowledgement by our Company and the Vendors.You irrevocably authorise CDP to complete and sign on your behalf as transferee or renounceeany instrument of transfer and/or other documents required for the issue or transfer of theInvitation Shares allotted to you. This authorisation applies to applications made by way ofApplication Forms and by way of Electronic Applications.

You hereby consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent resident status, CDP securities account number, CDP Investment Account number (ifapplicable) and share application amount from your account with the relevant Participating Bankto the Share Registrar, SCCS, SGX-ST, CDP, CPF, our Company and the Manager.

You irrevocably authorise CDP to disclose the outcome of your application, including the numberof Invitation Shares allotted to you pursuant to your application, to our Company, the Vendors, theManager, the Underwriter, Placement Agent and any other parties so authorised by CDP, theCompany, the Vendors, the Manager, the Underwriter and/or the Placement Agent.

12. In the event that our Company lodges a supplementary or replacement prospectus pursuant to theSFA or any applicable legislation in force from time to time prior to the close of the Invitation, andthe Invitation Shares have not been issued, we are required at our sole and absolute discretionto either:

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(a) within seven days of the lodgement of the supplementary or replacement prospectus, giveyou a copy of the supplementary or replacement prospectus, as the case may be, andprovide you with an option to withdraw your application; or

(b) deem your application as withdrawn and cancelled and refund your application monies(without interest or any share of revenue or other benefit arising therefrom) to you withinseven days from the lodgement of the supplementary or replacement prospectus.

In the event that at any time of the lodgement, the Invitation Shares have already been issued buttrading has not yet commenced, we will (as required by law) at our sole and absolute discretioneither:

(a) within seven days of the lodgement of the supplementary or replacement prospectus, giveyou a copy of the supplementary or replacement prospectus, as the case may be, andprovide you with an option to return the Invitation Shares; or

(b) deem the issue of the Invitation Shares as void and, subject to compliance with the BermudaCompanies Act, refund your payment for the Invitation Shares (without interest or any shareof revenue or other benefit arising therefrom) to you within seven days from the lodgementof the supplementary or replacement prospectus.

Additional terms and instructions applicable upon the lodgement of the supplementary orreplacement instructions, including instructions on how you can exercise the option to withdrawyour application or return the Invitation Shares allotted to you, may be found in suchsupplementary or replacement prospectus.

Where an applicant has notified us within 14 days from the date of lodgement of thesupplementary or replacement prospectus of his wish to exercise his option under the SFA towithdraw his application or return the Invitation Shares allotted to him, we shall, subject tocompliance with the Bermuda Companies Act, pay him all monies paid by him on account of hisapplication for the Invitation Shares without interest or any share of revenue or other benefitarising therefrom and at his own risk, within seven days from the receipt of such notification.

13. In the event of an under-subscription for the Offer Shares as at the close of the Application List,we will make available that number of the Offer Shares under-subscribed to satisfy applicationsfor the Placement Shares to the extent that there is an over-subscription for the Placement Sharesas at the close of the Application List.

In the event of an under-subscription for the Placement Shares as at the close of the ApplicationList, we will make available that number of the Placement Shares under-subscribed to satisfyapplications for the Offer Shares to the extent that there is an over-subscription for the OfferShares as at the close of the Application List.

In the event of an over-subscription for the Offer Shares as at the close of the Application List andthe Placement Shares are fully subscribed or over-subscribed as at the close of the ApplicationList, the successful applications for the Offer Shares will be determined by ballot or otherwise asdetermined by our Directors and the Vendors and approved by the SGX-ST.

In the event of an under-subscription for the Offer Shares and/or Placement Shares as at theclose of the Application List, the number of Offer Shares and/or Placement Shares under-subscribed shall be subscribed by the Underwriter and/or the Placement Agent respectively.

14. Any reference to the “you” in this section shall include an individual, a corporation, an approvednominee and trustee applying for the Offer Shares by way of an Offer Shares Application Form orby way of an Electronic Application and a person applying for the Placement Shares through thePlacement Agent by way of a Placement Shares Application Form.

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15. By completing and delivering an Application Form or by making and completing an ElectronicApplication by (in the case of an ATM Electronic Application) pressing the “Enter” or “Ok” or“Confirm” or “Yes” key or any other relevant key on the ATM (as the case may be) or by (in thecase of an Internet Electronic Application) clicking “Submit” or “Continue” or “Yes” or “Confirm” orany other button on the IB website screen (as the case may be) in accordance with the provisionsof this Prospectus, you:

(a) irrevocably offer to subscribe for and/or purchase the number of Invitation Shares specifiedin your application (or such smaller number for which the application is accepted) at theIssue Price and agree that you will accept such Invitation Shares as may be allotted to you,in each case on the terms of, and subject to the conditions set out in, this Prospectus andthe Memorandum of Association and Bye-Laws of our Company;

(b) agree that in the event of any inconsistency between the terms and conditions for applicationand acceptance set out in this Prospectus and those set out in the IB websites or ATMs ofthe relevant Participating Banks, the terms and conditions set out in this Prospectus shallprevail;

(c) agree that the aggregate Issue Price for the Invitation Shares applied for is due and payableto our Company and the Vendors upon application;

(d) warrant the truth and accuracy of the information contained, and representations anddeclarations made, in your application, and acknowledge and agree that such information,representations and declarations will be relied on by our Company and the Vendors indetermining whether to accept your application and/or whether to allot any Invitation Sharesto you; and

(e) agree and warrant that if the laws of any jurisdictions outside Singapore are applicable toyour application, you have complied with all such laws and none of our Company, theVendors, the Manager, the Underwriter and/or the Placement Agent will infringe any suchlaws as a result of the acceptance of your application.

16. Our acceptance of applications will be conditional upon, inter alia, our Company and the Vendorsbeing satisfied that:

(a) permission has been granted by the SGX-ST to deal in, and for quotation of, all our existingShares (including the Vendor Shares), the New Shares and the Option Shares on a“when-issued” basis on the SGX-ST;

(b) the Management and Underwriting Agreement and the Placement Agreement referred tounder the heading “Management and Underwriting and Placement Arrangements” of thisProspectus have become unconditional and have not been terminated or cancelled prior tosuch date as our Company and the Vendors may determine; and

(c) the Authority has not served a stop order which directs that no further shares to which thisProspectus relates be allotted.

17. In the event that a stop order in respect of the Invitation Shares is served by the Authority or othercompetent authority; and

(a) the Invitation Shares have not been issued and/or sold, we will (as required by law) deemall applications withdrawn and cancelled and our Company (for itself as well as on behalf ofthe Vendors) shall refund the application monies (without interest or any share of revenueor other benefit arising therefrom) to you within 14 days of the date of the stop order; or

(b) if the Invitation Shares have already been issued, the issue is required to be deemed void,and our Company (for itself as well as on behalf of the Vendors) shall refund the applicationmonies (without interest or any share of revenue or other benefit arising therefrom) to youwithin 14 days of the date of the stop order; or

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(c) if the Invitation Shares have been transferred to the applicants, the sale of the InvitationShares shall be deemed void and if documents purporting to evidence title had been issuedto you, our Company (for itself as well as on behalf of the Vendors) shall within seven daysfrom the date of the Stop Order inform you to return such documents to our Company within14 days from that date; and subject to compliance with the Bermuda Companies Act, we (forourselves as well as on behalf of the Vendors) will refund the application monies (withoutinterest or any share of revenue or other benefit arising therefrom) to you within seven daysfrom the date of receipt of such documents (if applicable) or the date of the Stop Order,whichever is later.

This shall not apply where only an interim Stop Order has been served.

18. In the event that an interim Stop Order in respect of the Invitation Shares is served by the Authorityor other competent authority, no Shares shall be issued to you until the Authority revokes theinterim Stop Order.

19. We will not hold any applications in reserve.

20. We will not allot Shares on the basis of this Prospectus later than six months after the date ofregistration of this Prospectus.

21. Additional terms and conditions for application and acceptance using printed Application Formsare set out on pages H-6 to H-9 of Appendix H of this Prospectus.

22. Additional terms and conditions for Electronic Applications are set out on pages H-9 to H-14 ofAppendix H of this Prospectus.

ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS AND ACCEPTANCE USINGPRINTED APPLICATION FORMS

You shall make an application by way of Application Forms made on and subject to the terms andconditions of this Prospectus including but not limited to the terms and conditions appearing below aswell as those set out under the section on “TERMS, CONDITIONS AND PROCEDURES FORAPPLICATION AND ACCEPTANCE” on pages H-1 to H-6 of Appendix H of this Prospectus, as well asthe Memorandum of Association and Bye-Laws of our Company.

1. Your application for the Offer Shares must be made using the WHITE Offer Shares ApplicationForms and WHITE official envelopes “A” or “B” accompanying and forming part of this Prospectus.

Your application for the Placement Shares must be made using the BLUE Placement SharesApplication Forms accompanying and forming part of this Prospectus.

We draw your attention to the detailed instructions contained in the respective Application Formsand this Prospectus for the completion of the Application Forms which must be carefully followed.We reserve the right to reject applications which do not conform strictly to the instructionsset out in the Application Forms and this Prospectus or to the terms and conditions of thisProspectus or which are illegible, incomplete, incorrectly completed or which areaccompanied by improperly drawn remittances or improper form of remittances.

2. Your Application Forms must be completed in English. Please type or write clearly in ink usingBLOCK LETTERS.

3. All spaces in the Application Forms except those under the heading “FOR OFFICIAL USE ONLY”must be completed and the words “NOT APPLICABLE” or “N.A.” should be written in any spacethat is not applicable.

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4. Individuals, corporations, approved nominee companies and trustees must give their names infull. If you are an individual, you must make your application using your full name appearing inyour identity card (if you have such identification document) or in your passport and, in the caseof corporations, in your full names as registered with a competent authority. If you are anon-individual completing the Application Form under the hand of an official, you must state thename and capacity in which that official signs. If you are a corporation completing the ApplicationForm, you are required to affix your Common Seal (if any) in accordance with your memorandumand articles of association or equivalent constitutive documents. If you are a corporate applicantand your application is successful, a copy of your memorandum and articles of Association orequivalent constitutive documents must be lodged with our Company’s Share Registrar andShare Transfer Office. Our Company and the Vendors reserve the right to require you to producedocumentary proof of identification for verification purposes.

5. (a) You must complete Sections A and B and sign page 1 of the Application Form.

(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form.Where paragraph 7(a) is deleted, you must also complete Section C of the Application Formwith particulars of the beneficial owner(s).

(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be,on page 1 of the Application Form, your application is liable to be rejected.

6. You (whether you are an individual and corporate applicant, whether incorporated orunincorporated and wherever incorporated or constituted), will be required to declare whether youare a citizen or permanent resident of Singapore or a corporation in which citizens or permanentresidents of Singapore or any body corporate constituted under any statute of Singapore have aninterest in the aggregate of more than 50 per cent of the issued share capital of or interests in suchcorporations. If you are an approved nominee company, you are required to declare whether thebeneficial owner of the Invitation Shares is a citizen or permanent resident of Singapore or acorporation, whether incorporated or unincorporated and wherever incorporated or constituted, inwhich citizens or permanent residents of Singapore or any body corporate whether incorporatedor unincorporated and wherever incorporated or constituted under any statute of Singapore havean interest in the aggregate of more than 50 per cent of the issued share capital of or interests insuch corporation.

7. Your application must be accompanied by a cash remittance in Singapore currency for the fullamount payable, in respect of the number of Invitation Shares applied for, in the form of aBANKER’S DRAFT or CASHIER’S ORDER drawn on a bank in Singapore, made out in favourof “CHANGTIAN SHARE ISSUE ACCOUNT” crossed “A/C PAYEE ONLY”, with your name andaddress written clearly on the reverse side.

WE WILL NOT ACCEPT APPLICATIONS NOT ACCOMPANIED BY ANY PAYMENT ORACCOMPANIED BY ANY OTHER FORM OF PAYMENT. WE WILL REJECT REMITTANCESBEARING “NOT TRANSFERABLE” OR “NON TRANSFERABLE” CROSSINGS. Noacknowledgement or receipt will be issued by our Company, the Vendors or the Manager forapplications and application monies received.

8. Monies paid in respect of unsuccessful applications are expected to be returned (without interestor any share of revenue or other benefit arising therefrom) to you by ordinary post within 24 hoursof the balloting at your own risk. Where your application is rejected or accepted in part only, thefull amount or the balance of the application monies, as the case may be, will be refunded (withoutinterest or any share of revenue or other benefit arising therefrom) to you by ordinary post at yourown risk within 14 Market Days after the close of the Application List, provided that the remittanceaccompanying such application which has been presented for payment or other processes hasbeen honoured and the application monies have been received in the designated share issueaccount.

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9. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear themeanings assigned to them in this Prospectus.

10. By completing and delivering the Application Form in accordance with the provisions of thisProspectus, you agree that:

(a) in consideration of us and the Vendors having distributed the Application Form to you andagreeing to close the Application List at 12.00 noon on 6 November 2007 or such othertime or date as our Company and the Vendors may, in consultation with the Manager,decide and by completing and delivering the Application Form, you agree that:

(i) your application is irrevocable; and

(ii) your remittance will be honoured on first presentation and that any monies returnablemay be held pending clearance of your payment without interest or any share ofrevenue or other benefit arising therefrom;

(b) all applications, acceptances and contracts resulting therefrom under the Invitation shall begoverned by and construed in accordance with the laws of Singapore and that youirrevocably submit to the non-exclusive jurisdiction of the Singapore courts;

(c) in respect of the Invitation Shares for which your application has been received and notrejected, acceptance of your application shall be constituted by written notification and nototherwise, notwithstanding any remittance being presented for payment by or on behalf ofour Company and the Vendors;

(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application;

(e) in making your application, reliance is placed solely on the information contained in thisProspectus and none of our Company, the Vendors, the Manager, the Underwriter, thePlacement Agent or any other person involved in the Invitation shall have any liability for anyinformation not so contained;

(f) you consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent resident status, CDP Securities Account number and share application amountfrom your Bank A/C(s) with the relevant Participating Bank to our Share Registrar, SGX-ST,CDP, SCCS, CPF, our Company, the Vendors, the Manager, the Underwriter and thePlacement Agent;

(g) you irrevocably agree and undertake to subscribe for the number of Invitation Sharesapplied for as stated in the Application Form or any smaller number of such Invitation Sharesthat may be allotted to you in respect of your application. In the event that we decide to allota smaller number of Invitation Shares or not to allot any Invitation Shares to you, you agreeto accept such decision as final; and

(h) you irrevocably authorise CDP to complete and sign on your behalf as transferee orrenouncee any instrument of transfer and/or other documents required for the issue ortransfer of the Invitation Shares that may be allotted to you.

Applications for Offer Shares

1. Your application for Offer Shares MUST be made using the WHITE Offer Shares ApplicationForms and WHITE official envelopes “A” and “B”.

2. You must:

(a) enclose the WHITE Offer Shares Application Form, duly completed and signed, togetherwith your correct remittance in accordance with the terms and conditions of this Prospectusin the WHITE official envelope “A” provided;

H-8

(b) in the appropriate spaces on WHITE official envelope “A”:

(i) write your name and address;

(ii) state the number of Offer Shares applied for;

(iii) tick the relevant box to indicate the form of payment; and

(iv) affix adequate Singapore postage;

(c) SEAL THE WHITE OFFICIAL ENVELOPE “A”;

(d) write, in the appropriate box provided on the larger WHITE official envelope “B” addressedto Boardroom Corporate & Advisory Services Pte. Ltd., 3 Church Street, #08-01Samsung Hub, Singapore 049483, the number of Offer Shares you have applied for; and

(e) insert WHITE official envelope “A” into WHITE official envelope “B”, seal WHITE officialenvelope “B”, affix adequate Singapore postage on WHITE official envelope “B” (ifdespatched by ordinary post) and thereafter DESPATCH BY ORDINARY POST ORDELIVER BY HAND the documents at your own risk to Boardroom Corporate & AdvisoryServices Pte. Ltd., 3 Church Street, #08-01 Samsung Hub, Singapore 049483, so as toarrive by 12.00 noon on 6 November 2007 or such other time or date as our Companyand the Vendors may, in consultation with the Manager, decide. Local Urgent Mail orRegistered Post must NOT be used. No acknowledgement of receipt will be issued for anyapplication or remittance received.

3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation are liable to be rejected.

4. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement ofreceipt will be issued for any application or remittance received.

Applications for Placement Shares

1. Your application for Placement Shares MUST be made using the BLUE Placement SharesApplication Forms.

2. The completed and signed BLUE Placement Shares Application Form and your remittance inaccordance with the terms and conditions of this Prospectus, for the full amount payable inrespect of the number of Placement Shares you have applied for, with your name, CDP Accountnumber and address written clearly on the reverse side, must be enclosed and sealed in anenvelope to be provided by you. You must affix adequate Singapore postage on the envelope (ifdespatching by ordinary post). The sealed envelope must be DESPATCHED BY ORDINARYPOST OR DELIVERED BY HAND at your own risk to Boardroom Corporate & AdvisoryServices Pte. Ltd., 3 Church Street, #08-01 Samsung Hub, Singapore 049483, so as to arriveby 12.00 noon on 6 November 2007 or such other time or date as our Company and theVendors may, in consultation with the Manager, decide. Local Urgent Mail or RegisteredPost must NOT be used. No acknowledgement of receipt will be issued for any application orremittance received.

3. Applications which are illegible, incomplete or incorrectly completed or accompanied byimproperly drawn remittances or which are not honoured upon their first presentation are liable tobe rejected.

4. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receiptwill be issued for any application or remittance received.

H-9

ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS

The procedures for Electronic Applications at ATMs are set out on the ATM screens (in the case of ATMElectronic Applications) and the IB website screens (in the case of Internet Electronic Applications) ofthe relevant Participating Banks. Currently, DBS and the UOB Group are the only Participating Banksthrough which Internet Electronic Applications can be made. For illustration purposes, the proceduresfor Electronic Applications through ATMs and the IB website of DBS are set out respectively in the“Steps for Electronic Applications through ATMs of DBS (including its POSB ATMs)” and “Steps forInternet Electronic Applications through the IB website of DBS” (collectively, the “Steps”) appearing onpages H-15 and H-17 of Appendix H of this Prospectus.

The Steps set out the actions that you must take at an ATM or the IB website of DBS to complete anElectronic Application. The actions that you must take at the ATMs or the IB websites of the otherParticipating Banks are set out on the ATM screens or the IB website screens of the relevantParticipating Banks.

Please read carefully the terms of this Prospectus, the Steps and the terms and conditions forElectronic Applications set out below before making an Electronic Application.

Any reference to “you” in the Additional Terms and Conditions for Electronic Applications and the Stepsshall refer to you making an application for the Offer Shares through an ATM or the IB website of arelevant Participating Bank.

You must have an existing bank account with and be an ATM cardholder of one of the ParticipatingBanks before you can make an Electronic Application at the ATMs of that Participating Bank. An ATMcard issued by one Participating Bank cannot be used to apply for the Offer Shares at an ATMbelonging to other Participating Banks. Upon the completion of your ATM Electronic Applicationtransaction, you will receive an ATM transaction slip (“Transaction Record”), confirming the details ofyour ATM Electronic Application. The Transaction Record is for your retention and should not besubmitted with any Application Form.

You must ensure that you enter your own Securities Account number when using the ATM card issuedto you in your own name. If you operate a joint bank account with any of the Participating Banks, youmust ensure that you enter your own Securities Account number when using the ATM card issued toyou in your own name. Using your own Securities Account number with an ATM card which is not issuedto you in your own name will render your Electronic Application liable to be rejected.

For an Internet Electronic Application, you must have an existing bank account with and an IB UserIdentification (“User ID”) and a Personal Identification Number/Password (“PIN”) given by the relevantParticipating Bank. Upon completion of your Internet Electronic Application, there will be an on-screenconfirmation (“Confirmation Screen”) of the application which you can print out for your record. Thisprinted record of the Confirmation Screen is for your retention and should not be submitted with anyApplication Form.

Further, you must ensure, when making an Internet Electronic Application that:

(a) you are currently in Singapore at the time of making of such application;

(b) your mailing address for IB with the relevant Participating Bank is in Singapore;

(c) you are not a US person(1) (as such term is defined in Regulation S under the United StatesSecurities Act of 1933, as amended from time to time),

and you will be asked to declare the above accordingly. Otherwise, your application is liable to berejected.

Note:

(1) For details, please refer to definition of “US person” on the IB websites.

H-10

Your Electronic Application shall be made on the terms and subject to the conditions of this Prospectus,including but not limited to the terms and conditions appearing below and those set out under the sectionon “TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE” on pagesH-1 to H-6 of this Prospectus as well as the Memorandum Of Association and Bye-Laws of our Company.

1. In connection with your Electronic Application for Invitation Shares, you are required to confirmstatements to the following effect in the course of activating the Electronic Application:

(a) that you have received a copy of this Prospectus and have read, understood andagreed to all the terms and conditions of application for the Invitation Shares and thisProspectus prior to effecting the Electronic Application and agree to be bound by thesame;

(b) that you consent to the disclosure of your name, NRIC/passport number, address,nationality, permanent resident status, CDP Securities Account number, CPFInvestment Account Number (if applicable) and share application amount (the“Relevant Particulars”) from your account with that Participating Bank to the ShareRegistrar, CPF, SGX-ST, CDP, SCCS, our Company and the Manager (the “RelevantParties”); and

(c) that this is your only application and it is made in your own name and at your ownrisk.

Your application will not be successfully completed and cannot be recorded as a completedtransaction in the ATM unless you press the “enter” or “ok” or “confirm” or “yes” key or any otherrelevant key in the ATM or click “confirm” or “OK” or “Submit” or “Continue” or “Yes” or any otherrelevant button on the Internet screen. By doing so, you shall be treated as signifying yourconfirmation of each of the above three statements. In respect of statement 1(b) above, yourconfirmation, by pressing the “enter” or “ok” or “confirm” or “yes” or any other relevant key or byclicking “confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button on theInternet screen, shall signify and shall be treated as your written permission, given in accordancewith the relevant laws of Singapore including Section 47(2) of the Banking Act (Chapter 19) ofSingapore to the disclosure by that Participating Bank of your Relevant Particulars to the RelevantParties.

2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOTAPPLYING FOR THE OFFER SHARES AS A NOMINEE OF ANY OTHER PERSON AND THATANY ELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BYYOU AS BENEFICIAL OWNER.

YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION FOR THE OFFER SHARESAND SHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES, WHETHER ATTHE ATMs OR THE IB WEBSITES (IF ANY) OF ANY PARTICIPATING BANK OR ON THEAPPLICATION FORMS. IF YOU HAVE MADE AN APPLICATION FOR THE OFFER SHARESOR PLACEMENT SHARES ON AN APPLICATION FORM, YOU SHALL NOT MAKE ANELECTRONIC APPLICATION FOR THE OFFER SHARES AND VICE VERSA.

3. You must have sufficient funds in your bank account with your Participating Bank at the time youmake your Electronic Application, failing which your Electronic Application will not be completed.Any Electronic Application which does not conform strictly to the instructions set out inthis Prospectus or on the screens of the ATM or IB website through which your ElectronicApplication is being made shall be rejected.

For Offer Shares, you may make an ATM Electronic Application at the ATM of anyParticipating Bank or an Internet Electronic Application at the IB websites of the relevantParticipating Banks, using only cash by authorising such Participating Bank to deduct thefull amount payable from your account with such Participating Bank.

H-11

4. You irrevocably agree and undertake to subscribe for and/or purchase and to accept the numberof Offer Shares applied for as stated on the Transaction Record or Confirmation Screen or anylesser number of such Offer Shares that may be allotted to you in respect of your ElectronicApplication. In the event that we decide to allot any lesser number of such Offer Shares or not toallot any Offer Shares to you, you agree to accept such decision as final.

If your Electronic Application is successful, your confirmation (by your action of pressing the“Enter” or “OK” or “Confirm” or “Yes” or any other relevant key on the ATM or clicking “Confirm”or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button on the IB website screen)of the number of Offer Shares applied for shall signify and shall be treated as your acceptance ofthe number of Offer Shares that may be allotted to you and your agreement to be bound by theMemorandum of Association and Bye-Laws of our Company. You also irrevocably authorise CDPto complete and sign on your behalf as transferee or renouncee any instrument of transfer and/orother documents required for the issue or transfer of the Invitation Shares that may be allotted toyou.

5. We will not keep any applications in reserve. Where your Electronic Application isunsuccessful, the full amount of the application monies will be refunded (without interest or anyshare of revenue or other benefit arising therefrom) in Singapore currency to you by beingautomatically credited to your account with your Participating Bank at your own risk within 24hours after balloting provided that the remittance in respect of such application which has beenpresented for payment or other processes has been honoured and the application moniesreceived in the designated share issue account. Trading on a “WHEN ISSUED” basis, ifapplicable, is expected to commence after such refund has been made.

Where your Electronic Application is rejected or accepted in part only, the full amount or thebalance of the application monies, as the case may be, will be refunded (without interest or anyshare of revenue or other benefit arising therefrom) in Singapore currency to you by beingautomatically credited to your account with your Participating Bank, at your own risk within 14Market Days after the close of the Application List provided that the remittance in respect of suchapplication which has been presented for payment or other processes has been honoured and theapplication monies received in the designated share issue account.

Responsibility for timely refund of application monies arising from unsuccessful or partiallysuccessful Electronic Applications lies solely with the respective Participating Banks. Therefore,you are strongly advised to consult your Participating Bank as to the status of your ElectronicApplication and/or the refund of any monies to you from unsuccessful or partially successfulElectronic Application, to determine the exact number of Invitation Shares allotted to you beforetrading the Invitation Shares on the SGX-ST. Neither the SGX-ST, the CDP, the SCCS, theParticipating Banks, our Company, the Vendors, the Manager, the Underwriter and the PlacementAgent assume any responsibility for any loss that may be incurred as a result of you having tocover any net sell positions or from buy-in procedures activated by the SGX-ST.

6. If your Electronic Application is made through the ATMs of one of the Participating Banks, and isunsuccessful, no notification will be sent by such Participating Bank.

If your Internet Electronic Application made through the IB website of DBS or UOB Group isunsuccessful, no notification will be sent by such Participating Bank.

H-12

If you make Electronic Applications through the ATMs of the following banks, you may check theresults of your Electronic Applications as follows:

Bank Telephone Available at Operating Hours

Serviceexpectedfrom

DBS 1800 339 6666(for POSB accountholders)

1800 111 1111(for DBS Bankaccount holders)

Internet Bankinghttp://www.dbs.com(1)

24 hours Evening of theballoting day

UOB Group 1800 222 2121 ATM (Other Transactions —“IPO Enquiry”)

http://www.uobgroup.com(1)(2)

ATM/Phone Banking24 hours

Internet Banking24 hours

Evening of theballoting day

OCBC 1800 363 3333 ATM/Phone Banking/Internet Banking/http://www.ocbc.com(3)

24 hours Evening of theballoting day

Notes:

(1) If you make your Internet Electronic Applications through the IB website of DBS or UOB Group, you may check theresult through the same channels listed in the table above in relation to ATM Electronic Applications made at ATMsof DBS or the UOB Group.

(2) If you make your Electronic Application through the ATMs or IB website of the UOB Group, you may check the resultsof your application through UOB Personal Internet Banking, UOB Group’s ATMs or UOB Phone Banking Services.

(3) If you make your Electronic Application through the ATMs of OCBC Bank, you may check the results of yourapplication through the same channels listed in the table above.

7. Electronic Applications shall close at 12.00 noon on 6 November 2007 or such other time or dateas our Company and the Vendors may, in consultation with the Manager, decide. Subject toparagraph 9 below, your Internet Electronic Application is deemed to be received when it entersthe designated information system of the relevant Participating Bank.

8. You are deemed to have irrevocably requested and authorised us and the Vendors to:

(a) register the Offer Shares or Placement Shares, as the case may be, allotted to you in thename of CDP for deposit into your Securities Account;

(b) send the relevant Share certificate(s) to CDP;

(c) return or refund (without interest or any share of revenue earned or other benefit arisingtherefrom) the application monies in Singapore currency, should your Electronic Applicationbe unsuccessful, by automatically crediting your bank account with your Participating Bankwith the relevant amount at your risk, within 24 hours of the balloting; and

(d) return or refund (without interest or any share of revenue or other benefit arising therefrom)the balance of the application monies in Singapore currency, should your ElectronicApplication be accepted in part only, by automatically crediting your bank account with yourParticipating Bank with the relevant amount at your risk, within 14 Market Days after theclose of the Application List.

9. You irrevocably agree and acknowledge that your Electronic Application is subject to risks ofelectrical, electronic, technical and computer-related faults and breakdowns, fires, acts of Godand other events beyond the control of the Participating Banks, our Company, the Vendors, theManager, the Underwriter, the Placement Agent, CDP, and if, in any such event, our Company, the

H-13

Vendors, the Manager, the relevant Participating Bank and/or CDP do not record or receive yourElectronic Application, or data relating to your Electronic Application or the tape or any otherdevices containing such data is lost, corrupted or not otherwise accessible, whether wholly orpartially for whatever reason, you shall be deemed not to have made an Electronic Application andyou shall have no claim whatsoever against our Company, the Vendors, the Manager, theUnderwriter, the Placement Manager, the relevant Participating Bank and/or CDP for the InvitationShares applied for or for any compensation, loss or damage.

10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must bemade in your own name and without qualification. Our Company and the Vendors will reject anyapplication by any person acting as nominee (other than approved nominee companies).

11. All your particulars in the records of your Participating Bank at the time you make your ElectronicApplication shall be deemed to be true and correct and your Participating Bank and the RelevantParties shall be entitled to rely on the accuracy thereof. If there has been any change in yourparticulars after making your Electronic Application, you shall promptly notify your ParticipatingBank.

12. You should ensure that your personal particulars as recorded by both CDP and therelevant Participating Bank are correct and identical, otherwise, your ElectronicApplication is liable to be rejected. You should promptly inform CDP of any change in address,failing which the notification letter on successful allotment will be sent to your address lastregistered with CDP.

13. By making and completing an Electronic Application, you are deemed to have agreed that:

(a) in consideration of our Company and the Vendors making available the ElectronicApplication facility, through the Participating Banks acting as agents of our Company and theVendors, at the ATMs and the IB websites of the relevant Participating Banks (if any):

(i) your Electronic Application is irrevocable; and

(ii) your Electronic Application, the acceptance of our Company, the Vendors and thecontract resulting therefrom under the Invitation shall be governed by and construed inaccordance with the laws of Singapore and you irrevocably submit to the non-exclusivejurisdiction of the Singapore courts;

(b) none of our Company, the Vendors, the Manager, the Underwriter, the Placement Agent, theParticipating Banks or CDP shall be liable for any delays, failures or inaccuracies in therecording, storage or in the transmission or delivery of data relating to your ElectronicApplication to us or CDP due to breakdowns or failure of transmission, delivery orcommunication facilities or any risks referred to in paragraph 9 above or to any causebeyond their respective controls;

(c) in respect of the Offer Shares for which your Electronic Application has been successfullycompleted and not rejected, acceptance of your Electronic Application shall be constitutedby written notification by or on behalf of our Company and the Vendors and not otherwise,notwithstanding any payment received by or on behalf of our Company and the Vendors;

(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application; and

(e) reliance is placed solely on information contained in this Prospectus and that none of ourCompany, the Vendors, the Manager, the Underwriter, the Placement Agent nor any otherperson involved in the Invitation shall have any liability for any information not so contained.

H-14

Steps for Electronic Applications through ATMs of DBS (including its POSB ATMs)

Instructions for ATM Electronic Applications will appear on the ATM screens of the respectiveParticipating Bank. For illustration purposes, the steps for making an ATM Electronic Applicationthrough a DBS or POSB ATM are shown below. Certain words appearing on the screen are inabbreviated form (“A/c”, “amt”, “appln”, “&”, “I/C” “SGX”, “No.” and “Max” refer to “Account”, “amount”,“application”, “and”, “NRIC” “SGX-ST”, “Number” and “Maximum” respectively. Instructions for ATMElectronic Applications on the ATM screens of Participating Banks (other than DBS (including POSBATMs)), may differ slightly from those represented below.

Step 1 : Insert your personal DBS or POSB ATM Card

2 : Enter your Personal Identification Number

3 : Select “MORE SERVICES”

4 : Select “ESA-IPO SHARE”

5 : Select “ELECTRONIC SECURITY APPLN (IPOS/BOND/ST-NOTES/SECURITIES)”

6 : Read and understand the following statements which will appear on the screen:

• THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN,OR ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT ORPROFILE STATEMENT (AND IF APPLICABLE, A COPY OF THEREPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT ORPROFILE STATEMENT) WHICH CAN BE OBTAINED FROM ANY DBS/POSBBRANCH IN SINGAPORE AND, WHERE APPLICABLE, THE VARIOUSPARTICIPATING BANKS DURING BANKING HOURS, SUBJECT TOAVAILABILITY.

• (IN THE CASE OF SECURITIES OFFERING THAT IS SUBJECT TO APROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENTREGISTERED WITH THE MONETARY AUTHORITY OF SINGAPORE) ANYONEWISHING TO ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES)SHOULD READ THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT(AS SUPPLEMENTED OR REPLACED, IF APPLICABLE) BEFORESUBMITTING HIS APPLICATION WHICH WILL NEED TO BE MADE IN THEMANNER SET OUT IN THE PROSPECTUS/DOCUMENT OR PROFILESTATEMENT (AS SUPPLEMENTED OR REPLACED, IF APPLICABLE). A COPYOF THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT, AND IFAPPLICABLE, A COPY OF THE REPLACEMENT OR SUPPLEMENTARYPROSPECTUS/DOCUMENT OR PROFILE STATEMENT HAS BEEN LODGEDWITH AND REGISTERED BY THE MONETARY AUTHORITY OF SINGAPOREWHO ASSUMES NO RESPONSIBILITY FOR ITS OR THEIR CONTENTS.

• PRESS THE “ENTER” KEY TO CONFIRM THAT YOU HAVE READ ANDUNDERSTOOD.

7 : Select “CHANGTIAN” to display details.

H-15

8 : Press the “ENTER” key to acknowledge:

- YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF THEAPPLICATION AND PROSPECTUS/DOCUMENT OR PROFILE STATEMENT,AND IF APPLICABLE, THE REPLACEMENT OR SUPPLEMENTARYPROSPECTUS/DOCUMENT OR PROFILE STATEMENT.

- YOU CONSENT TO DISCLOSE YOUR NAME, NRIC/PASSPORT NO.,ADDRESS, NATIONALITY, CDP SECURITIES A/C NO., CPF INVESTMENT A/CNO. AND SECURITY APPLICATION AMOUNT FROM YOUR BANK A/C(S) TOSHARE REGISTRARS, SGX, SCCS, CDP, CPF AND THE ISSUER/VENDOR(S).

- FOR FIXED AND MAX PRICE SECURITY APPLICATION, THIS IS YOUR ONLYAPPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR OWNRISK.

- THE MAXIMUM PRICE FOR EACH SHARE IS PAYABLE IN FULL ONAPPLICATION AND SUBJECT TO REFUND IF THE FINAL PRICE IS LOWER.

- FOR TENDER SECURITY APPLICATIONS, THIS IS YOUR ONLYAPPLICATION AT THE SELECTED TENDER PRICE AND IT IS MADE IN YOUROWN NAME AND AT YOUR OWN RISK.

- YOU ARE NOT A US PERSON AS REFERRED TO IN THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT AND IF APPLICABLE, THEREPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT ORPROFILE STATEMENT.

- THERE MAY BE A LIMIT ON THE MAXIMUM NUMBER OF SECURITIES THATYOU CAN APPLY FOR SUBJECT TO AVAILABILITY, YOU MAY BE ALLOCATEDA SMALLER NUMBER OF SECURITIES THAN YOU APPLIED FOR OR (IN THECASE OF AN EARLIER CLOSURE UPON FULL SUBSCRIPTION) YOURAPPLICATION MAY BE REJECTED IF ALL THE AVAILABLE SECURITIES HAVEBEEN FULLY ALLOCATED TO EARLIER APPLICANTS.

9 : Select your nationality.

10. : Select your payment method (i.e. by cash, CPF Funds, or a combination of cash andCPF Funds).

11 : Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSBaccount (Current/Savings) from which to debit your application monies.

12 : Enter the number of securities you wish to apply for using cash

13 : Enter the number of securities you wish to apply for using CPF Funds (if applicable).

14 : Enter or confirm (if your CDP Securities Account number has already been stored inDBS Bank’s records) your own 12-digit CDP Securities Account number (Note: Thisstep will be omitted automatically if your Securities Account number has already beenstored in DBS’s records).

15 : Check the details of your securities application, your NRIC or passport number andCDP Securities Account number and number of securities on the screen and press the“ENTER” key to confirm application.

16 : Remove the Transaction Record for your reference and retention only.

H-16

Steps for Internet Electronic Applications through the IB website of DBS

For illustrative purposes, the steps for making an Internet Electronic Application through the IB websiteof DBS is shown below. Certain words appearing on the screen are in abbreviated form (“A/C”, “amt”,“&”, “I/C”, “SGX” and “No.” refer to “Account”, “amount”, “and”, “NRIC”, “SGX-ST” and “Number”respectively).

Step 1 : Click on to DBS website (http://www.dbs.com)

2 : Login to Internet Banking.

3 : Enter your User ID and PIN.

4 : Select “Electronic Security Application (ESA)”.

5 : Click “Yes” to proceed and to warrant, among others, that you are currently inSingapore, you have observed and complied with all applicable laws and regulationsand that your mailing address for DBS Internet Banking is in Singapore and that you arenot a US person (as such term is defined in Regulation S under the United SecuritiesAct of 1933, amended).

6 : Select your country of residence and click “I Confirm”.

7 : Click on “CHANGTIAN” and click the “Submit” button.

8 : Click on “Confirm” to confirm, among others:

(1) You have read, understood and agreed to all terms of this application and theProspectus/Document or Profile Statement and if applicable, the Supplementaryor Replacement Prospectus/Document or Profile Statement.

(2) You consent to disclose your name, NRIC or Passport No., address, nationality,CDP Securities A/C No., CPF Investment A/C No. (if applicable) and securitiesapplication amount from your DBS/POSB Accounts(s) to registrars of securities,SGX, SCCS, CDP, CPF Board and issuer/vendor(s).

(3) You are not a U.S. person (as such term is defined in Regulation S under theUnited States Securities Act of 1933, as amended).

(4) You understand that the securities mentioned herein have not been and will not beregistered under the United States Securities Act of 1933 as amended (the “USSecurities Act”) or the securities laws of any state of the United States and may notbe offered or sold in the United States or to, or for the account or benefit of any “USperson” (as defined in Regulation S under the US Securities Act) except pursuantto an exemption from or in a transaction subject to, the registration requirementsof the US Securities Act and applicable state securities laws. These will be nopublic offer of the securities mentioned herein in the United States. Any failure tocomply with this restriction may constitute a violation of the United Statessecurities laws;

(5) This application is made in your own name and at your own risk.

(6) For FIXED/MAX price securities application, this is your only application. ForTENDER price securities application, this is your only application at the selectedtender price.

9 : Fill in details for securities application and click “Submit”.

10 : Check the details of your securities application, your NRIC or passport number and click“OK” to confirm your application.

11 : Print the Confirmation Screen (optional) for your reference and retention only.

H-17

PROSPECTS

Adhesive tapes

> Sustained demand underpinned by the positive economic development in the PRC

Release Papers

> Opportunities to expand product range by adding a new release paper product offering – the UV PEcured release film

> Production process of UV PE cured release film is less expensive and incurs less wastage> Significant market potential for UV cured PE release film produced in the PRC, in view of lower cost

base with quality assurance as compared to the overseas manufacturers

BOPA film

> Rising affluence of the population and the increasing pace of lifestyle in the PRC will lead to arise in consumer preference for convenience foods

> BOPA film is an ideal element in food packaging – better appearance, longer shelf life of products,minimises loss of aroma and has better packaging strength

> Currently, our BOPA film sales are limited by our production capacities• Our Directors believe that there are opportunities for growth in our BOPA film segment and

we will seek to expand our production capacity

2-A2MPS

> More industries are adopting the use of 2-A2MPS as a raw material, including the textile(spinning and dyeing), plastic, paper manufacturing, coating materials, waste water treatmentand oil and gas extraction industries

> Currently only selling our 2-A2MPS product to customers in the oil industry and water treatmentindustry as we are limited by our production capacity

> Output of 2-A2MPS in the PRC is insufficient to meet the increasing demand• Based on our Directors’ market understanding, the usage of 2-A2MPS by various industries in

the PRC will increase by 20% to 30% annually, thereby driving the growth in this segment

Strong brand recognition

> Built up substantial brand goodwill and trackrecord for and brand names overthe years

> Recognition is synonymous with our track recordand market reputation in the industry, andassociated with the quality and reliability of ourproducts

Wide range of products

> Four main products targeted at different industries,each with a wide range of applications

> BOPA film is widely used in various forms ofpackaging and 2-A2MPS is an important chemicalproduct in many different industries

Established track record and customer base

> Built up customer base from approximately233 in FY2004 to approximately 286 in FY2006

> Sales to repeat customers accounted for morethan 98.7% of total revenue in FY2006

> Reliability and long-term relationships withcustomers are testimony to our reputation andtrack record

Competitive pricing

> Developed own glue formula for adhesive tapesand release papers, thereby achieving costefficiency which translates to competitive prices

> We are one of a few 2-A2MPS producers in thePRC, and we believe we are able to provide morecompetitively priced quality 2-A2MPS

Experienced management team

> Yang Qingjin, our Chairman and Executive Director,has been in the adhesive tapes and release papersindustry for more than 20 years

> Each of our Executive Directors has more than 5years of experience in the industries related to ourGroup’s products

ADHESIVETAPES

�RELEASEPAPERS

�BOPAFILM

�2-A2MPS

COMPETITIVESTRENGTHS


ADHESIVETAPES

�RELEASEPAPERS

�BOPAFILM

�2-A2MPS

BUSINESSSTRATEGIES

AND FUTUREPLANS

Expansion of BOPA film production capacity

> Install one additional BOPA film production line, to increase production capacity from 5,400 tonnesto 10,800 tonnes per annum• Production to commence in third quarter of 2008

Expansion of range of release papers

> Commission and install a UV cured release film production line, with a production capacity of 3,000tonnes per annum• Production to commence in fourth quarter of 2008

Expansion of 2-A2MPS production capacity

> Install one additional 2-A2MPS production line, to increase production capacity from 1,500 tonnesto 3,000 tonnes per annum• Production to commence in fourth quarter of 2008





ADHESIVETAPES

�RELEASEPAPERS

�BOPAFILM

�2-A2MPS










T 86-592-6517000F 86-592-6519700

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OVERVIEW




OUR BUSINESS

Adhesive Tapes


Release Papers


BOPA film


2-A2MPS



FIN

AN

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IGH

LIG

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0

100

200

300

400

500

600


0

20

40

60

80

100

120

140

160

3 monthsended 31

March2006

3 monthsended 31

March2007

FY2004 FY2005 FY2006

223

412

540

117151

CAGR56%

30%


FY2006


BOPA Film

Release Papers

2-A2MPS

Adhesive Tapes

BOPA Film

Release Papers

2-A2MPS

Adhesive Tapes

50%

24%

19%

7%

44%

22%

27%


CH

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PL

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149

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CAGR84%

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Manager

3 monthsended 31

March2006

3 monthsended 31

March2007



