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Corporate Presentation

March 2012. Corporate Presentation. Disclaimer.

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Corporate Presentation

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  1. March 2012 Corporate Presentation

  2. Disclaimer By accepting and reviewing this presentation, the recipient hereof represents and warrants that he is entitled to receive such presentation in accordance with the restrictions set forth below and agrees to be bound by the limitations contained herein. Any failure to comply with these limitations may constitute a violation of law. This presentation is strictly confidential and is being supplied to you strictly on the basis that it will remain confidential. No part of this presentation may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of the Company. This presentation has been prepared by SYNERTONE COMMUNICATION CORPORATION (“Synertone”, “us” or the “Company”) and have not been independently verified. This presentation is general in nature and has been prepared for information purposes only and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this presentation. The information and opinions in this presentation are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments thereof. No representation, guarantee or warranty, expressed or implied, is made and no reliance should be placed on the adequacy, accuracy, fairness or completeness, reliability of the information presented or contained in these materials. The Company, the Sole Global Coordinator, and the Sole Bookrunner and their respective directors, supervisors, officers, employees, or any of its affiliates, advisers or representatives accepts no liability in any manner and whatsoever for any consequence (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) howsoever arising from any information presented or contained herein. The information presented or contained herein is subject to change without notice and are subject to change without notice. The Company, the Sole Global Coordinator, and the Sole Bookrunner have no obligation to update any opinion or the information in this presentation This presentation contains forward-looking statements which are subject to risks and uncertainties. The opinions and forward-looking statements herein with respect to the Company and other matters, such as the China’s economy and the specialized communication system market, are derived from official government publications and industry sources and a report commissioned by CCID Consulting Company Limited, independent third party, and data and sources believed to be correct and reliable at the time of issue of this presentation. The forward-looking statements are subject to a number of known and unknown factors, including factors beyond the Company’s control, which may cause the Company’s actual results or performance to differ materially from those expressed or implied by such opinions or forward-looking statements. No unreasonable reliance shall be placed on the forward-looking statements. The Company, the Sole Global Coordinator and the Sole Bookrunner, and their respective directors, supervisors, officers, employees, affiliates, advisers and representatives undertake no obligation to update such opinions or forward-looking statements for events or circumstances that occur after the date of the presentation This presentation is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to any law, regulation, rule or other registration or licensing requirement. Our Offer Shares are not being registered under the U.S. Securities Act of 1933 (as amended) or any state securities laws of the United States and may not be offered or sold in the United States absent registration under the 1933 Securities Act or an exemption from such registration if available. However, our Offer Shares are being offered and sold outside the US in reliance on Regulation S and within the IS to QIBs in reliance on Rule 144A.The Company does not intend to register any portion of the Global Offering in the United States or to conduct a public offering in the United States. In Hong Kong, no shares of the Company may be offered to the public unless a prospectus in connection with the offering for sale or subscription of such shares has been authorized by The Stock Exchange of Hong Kong Limited for registration by the Registrar of Companies under the provisions of the Companies Ordinance (Cap. 32 of the Laws of Hong Kong), and has been so registered. Otherwise, without due registration, a prospectus must not be distributed, issued or circulated in Hong Kong except to professional investors as defined under Schedule 1 of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and any rules made thereunder.

  3. Management Wong Chit On Founder, Chairman & Executive Director Lu Zhijie Executive Director TianHua Chen Finance and AccountsGeneral Manager Fan Zhiwen Vice President

  4. Contents • Listing Details • Company Overview • Market Condition • Competitive Strength • Financial Performance • Use of Proceeds • Future Development Strategy • Investment Highlights

  5. Listing Details

  6. Company Overview

  7. Overview Introduction Products Customer • System Integrators • Distributors • Direct customers: governmental bodies and business enterprises • covering 13 provinces, 3 municipality and 1 autonomous region in PRC • Founded in 2001 in HK • A total of 344 employees nationwide • 171 professionals in R&D • Net asset reaching RMB $187million • For public safety and emergency communication purposes • Digital trunking system • VSAT Satellite system • Operation Integrated system Strive to Provide More Value-added Services to Customer • Founded in 2001 by chairman Mr. Wong Chit On

  8. Our Business Create a Better Communications Network After-sale Service R&D Production Training Engineering

  9. Comprehensive Product Offering Digital Trunking Communication System VSAT Satellite Communication System Operation Integrated System

  10. Total Solution

  11. Achievement

  12. Post-IPO Shareholding Structure Controlling Shareholder Senior Management & Directors Investors Public 1.5% 67.5% 6% 25% The Company (Cayman Islands) Synertone Group (Hong Kong) Radio World (BVI) Vastsuccess (BVI) Synertone Wireless (HK) SCL (HK) SynertoneSmartend (PRC) SynertoneSoontend (PRC) * 100% shareholding unless otherwise stated

  13. Market Condition

  14. Favourable Industry Environment Favourable factors for Development of the Industry • The support of Chinese government sustains steady development • Increasing investment from some existing and new industries in China • Increasing emphasis on emergency communications in China • Emerging overseas markets Rapid Development in China Market Rapid Development in China Market • Third quarter of 2011 • Strong demand in fields including public security, airport, railway and underground in China • Customer bases of specialized communication system in China can be broadly categorized into such as government sector; infrastructure services and large-scale enterprises Source: CCID

  15. Market Analysis of the Industry Products Structure of Specialized Communication Systems in PRC in Q3 2011 Source: CCID Satellite Communication System in China (2005 to Q3 2011) Trunking Communication System in China (2005 to Q3 2011) Billion (RMB) Billion (RMB) Source: CCID Source: CCID

  16. Development Trend of the Industry Source: CCID Specialized Communication System Trunking Communications System Satellite Communication System Market Composition of Specialized Communication System in China from 2011 to 2013 Source: CCID Source: CCID

  17. Competitive Strength

  18. An Integrated Service Provider 3. Component Procurement, Manufacture and Quality Control 2. Product R&D and Customerized Network Design 1. Market Research and Preliminary Product Design 4. Operation System Integration and Delivery 5. Installation Training and Technical Support 6. After-sales Services and Warranty

  19. Strong Technical Know-how & Track Record of Success Products Developed to Meet Customer Requirements Close Customer Relationships • Maintained one to nine years of business relationship with its major customers • In 2003, launched CITONE digital trunking mobile communication system • In 2005, launched the CITONE digital trunking mobile communication system • In 2008, launched WITONE digital trunking mobile communication system • In 2010, developed and first sold DITONE digital trunking mobile communication system Products Used in High Profile National Events • Sichuan earthquake • The World Expo 2010 • 16th Asian Game • Beijing Olympic Games

  20. Strong R&D Capabilities Team of 171 R&D staff Registered 4 patents and 65 softwares Applied for 2 additional patents Synertone Smartend and Synertone Soontend have both been accredited as “Advanced Technology Enterprise” In 2010, Synertone became a member of the Professional Digital Trunking System Industry Alliance

  21. Comprehensive After-sales Services System Integrators and Distributors Direct Customers • Training relating to use and repair of products • Technical support • System and network testing • Equipment repair • Maintenance services • System installation • Technical support • Repair and maintenance Enable Synertone to Secure More Business and Gather Information from Existing Customers

  22. Professional & Experienced Management Mr. Wong Chit On Chairman, CEO, Founder Over 12 years of experience in the specialized communication industry Responsible for company’s overall corporate strategy, expansion and investment decisions Adjunct professor of Harbin Institute of Technology Shenzhen Graduate School Committee member of electronics and communications specialist working committee of Shenzhen City Specialist Working Association in 2005-2009 2009 Outstanding and Innovation Entrepreneur in China Standing supervisor of the China Users Association for Communications Broadcasting & Television in 2010

  23. Professional & Experienced Management • Mr. Lu Zhijie -Executive Director • Solid experience in technology business and qualification in communication • Received education in engineering management at Guangxi Radio and TV University in PRC • Mr. Han Weining-Executive Director • Elected as a member of the Institution of Engineers in Australia in 1994 • Obtained Master Degree in Engineering from Zhejiang University in PRC • Ms. Ni YunZi -Executive Director • Over 7 years of experience in management • Received her education in Party School of the Zhejiang Committee of The CCP, Zhejiang School of Administration, major in executive management • Mr. Fan Zhiwen-Vice President • Over 8 years of experience in quality assurance • Obtained post-graduate certificate of telecommunications management from Sheridan College Institute of Technology and Advance Learning • Mr. Tian Hua Chen –Finance & Accounts General Manager • In charge of the overall financial and accounting affairs • Has over 6 years experience in financial planning and management • Obtained Doctoral Degree in Economics in Western Countries in Huazhong University of Science and Technology

  24. Benefits from Government Policies • The 12th five-year plan aims to provide strong support to the satellite communication industry • Government announced to invest a total of RMB1,600 billion in mega infrastructure projects such as railway, highway and airport • Government’s intention to improve the communication system of government sectors and public security • Increased the demand for informatization in public security, railway and city management • Demand for specialized communication system and ancillary products is expected to increase in the near future

  25. Financial Performance

  26. Financial Highlights Growth for 3 Financial Years • 2009 –2011 Revenue CAGR: 11% • 2009 –2011 Operating Profit CAGR: 29% • 2009 –2011 Net Profit CAGR: 31% • 2009 –2011 EBITDA CAGR: 28% • 7 months ended 31 Oct 2011 • Gross Profit Margin: 59% • Operating Profit Margin: 30% • Net Profit Margin: 19% • Financial year-ended 31 Mar in 2011 • Gross Profit Margin: 65% • Operating Profit Margin: 45% • Net Profit Margin: 33% High Profit Margin ExtensiveSalesChannel • Co-operation with system integrators and distributors • Growth with the direct sales to end-users

  27. Substantialgrowthinourtop-line Revenue breakdown by categories Revenue breakdown by sales channel HK$’ million HK$’ million CAGR: 11% 218.8 214.4 214.4 161.6 161.6 102.4 102.4

  28. Profit Highlight Gross Profit and Margin Operating Profit and Margin HK$’ million Gross Profit Margin % Operating Profit Margin % HK$’ million CAGR: 13% CAGR: 29% EBITDA Net Profit and Net Profit Margin HK$’ million HK$’ million Net Profit Margin % CAGR: 28% CAGR: 31%

  29. Profitability at a glance Gross Profit Margin by categories Gross Profit %

  30. Our Strong Balance Sheet

  31. User of Proceeds

  32. Use of Proceeds Net Proceeds R&D Investment

  33. Future Development Strategy

  34. Focused Growth Strategy Expand sales network and market share in the PRC Strength R&D capability and product quality, functionality & network design Penetrate Overseas Market Develop new products to meet market demand Promote better awareness of products & services

  35. Investment Highlights

  36. Investment Highlights 1 An integrated total solution provider in the specialized communication industry in the PRC which has developed its own standards of specialized communication system 2 Strong research and development capabilities and owns various intellectual property rights in its business operation 3 Deep understanding of the requirements and needs of customers and close relationship with customers 4 Strong capability in VSAT satellite business and close collaborations with key players in the market 5 Provides comprehensive after-sales and maintenance services 6 Professional and experienced management team 7 Benefits from the government policies

  37. Thank you! Open Forum

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