Smith Street Introduction 200911 Fs27 En

Problems Projects People Solutions

November 2009www.smithstreetsolutions.com

“ Unlocking China’s Talent and Information ”

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Service Offerings

SmithStreetSolutions is a China-based Consulting and Advisory firm that provides services to clients around the world.

� Our diverse skill sets, language competencies and industry experience enable our team to collect, collaborate, analyze and organize information to deliver superior solutions

� Our solutions provide the flexibility for clients to focus on their core competencies and scale their business while effectively managing their cost structure and allocation of resources

� International presence of senior management allows for immediate attention to each client’s unique needs

� Our diverse skill sets, language competencies and industry experience enable our team to collect, collaborate, analyze and organize information to deliver superior solutions

� Our solutions provide the flexibility for clients to focus on their core competencies and scale their business while effectively managing their cost structure and allocation of resources

� International presence of senior management allows for immediate attention to each client’s unique needs

� Investment Opportunity Identification

� Industry Research & Company Profiles

� Strategic / Operational / Investment Related Due Diligence

� Valuation Analysis including 409A and FAS 157 Quarterly Valuations for Portfolio Companies

� M&A Advisory

� Financial Modeling

� Financial Document Translation – Chinese (Traditional & Simplified), Japanese, Korean

� Investment Opportunity Identification

� Industry Research & Company Profiles

� Strategic / Operational / Investment Related Due Diligence

� Valuation Analysis including 409A and FAS 157 Quarterly Valuations for Portfolio Companies

� M&A Advisory

� Financial Modeling

� Financial Document Translation – Chinese (Traditional & Simplified), Japanese, Korean

� Market & Business Research

� Primary Research

� Pharmaceutical Research

� Competitive Intelligence

� Data Analysis

� Sales & Marketing Analysis

� Media Monitoring

� China Market Entry / Feasibility

� Market & Business Research

� Primary Research

� Pharmaceutical Research

� Competitive Intelligence

� Data Analysis

� Sales & Marketing Analysis

� Media Monitoring

� China Market Entry / Feasibility

Investment Research & AnalyticsInvestment Research & AnalyticsInvestment Research & Analytics Market ResearchMarket ResearchMarket Research

“ Managing across time, distance and culture ”“ Managing across time, distance and culture ”

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Solutions Provided to Financial Services Clients

Our clients can attest to our ability to produce high-quality work outputs – with fast turnaround times – which provide real value to their businesses.

ClientClient Service ProvidedService Provided Client's RequestClient's Request SmithStreet SmithStreet ––> Solutions > Solutions

Leading PE firm � Industry Research� Investment Opportunity

Identification� Market Entry Feasibility� Company Profiles� English-to-Chinese Translation

� Evaluate investment opportunities and competitive landscape of select industries in China

� Delivered a comprehensive report outlining global and domestic trends, regulatory environment, and key competitor profiles

Global Financial Advisory Firm � Offshore Analyst Staffing� Business Research� Data Cleansing, Analysis and

Modeling

� Provide flexible staffing of qualified business analysts to support US-based engagement team from offshore

� Staffed fully-managed and dedicated resources to execute research and analyses, providing the flexibility to scale up or down the offshore team based on workload during each project phase

Multinational Industrial Products Corporation

� M&A Advisory� Client Liaison / Intermediary� English-to-Chinese Translation

� Facilitate the acquisition of a Chinese industrial products company (including manufacturing facilities, sales teams, trademarks and licenses)

� Guided the client through business, legal and cultural aspects of acquiring a Chinese firm

� Acted as an intermediary to find resolutions to disagreements

Boutique Investment Bank � Industry Research� Investment Opportunity

Identification

� Recommend attractive retail chains in second- and third-tier cities in China based on specific investment criteria

� Engaged in both primary and secondary research to identify potential target companies meeting investment criteria

� Facilitated initial negotiations between potential targets’management and client

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SmithStreetSolutions – Senior Management

Our leadership is made up of experienced consulting and financial services professionals with in-depth experience and successful track records across industries.

Franklin Yao – Chief Executive Officer

Franklin has spent his career advising Financial Services, Insurance, and Professional Services organizations in both Asia and North America in the areas of investment strategy, China market entry, offshoring and outsourcing, analytics, business strategy, operations reengineering, and strategic sourcing.

Previously, Franklin was at the global consulting firm Opera Solutions, where he managed the day-to-day operations of the Shanghai office and oversaw an eight-fold growth in its size. Prior to Opera Solutions, Franklin was a strategy consultant at the Mitchell Madison Group, Cap Gemini Ernst & Young, and Inductis. In addition to his work at SmithStreetSolutions, Franklin is a Partner at Glocal Strategy, China’s leading PR agency; a Strategy Advisor for JUCCCE, a joint US-China NGO for clean energy development; and Deputy Chairman of the Shanghai Yangpu High-Tech District Overseas Chinese Committee.

Franklin received a B.A. in Economics and in East Asian Studies from Yale University.

Franklin Yao – Chief Executive Officer

Franklin has spent his career advising Financial Services, Insurance, and Professional Services organizations in both Asia and North America in the areas of investment strategy, China market entry, offshoring and outsourcing, analytics, business strategy, operations reengineering, and strategic sourcing.

Previously, Franklin was at the global consulting firm Opera Solutions, where he managed the day-to-day operations of the Shanghai office and oversaw an eight-fold growth in its size. Prior to Opera Solutions, Franklin was a strategy consultant at the Mitchell Madison Group, Cap Gemini Ernst & Young, and Inductis. In addition to his work at SmithStreetSolutions, Franklin is a Partner at Glocal Strategy, China’s leading PR agency; a Strategy Advisor for JUCCCE, a joint US-China NGO for clean energy development; and Deputy Chairman of the Shanghai Yangpu High-Tech District Overseas Chinese Committee.

Franklin received a B.A. in Economics and in East Asian Studies from Yale University.

Robin Kerawala – Chief Operating Officer

Robin has been advising his North American clients in the areas of strategic procurement and outsourcing over the past 10 years. He has served clients in the financial services, professional services, manufacturing and government sectors.

Previously, Robin was an Engagement Manager at Mitchell Madison Group where he delivered significant cost savings for his clients, advising them on global logistics strategy, raw materials sourcing, as well as legal services and HR outsourcing issues. Robin also worked as a consultant at Operations Management Group, Cap Gemini Ernst & Young, and Silver Oak Solutions.

Robin graduated from Brown University with a B.A. in Economics.

Robin Kerawala – Chief Operating Officer

Robin has been advising his North American clients in the areas of strategic procurement and outsourcing over the past 10 years. He has served clients in the financial services, professional services, manufacturing and government sectors.

Previously, Robin was an Engagement Manager at Mitchell Madison Group where he delivered significant cost savings for his clients, advising them on global logistics strategy, raw materials sourcing, as well as legal services and HR outsourcing issues. Robin also worked as a consultant at Operations Management Group, Cap Gemini Ernst & Young, and Silver Oak Solutions.

Robin graduated from Brown University with a B.A. in Economics.

Steven C. Lee, CFA – Principal, Investment Research & Analytics

Steven has over 13 years of experience in investment analysis, structured products, and portfolio management. Prior to joining SmithStreet, Steven served as Managing Director for an opportunistic, multi-strategy hedge fund in New York focusing primarily on private investments. Previously, he was the Head of Structured Products at Refco Alternative Investments, where he was responsible for the creation, distribution and management of Principal Protected Notes and Total Return Swap structures. Steven has also formerly worked at Asset Alliance Corporation, Bear Stearns investment banking, and James D. Wolfensohn, Inc.

Steven received a Bachelor of Arts in Economics, with Distinction, from Yale University and is a CFA Charterholder.

Steven C. Lee, CFA – Principal, Investment Research & Analytics

Steven has over 13 years of experience in investment analysis, structured products, and portfolio management. Prior to joining SmithStreet, Steven served as Managing Director for an opportunistic, multi-strategy hedge fund in New York focusing primarily on private investments. Previously, he was the Head of Structured Products at Refco Alternative Investments, where he was responsible for the creation, distribution and management of Principal Protected Notes and Total Return Swap structures. Steven has also formerly worked at Asset Alliance Corporation, Bear Stearns investment banking, and James D. Wolfensohn, Inc.

Steven received a Bachelor of Arts in Economics, with Distinction, from Yale University and is a CFA Charterholder.

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SmithStreetSolutions – Team Member Profiles

We have built a diverse and talented team representing 11 countries and bringing together a wide range of industry experience.

Anders Paulsson – Director, Investment Research & Analytics

Collectively, Anders is well experienced in finance, divided between fixed income derivatives and asset back securitization at RBC Capital Markets. Within these areas, he has experience in the marketing and structuring of derivatives and the risk analysis and portfolio management of securitized assets.

Anders graduated from the MBA program at CEIBS in Shanghai and earned his B.Sc. in Economics & Finance from Lehigh University.

Anders Paulsson – Director, Investment Research & Analytics

Collectively, Anders is well experienced in finance, divided between fixed income derivatives and asset back securitization at RBC Capital Markets. Within these areas, he has experience in the marketing and structuring of derivatives and the risk analysis and portfolio management of securitized assets.

Anders graduated from the MBA program at CEIBS in Shanghai and earned his B.Sc. in Economics & Finance from Lehigh University.

Feng Xu – Research Associate, Investment Research & Analytics

Feng has experience in international M&A, private equity and venture capital at SmithStreet. He previously worked at a Philadelphia-based asset management company as an investment advisor and a Pennsylvania-headquartered US mortgage company as a financial analyst.

Feng earned his M.S. in Analytical Finance from Lehigh University, M.Sc. in International Business from University of Nottingham, a B.S. in Information and Computer Science from Zhejiang University (China).

Feng Xu – Research Associate, Investment Research & Analytics

Feng has experience in international M&A, private equity and venture capital at SmithStreet. He previously worked at a Philadelphia-based asset management company as an investment advisor and a Pennsylvania-headquartered US mortgage company as a financial analyst.

Feng earned his M.S. in Analytical Finance from Lehigh University, M.Sc. in International Business from University of Nottingham, a B.S. in Information and Computer Science from Zhejiang University (China).

Joseph Floyd – Director, Investment Research & Analytics

Previously, Joseph was an investment professional at American Capital, a US private equity firm and an investment banker at FT Partners, a US boutique investment bank. He has deep experience with both principal investing and M&A advisory.

Joseph graduated with high honors from the University of California, Berkeley with a B.A. in Economics and a B.S. in Business Administration. He previously held an NASD Series 7 license.

Joseph Floyd – Director, Investment Research & Analytics

Previously, Joseph was an investment professional at American Capital, a US private equity firm and an investment banker at FT Partners, a US boutique investment bank. He has deep experience with both principal investing and M&A advisory.

Joseph graduated with high honors from the University of California, Berkeley with a B.A. in Economics and a B.S. in Business Administration. He previously held an NASD Series 7 license.

Michael Yeo – Manager, Market Research

Michael has managed numerous global & China market research initiatives for clients across a range of industries. His projects have ranged from identifying potential investment opportunities for private equity firms to delivering strategic recommendations to Chinese government agencies. Previously, Michael was a SOX Internal Auditor at Shell and an External Auditor at Ernst & Young.

Michael received his B.A. in Accounting & Economics from the University of Reading.

Michael Yeo – Manager, Market Research

Michael has managed numerous global & China market research initiatives for clients across a range of industries. His projects have ranged from identifying potential investment opportunities for private equity firms to delivering strategic recommendations to Chinese government agencies. Previously, Michael was a SOX Internal Auditor at Shell and an External Auditor at Ernst & Young.

Michael received his B.A. in Accounting & Economics from the University of Reading.

SmithStreet Understands the Factors that Drive Valuation

SmithStreet analyzes each unique situation to unlock maximum value for clients.

Discounted Cash Flow Analysis

Discounted Cash Flow Analysis

Buyer(s’) Ability to Pay

Buyer(s’) Ability to Pay

Industry &Market

Conditions

Industry &Market

Conditions

Projections / Strategic Plan

Projections / Strategic Plan

Balance Sheet Optimization

Balance Sheet Optimization

Potential Synergies / Risks

Potential Synergies / Risks

Inherent Risk of Business

Inherent Risk of Business

Understanding of Business, Incremental

Assets & Liabilities

Understanding of Business, Incremental

Assets & Liabilities

Recent Comparable Transactions

Recent Comparable Transactions

Public Market Comparables

Public Market Comparables

Industry Merger and Acquisitions Comparables

Industry Merger and Acquisitions Comparables

Other Companies for Sale or Potentially

for Sale

Other Companies for Sale or Potentially

for Sale

Public / Private Market Conditions

Public / Private Market Conditions

Industry and Company Specific Characteristics

Industry and Company Specific Characteristics

Sale Process and Collective Judgment

of SmithStreet

Sale Process and Collective Judgment

of SmithStreet

Maximum Valuation

Maximum Valuation

Strategic ImplicationsStrategic Implications Ability to Raise Capital / Leverage

Ability to Raise Capital / Leverage Dilution / IRRDilution / IRR Potential Synergies /

Risks

Potential Synergies / Risks

Other Investment Opportunities

Other Investment Opportunities

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SmithStreet Identifies M&A Synergies to Unlock Value

Revenue EnhancementRevenue EnhancementRevenue Enhancement

Cost ReductionCost ReductionCost Reduction

Asset OptimizationAsset OptimizationAsset Optimization

Tax ReductionTax ReductionTax Reduction

Financial SynergiesFinancial SynergiesFinancial Synergies

Strategic OptionsStrategic OptionsStrategic Options

� Cross-selling opportunities between different sales forces, products and verticals

� Potential new product lines and geographic markets

� Cross-selling opportunities between different sales forces, products and verticals

� Potential new product lines and geographic markets

� How economies of scale can reduce average production costs, increase purchasing power, eliminate supply chain intermediaries and better utilize capacity

� Appropriate size of Management teams and office locations post-M&A

� How economies of scale can reduce average production costs, increase purchasing power, eliminate supply chain intermediaries and better utilize capacity

� Appropriate size of Management teams and office locations post-M&A

� Non-essential assets post-M&A that can be divested: real estate, factories, inventory, etc.

� Value of intangible assets such as patents, copyrights and trademarks

� Non-essential assets post-M&A that can be divested: real estate, factories, inventory, etc.

� Value of intangible assets such as patents, copyrights and trademarks

� Tax savings via NOLs

� Tax savings via geographic location post-M&A

� Tax savings via NOLs

� Tax savings via geographic location post-M&A

� Decreases in WACC via optimal debt / equity ratio

� Reductions in beta via increased assets, cash flow and diversified income

� Decreases in WACC via optimal debt / equity ratio

� Reductions in beta via increased assets, cash flow and diversified income

� Additional strategic options due to increased assets and cash flow, such as: IPO, debt recapitalization, geographic expansion, etc.

� Additional strategic options due to increased assets and cash flow, such as: IPO, debt recapitalization, geographic expansion, etc.

SmithStreet Analyzes the Acquirer and Target to Identify Synergies

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Illustrative Example: Preparation, Process, Negotiation Drive Value

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Process and Negotiations Increase Core Multiple Paid

The market’s initial perception will not fully capture your Company’s inherent value.

$18.0

$24.0

8 x 12 x 12+ x

Market willinitially

discount Management’sprojections by 25%

Market’sFirstImpression

$144 mm

$192 mm

$288 mm

$216 mm

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Note: all figures are representative examples only

Through preparation, process and negotiation, SmithStreet increases the market’s willingness to commit to higher valuations.

Through preparation, process and negotiation, SmithStreet increases the market’s willingness to commit to higher valuations.

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Methodology for Valuation Analysis (409A and FAS 157 Services)

SmithStreetSolutions reviews and analyzes multiple information sources to determine valuation parameters.

Specific Valuation MethodologiesSpecific Valuation Methodologies

Discounted CashFlow Analysis

Discounted CashDiscounted CashFlow AnalysisFlow Analysis

Common Stock Comparison

Common Stock Common Stock ComparisonComparison

Precedent Transaction Analysis

Precedent Transaction Precedent Transaction AnalysisAnalysis

� Build detailed financial projection model and discount cash flows to present value using WACC method

� Build detailed financial projection model and discount cash flows to present value using WACC method

� Compare financial performance of company to a select group of comparable public companies

� Compare financial performance of company to a select group of comparable public companies

� Use relevant precedent M&A and private placement transactions to establish valuation parameters

� Use relevant precedent M&A and private placement transactions to establish valuation parameters

SmithStreet delivers comprehensive valuation analysis: enterprise value determined by multiple methodologies and equity value per share determined by capitalization table waterfall analysis

SmithStreet delivers comprehensive valuation analysis: enterprise value determined by multiple methodologies and equity value per share determined by capitalization table waterfall analysis

� Review financial statements and Management estimates to develop several sets of projections by which to value the company

� Hold discussions with Management or Advisors concerning the business, milestones, operations and future prospects

� Review financial terms and conditions set forth in the capitalization table and articles of incorporation

� Compare the financial performance of the company with that of publicly traded comparable companies and relevant precedent transactions

� Review financial statements and Management estimates to develop several sets of projections by which to value the company

� Hold discussions with Management or Advisors concerning the business, milestones, operations and future prospects

� Review financial terms and conditions set forth in the capitalization table and articles of incorporation

� Compare the financial performance of the company with that of publicly traded comparable companies and relevant precedent transactions

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Methodology for Identifying Investment Targets

SmithStreet uses a rigorous methodology to search for and identify potential investment targets meeting client-specified criteria.

Analyze key trends, government policies, map out the value chain, and highlight areas of opportunity

Compile a master list of available companies along with key data & financials for each individual company

Screen companies using defined investment criteria including: company financials & ratios, growth rates, number of locations, geographic coverage, etc.

Senior management interviews to determine: SWOT (strengths, weaknesses, opportunities & threats), brand recognition, openness toward outside investors, etc.

Present industry report with recommended investment candidates; facilitate company introductions and negotiations

Industry Research

Identify the Key Players

Quantitative Analysis

Qualitative Research

Recommend Targets

Our investment research projects are custom-tailored to each individual client’s needsOur investment research projects are custom-tailored to each individual client’s needs

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Complete Confidentiality

At SmithStreetSolutions, we regard confidentiality as our lifeline and have actively taken measures to safeguard our clients’ business information.

Our access controlled data centers are protected and secured

at various entry levels: perimeter, network, host, application

and data

Multiple barriers ensure the integrity of our network which

are designed to detect, prevent and defend against threats

Our managed firewall provides around-the-clock security

monitoring, and management logs and reviews of potential

intrusions

Firewall log data is continuously archived in a physical

backup media available for restoration for a specified time

period commensurate with service levels

Our physical workspace consists of one floor, accessible

only to employees of the company

Each individual terminal is secured by multiple logins /

password-protected entryways

Restricted internet access (personal email accounts, online

chatting tools, personal websites)

Disabled USB and copying capabilities (data cannot to be

transferred without the proper authorization)

Restricted access available to client team only

Strict confidentiality agreements are required for all

employees

ServersServers Employee’s TerminalEmployee’s Terminal

Our Infrastructure For Information SecurityOur Infrastructure For Information SecurityOur Infrastructure For Information Security

• SmithStreetSolutions has taken crucial steps to manage sensitive information so that it remains secure, credible and trustworthy

• SmithStreetSolutions has taken crucial steps to manage sensitive information so that it remains secure, credible and trustworthy

Steven C. Lee, CFAPrincipal, Investment Research & Analytics

US Mobile: +1 (917) 806 6508China Mobile: +86 150 2190 8229Email: [email protected]

Robin KerawalaChief Operating Officer

US Mobile: +1 (917) 771 7153China Mobile: +86 158 0092 2899 Email: [email protected]

Steven C. Lee, CFAPrincipal, Investment Research & Analytics

US Mobile: +1 (917) 806 6508China Mobile: +86 150 2190 8229Email: [email protected]

Robin KerawalaChief Operating Officer

US Mobile: +1 (917) 771 7153China Mobile: +86 158 0092 2899 Email: [email protected]

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Contact Information

New York Office521 Fifth Avenue, 17th Floor

New York, NY 10175+1 (212) 292 4420

Shanghai Office20 Jinchuang Road, 10th Floor

Yangpu, Shanghai 200433+86 (21) 6565 6533

www.smithstreetsolutions.comwww.smithstreetsolutions.com