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mon 101 0101001110000110010000111 100101010100101010101101010101010110001011010 KU 010010100101010101010101010101010101101 01. علانات 10010101010010101010001101000100101010101111111 10101010101010101010110010101010101010101010101010101010101010011.m 0111101001010101010111101111010010100100101010100111010 10101010 FULL 100010101010101010100110101010100101101010101010101010101010100001010101 010010101010101010001010101010101010101010101010 1001010101001010101011010101010101010001110100010110010101010001101001010101010101 101010100101010101001001010101010110101010101-0101010100 010-0101- 111101000101010111010001000100001110100101010010101010E 1001010101010101010110000101101001010010101010101010101 1010101010101010101010101 0101101010101 100001110101 01001910 1010101010101010101010101010101011010110101010101010001010101010101011 110110010_=' 1001100100111010100110-000101101101010 0011101001010101001001001001101 010011101010010001010011101000100160 11100101001001010110100111010 00100100 101010101010101010110101010101010101010101001117101 01010010131010101010 01-03010101010100 GOG101001010101010010101010101.00.03 0101010101010101 101010101010101 11101010111101 חום01010101015101 מל191010110101-010 101010010015101 1000101010100110 010000111010101 100101010100111 100101010100101 101010101 An 1001010101010101 10101010101 115101010165 01010100101010100011011A -1501101010101000101010100101001000T 101010101001010101001110100 40010150101-101010101-01010001 10101010101010101010 100000101010100101001000110 01010010 1010101010 and 01110100 11010110 (010101010 1010101010101010101 10101.01 110101-0101- 1010 D DE 010101-0000 1001010101 100010001110 110.00 10010001 L טוח 0010100100111010010000 לחתם 11010103011100 101102 " + (1011010103010100100100 130110101010101010.0 1110101010020301 D 701010001 13404 700011 03015 0101 01010 1010 2307 THY 0101010 1101001010010101610101011600010 01 101001010101010 100101010 D BLUE STAR 蓝色之星 Investor Presentation March 2009 0000#2BLUE STAR 蓝色之星 Disclaimer The information contained in this confidential document ("Presentation") has been prepared by Blue Star plc (the "Company"). It has not been fully verified and is subject to material updating, revision and further amendment. This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 and therefore it is being delivered for information purposes only to a very limited number of persons and companies who are persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or are high net worth companies within the meaning set out in Article 49 of the Order or are otherwise permitted to receive it. Any other person who receives this Presentation should not rely or act upon it. By accepting this Presentation, the recipient represents and warrants that they are a person who falls within the above description of persons entitled to receive the Presentation. This Presentation is not to be disclosed to any other person or used for any other purpose. Seymour Pierce Limited ("Seymour Pierce") is acting for the Company and no-one else in connection with the proposals contained in this presentation. Accordingly recipients should note that Seymour Pierce is not advising or treating as a client any other person and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Seymour Pierce nor for providing advice in relation to the proposals contained in this presentation. While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers give, have given or have authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise, in respect of, the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent. This Presentation should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters. Neither this Presentation nor any copy of it may be (a) taken or transmitted into Australia, Canada, Japan, the Republic of Ireland, South Africa or the United States of America, their territories or possessions; (b) distributed to any U.S. person (as defined in Regulation S under the United States Securities Act of 1933 (as amended)) or (c) distributed to any individual outside Australia, Canada, Japan, the Republic of Ireland or South Africa who is a resident thereof in any such case for the purpose of offer for sale or solicitation or invitation to buy or subscribe any securities or in the context where its distribution may be construed as such offer, solicitation or invitation, in any such case except in compliance with any applicable exemption. The distribution of this document in or to persons subject to other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction 2#3BLUE STAR 蓝色之星 Xiao Gang: Founder & CEO BA in Robotics Instruments Presentation Team Member of the China Security and Protection Industry Association Over 16 years experience in the marketing, sales and manufacture of security/surveillance solutions Founded Beijing BlueStar Software Technology Development Corporation Limited in 2000 and its subsidiary companies in Guangzhou and Shanghai Jeff Teo: Non-Executive Director BA in Electrical Engineering from Arizona State University, MA in Engineering Economics System from Stanford University Chartered Financial Analyst (CFA) since 2000 Over 14 years of strategic planning and venture capital experience in the USA, China and Singapore Non-executive Director of Singapore and AIM listed companies including [insert non-exec directorships here] Strong relationships with Chinese entrepreneurs, international and domestic venture capital firms, professional service firms and government agencies 3#4BLUE STAR 蓝色之星 BlueStar SecuTech: A Snapshot Video Surveillance in China Agenda A fast growing market, in transition, with strong domestic drivers BlueStar's Business: Surveillance Network Solutions BlueStar's Business: Growth, Strength & Innovation BlueStar's Clients: China's Largest Banks BlueStar's Strategy For Growth: Happening Now Outlook and Summary Appendix 商业新力量 20 318 【北京 Cons JADE VA 4#5BLUE STAR 蓝色之星 BlueStar SecuTech: A Snapshot BlueStar SecuTech Inc. is a leading provider of "next generation" surveillance network solutions in China, using hardware and software across a network/platform to capture, process, analyse and store digital video Incorporated 7 June 2006, listed on AIM since June 2007 (AIM: BSST) Headquarters in Beijing Customers predominantly in the banking/financial sector and include HSBC, Standard Chartered, Shanghai Stock Exchange, Bank of China, China Construction Bank, People's Bank of China, Bank of Communications Strong regulatory drivers and domestic demand driven by replacement cycle and increasing security concerns and requirements Award winning, extensively copyrighted software and hardware Moving towards providing comprehensive "cameras-to-callout" offering through co-operation agreements 5 LO#6BLUE STAR 蓝色之星 Video Surveillance In China: A Fast Growing Market The global Video Surveillance Market is expected to grow by more than 10% in 2009 The Chinese market is expected to grow by more than 20% Chinese Surveillance Market 60.00 50.00 40.00 30.00 23.84 28.21 33.85 40.62 SLLL 20.00 48.75 8.80 7.26 10.00 5.72 4.18 2.64 0.00 2007 2008(E) 2009(E) 2010(E) 2011(E) Source: Market Avenue, January 2009 All Systems Networked Systems 6#7BLUE STAR 蓝色之星 Camera Video Surveillance In China: An Industry In Transition Analogue - First Generation - VCR Monitor Video Cassette Recorder Camera Digital - Second Generation - DVR Monitor Digitalisation and Record compression Standalone DVR Cameras/locations Third Generation - Networked DVR IP Network Digitalisation and Record compression Networked DVR Third Generation - Networked Solution Digitalisation and compression Network Record Networked VR Before 1999 Between 2000 and 2003 Now IP Network 7#8BLUE STAR 蓝色之星 Video Surveillance In China: Strong Domestic Drivers Chinese Banking Regulations All new banking systems must be DVR All recorders must be replaced at least every five years 1:1 policy every cash counter & ATM must have one exclusive camera which must be connected to one dedicated DVR unit --------- There are over 270,000 bank branches & ATMs across 30 provinces in PRC Recording must be 24/7 and images stored for over 30 days Real-time systems must be a minimum of 25 frames per second Domestic Demand ☐ Rising demand in public areas to address terrorist concerns and safety issues Cash-centric culture with 97% of transactions in cash A rapidly developing economy Tier 1 city "best practice" expected to be adopted by Tier 2 and Tier 3 cities 31 Tier 2 cities Over 2,200 Tier 3 cities Government investment in "Safe City" schemes More than 660 cities earmarked for investment Major international events in the next two years including the World Expo in Shanghai and the Asian Games in Guangzhou 8#9BLUE STAR 蓝色之星 Surveillance Locations BlueStar's Business: Surveillance Network Solutions DVR DVR Video Server DVR Internet WAN DVS LAN Wireless Network Matrixs 2006-04-04 10: DVS NVR 18:22 25 DVS Video compression software Surveillance centers BlueStar's Surveillance Network Solutions Management & Control Software 9#10BLUE STAR 蓝色之星 BlueStar's Business: Key Points Strong top line and bottom line growth Revenue up 64% to RMB 80.6m / £7.9m (2007: RMB 49.2m / £4.8m) for six months to 30 Sept. 2008 Gross profit up 46% to RMB40.6m / £4.0m (2007: RMB 27.9m / £2.7m) for six months to 30 Sept. 2008 Net profit of RMB 12.6m / £1.2m (2007: RMB 11.4m / £1.1m) for six months to 30 Sept. 2008 Financial strength Cash of RMB 67.0m / £6.6m (31 March 2008: RMB 115.4 m/ £11.3m) at 30 Sept. 2008 Net assets of RMB 231.3m / £22.6m (2007: RMB 185.6m / £18.1m) at 30 Sept. 2008 Paid maiden dividend of 0.96 pence per ordinary share in July 2008 Successful Research & Development First revenue from high-definition CCTV camera joint-developed with JVC Initial patent approval to improve image processing and storage ability of DVR chips New software platform to halve development time of new DVR products Intelligent Video Analytics has been applied to the new products Well positioned to overcome current slowdown in banking sector Order-book remains strong - legislative drivers remain Continuing to diversify into new sectors – first contract won in industrial sector Continuing to innovate and develop market leading products and solutions Signed first co-operation agreement to expand service offering Signed first contract to supply Indonesian market 10#11BLUE STAR 蓝色之星 BlueStar's Business: Pan-China Sales Network Huhehaote Beijing Tianjin Shijia zhuang Yinchuan Taiyuan Jinan Haerbin Changchun Shenyang Xining Lanzhou Xian Zhengzhou Hefei Nanjing Wuhan Hangzhou Chengdu Chongqing Nanchang Changsha Fuzhou Guiyang Kunming Nanning Haikou 30 Sales and Service offices covering 90% of China's provinces 65% of revenue currently from Beijing, Shanghai and Guangzhou 19% of revenue generated from sales centres established in last two years HQ in Beijing Jieyang Guangzhou Shanghai Seven sales and service centres in key locations across China 23 new sales offices opened since the second half of 2007 462 employees 11#12BLUE STAR 蓝色之星 BlueStar's Clients China has 110 domestic banks and there are over 50 foreign bank branches/ offices. BlueStar works with over half of them including: HSBC 交通銀行 Standard Chartered BANK OF COMMUNICATIONS 中国人民银行 ⑥ 中国银行 THE PEOPLE'S BANK OF CHINA BANK OF CHINA 中国建设银行 China Construction Bank HUAIA BANE C 华夏银行 ( 中信实业银行 CITIC INDUSTRIAL BANK ④ 招商銀行 北京市商业银行 BEA東亞銀行 BEIJING CITY COMMERCIAL BANK H 中国农业银行 AGRICULTURAL BANK OF CHINA S 中国民生银行 CHINA MINSHENG BANKING CORP., LTD. Pank 中国光大银行 CHINA EVERBRIGHT BANK 宮 中国工商银行 呂 上海浦東發展銀行 € INDUSTRIAL AND COMMERCIAL BANK OF CHINA SHANGHAI PUDONG DEVELOPMENT BANK 中国邮政 CHINA POST 上海證券交易所 SHANGHAI STOCK EXCHANGE#13BLUE STAR 蓝色之星 BlueStar's Business: Recent Developments Trading Update on 31 December 2008 " " Strong order book but delays in conversion to sales especially in banking sector Revenue expected to be 32% lower than previously forecast Net profit expected to be substantially lower than previously anticipated Cash position remained strong with approximately RMB 80 million / £8 million Success of expansion and diversification into new sectors reflected by contract wins Short term economic uncertainly but confident of long term prospects Well positioned and funded to capitalise when economic recovery begins 2 New contracts during Q3 2008 (1 October - 31 December 2008) Exclusive supplier of DVR products for China Agricultural Bank Shanghai Branch RMB 4.3 million contract with Bank of China Gansu Branch " ■ RMB 5.0 million contract with Tanggang Co., Ltd. (a large steel manufacturing company) RMB 7.8 million contract with Bank of China to provide specialized DVR systems RMB 2.5 million contract with China Agricultural Bank Inner Mongolia Branch Co-operation agreement with Kaiyuan Company 2 Significant Contracts during H1 2008 (1 April - 30 September 2008) RMB 13.7 million contract with Bank of China to provide specialized DVR systems across the country RMB 13.0 million software contract with An Heng Testing Appointed as exclusive supplier by Beijing Branch of China Construction Bank for DVR products 13#14BLUE STAR 蓝色之星 BlueStar's Strategy For Growth: Happening Now Continued expansions in the banking sector Developing new customers Investing in R&D Enhance Distribution Overseas Market • • • • Major market share in tier 1 cities, expansion into tier 2&3 cities Continues to secure significant contracts Tailor made network solutions for banking clients Dedicated sales team focus on new sectors On-going cooperation with new industries including forestry and transport Future focus on military, legal system and oil industry First revenue from high-definition CCTV camera joint-developed with JVC Initial patent approval to improve image processing and storage ability of DVR chips New software platform to halve development time of new DVR products Expansion of Beijing HQ New sales and service offices resulting in 90% coverage of China's provincial capitals New sales centres contributing to revenue in first 12 months Geographical market focus remains same Actively in negotiation with banking clients from Asia Pacific Comprehensive Service Provision Co-operation with Kaiyuan allowing the company to expand to provide a comprehensive "camera-to-callout" service provision – can be replicated 14#15BLUE STAR 蓝色之星 BlueStar's Strategy For Growth: Happening Now Move toward a Comprehensive Service Provision Co-operation Model BlueStar will partner security agencies tasked with responding to and investigating security breaches. These agencies are often appointed by the City's Police force Initial agreement with Kaiyuan Company (January 2009) The Kaiyuan Company was appointed by the Beijing Municipal Public Security Bureau as its sole security service provider for the financial sector in Beijing. It is responsible for the security of around 2,000 self-service banks, more than 3,000 bank branches and outlets and over 6,000 ATMs across Beijing Kaiyuan will establish a new surveillance command centre using BlueStar's technology to provide networked solutions and products to customers. These will be linked to a command centre where Kaiyuan's mobile security staff will be able to respond to incidents and alarms Significance BlueStar will receive a recurring monthly service fee for each outlet utilising the command centre's services and estimates annualised revenues in the region of RMB 15 million to be achievable by BlueStar by the end of 2010 This model can be replicated within Beijing and other parts of China with Kaiyuan and other similar organisations These agreements transform BlueStar from a provider of surveillance networking solutions to a surveillance operations provider 15#16BLUE STAR 蓝色之星 BlueStar's Strategy For Growth: Happening Now Police Alarm & Mobile Security Staff Customers Networking Solutions by BlueStar Video Surveillance Alarm System Command Center Alarm Signal Products, Technologies, Services BlueStar Security Agency Cooperation 16#17BLUE STAR 蓝色之星 Outlook & Summary Well established, robust and financially secure Strong market drivers: general domestic demand and regulation led Effective, proven R&D strategy Comprehensive strategies for growth being implemented now Well positioned to benefit from the macroeconomic recovery 17#18BLUE STAR 蓝色之星 EY Appendix FTRENUCINT 品质源于专业 18#19BLUE STAR 蓝色之星 Financial: ☐ Revenue of RMB 80.6m / £7.9m up 64% ☐ Gross profit of RMB 40.6m / £4.0m up 46% Financials: Snapshot Net profit of RMB 12.6m / £1.2m up 9% Cash & cash equivalents of RMB 67.0m / £6.5m Net assets of RMB 231.3m / £22.6m (2007: RMB 185.6m / £18.1m) Maiden dividend of RMB13.46cents (0.96 pence) paid in July 2008 Investment: ☐ R&D investment of RMB 7.5m / £0.7m Expansion of sales network for six months to 30 September 2008 19#20BLUE STAR 蓝色之星 Financials: Summary Income Statement 6 months ended 30 September 2008 Unaudited RMB'000 6 months ended 30 September 2007 Unaudited RMB'000 9 months ended 30 September 2007 Unaudited RMB'000 Revenue Cost of sales Gross profit 80,556 (39,910) 49,248 (21,345) 58,171 (26,919) 40,646 27,903 31,252 Other income 1,231 668 1,524 Selling and distribution expenses (16,557) (9,610) (12,797) Administrative expenses (12,497) (8,054) (10,994) Other operating expenses (759) (117) (435) Finance cost (42) (16) (10) Finance income 785 586 605 Profit from operations 12,807 11,360 9,145 Taxation (161) Profit for the period/year 12,646 11,360 9,145 20 20#21BLUE STAR 蓝色之星 Non-current assets Financials: Summary Balance Sheet 30 September 2008 30 September 2007 31 March 2008 Unaudited Unaudited Unaudited RMB'000 RMB'000 RMB'000 30,631 13,446 28,653 Inventories 27,181 15,464 19,992 Trade and other receivables 138,086 74,062 88,967 Cash and cash equivalents 66,957 129,031 115,362 Total assets Total liabilities Net assets 262,855 232,003 252,974 31,543 46,374 24,759 231,312 185,629 228,215 21#22BLUE STAR 蓝色之星 Financials: Summary Cash Flow 6 months ended 30 September 2008 Unaudited RMB'000 6 months ended 30 September 2007 Unaudited RMB'000 Cash and cash equivalents at beginning of the period 115,362 8,622 Add: Operating cash flows before movement in working capital 15,653 12,977 Less: Increase in inventories (7,189) (5,903) Less: Increase in trade and other receivables (49,119) (7,096) Add: Decrease in trade and other payables 6,625 6,192 Less: Net cash used in investing activities (4,826) (1,371) Less: Dividends paid (9,549) Add: Net cash generated from financing activities 115,610 Cash and cash equivalents at the end of the period 66,957 129,031 22#23BLUE STAR 蓝色之星 Earnings per ordinary share Basic Diluted Financials: Earnings Per Share 6 months ended 30 September 2008 6 months ended 30 September 2007 9 months ended 30 September 2007 Unaudited (cents) EPS slightly down, reflecting full year effect of IPO shares Strongly H2 weighted results traditionally Unaudited (cents) Unaudited (cents) 17.37 18.00 15.56 17.02 17.76 15.41 23#24BLUE STAR 蓝色之星 Receivables: Financials: Receivables & Inventories Trade debtors at 30 September 2008 increased from RMB 72m to RMB 121m Trade debtor days up slightly at 276 days vs. 266 days last year Reflecting revenue growth and increase in longer term networking projects RMB 7m prepayment to supplier to secure discontinued serial-port hard disks Inventories: Inventories increased from RMB 15m to RMB 27m In line with increase in revenue Allowing shorter client lead times and improved satisfaction 24#25BLUE STAR 蓝色之星 BlueStar: Shareholdings Name Number of Shares % Seculine Technologies Inc. 17,150,000 23.56 Sunshine Holdings (private) Limited 13,720,000 18.84 Mackenzie Cundill Investment Management 10,340,000 14.20 CIM Investment Management 6,368,537 8.75 Balance Partners Limited 5,390,000 7.40 Video Source Communication Limited 5,390,000 7.40 Newtech Capital Management 4,410,000 6.06 Kaiqi Holdings (private) Limited 2,940,000 4.04 Wessex Asset Management 2,300,000 3.16 DIRECTORS' INTERESTS Xiao Gang (1) He Caiguang (2) Wang Chong (3) Teo Kean Eek (4) 30,870,000 42.40 2,940,000 4.04 2,450,000 3.37 600,000 0.82 (1) This represents the interests of Mr Xiao and his wife through their shareholdings respectively in SecuLine Technologies, Inc and Sunshine Holdings (Private) Limited (2) Held through Video Sources Communication Limited (3) Held through Balance Partners Limited (4) Held through Agile Partners Limited 45 25