3Business Overview

9Leadership

15Planning

19Information

23People

29Processes

35Customers

39Results

Contents

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Qian Hu Corporation Ltd is a leading exporter of ornamental fi sh, together with other local farms supplying more than 30% of the world’s aquarium fi sh. Our homegrown company has played a signifi cant role in helping Singapore achieve prestigious status as the world’s leading exporter of ornamental fi sh in the past decade and recognition as the ornamental fi sh capital of the world. Our 3 local divisions contribute about 17% to the Singapore’s total ornamental fi sh export.

Singapore

Thailand Guangzhou

Shanghai

North America

South / Latin America

Europe

Middle East

Africa Asia

Oceania

Malaysia

Beijing

China

Australia

New Zealand

Global Distribution & Export Markets

Distribution Points

Our Export Markets

Business Overview

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MAIN PRODUCTS AND SERVICES

• Ornamental Fish

The farm carries about 500 types of ornamental fi sh and sales of ornamental fi sh grew in 2008 to $45.7 million. Fish are brought in from various parts of Asia, Africa and South America and then exported worldwide to over 80 countries. This operation is handled by our division, Qian Hu Fish Farm Trading.

Since 1995, Qian Hu was one of the fi rst registered with AVA for the breeding and distribution of Arowana. In 1999, we succeeded in breeding the 2nd generation of Arowana and was released for sale in 2000 after receiving the license from CITES, UN Convention on International Trade in Endangered Species of Wild Fauna and Flora. The Group exports mainly to our subsidiaries in Malaysia, Thailand and China along with markets like Japan and Hong Kong. This export sale contributed about 20% of the local fi sh turnover and 32% of the profi t before tax in 2008. This operation is handled by our division, Wan Hu Fish Farm Trading.

• Aquarium & Pet Accessories

The manufacturing and distribution of our aquarium accessories and pet food complements ornamental fi sh operation by providing a one-stop concept. The Accessories business is an important growth driver as every dollar spent on fi sh, the consumer would spend an average of $5 on accessories. This contributed to 38.3% ($35.6 million) of total turnover and net profi t grew 34.5% growth, year on year, from 2007. To date, we have distributed more than 5,000 types of accessories for about 27 major manufacturers and principals. Under our proprietary “Ocean Free” brand, are products like fi lters, fi sh tanks, and pumps that are manufactured at our Guangzhou, China subsidiary. “Ocean Free” foods, medications and tonics are also sourced from Taiwan, China, Malaysia and Thailand. Food products for dogs and cats, marketed under our own brand, “BARK”, “Nature Gift” and “Aristo-Cats” are distributed in Singapore, Malaysia and Indonesia. We also have some innovative products like the pets odour eliminator, a deodorizer made of pure natural ingredients. We have new fi sh medications, lightings and air pumps. This operation is handled by our division, Yi Hu Fish Farm Trading.

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GQHAP (China)

STAFF PROFILE

Our well-balanced workforce constitutes 43% at below age 30 and 43% of staff are above 5 years length of service. We do open for foreign talent from general workers to competent marketing executives, with non-local workforce at about 47%.

MAJOR EQUIPMENT, FACILITIES & TECHNOLOGIES

We continued investment in building up the farm infrastructure, upgrade facilities and expand our operations even during adverse economic condition. We had spent about $ 7.5 mil in 2008 and another $2 mil for 2009, not to mention our several R&D initiatives.

REGULATORY ENVIRONMENT

We abide strictly to all statutory regulations related to our operation, product and services and seek out necessary environment standards to ensure a high standard in meeting customer needs. We adhere to the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) and our operations are ISO9001:2008 and 14001:2004 certifi ed.

ORGANISATIONAL RELATIONSHIP

RELATIONSHIP WITH CUSTOMERS

We have a worldwide customer base and will gladly export provided there is appropriate fl ight access and distribution infrastructure. Whether the customer is individual or a retailer/wholesaler, we strive to maintain long term distribution relationship.

We have to meet our defi ned customer requirements:

• Quality• Timeliness• Varieties• Value for Money• Product Knowledge

In June 09, new JV, Qian Hu Aquastar (India)

Future plan: Vietnam, Indonesia, etc.

KK Aquaculture

(M) QH the Pet

Family (M)

QHM (Thailand)

QHTLP(S)

TQH (Thailand)

BQHAP (China)

QHAP(M)

QHC[QHFFT][YHFFT][WHFFT]

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RELATIONSHIP WITH SUPPLIERS

Suppliers with good track record, meeting set delivery and product criteria are given preferred status, with good payment terms, no inspection and given assistance in resolving operational problems.

RELATIONSHIP WITH PARTNERS

We have collaboration with institutions like Ngee Ann Polytechnic and ITE which we helped to train students in research on ornamental fi sh diseases and cross breeding program by our R & D department. Our research partnership with Temasek Life Science Laboratory continues.

KEY FACTORS DETERMINING COMPETITIVE SUCCESS

Our competitive success has largely been due to our:

• Customer centric business processes• Strong design capabilities, good quality, workmanship and competitive pricing• Innovation and continual improvements and design of products, breeding of better arowana species and

the sourcing of new fi sh species to sustain competitive advantage• Leveraging on technology for effi cient procedures and services

ORGANISATIONAL DIRECTIONS

The company shall continue to invest in technology to leverage our operation that can add value to our customers in our products and services and our shareholders. Overseas market will continue to grow and resources will be allocated to grow the business. We have taken new initiative to grow the retail business overseas offering a one-stop service to our customers and increased our distribution points to over 100. As to our core business, we continue to invest in regional acquisition of fi sh farms to support our global growth.

We strive to:

• Enhance our expertise in ornamental fi sh• Pursue the growth strategy in accessories• Emphasis on Innovation• Build stronger relationship with investors• Continue the Business Excellence journey

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Senior Management at Qian Hu sets the strategic direction to create a Service oriented culture with a clear vision, values and the four strategic thrusts. The senior management strives to promote and sustain effective quality improvement efforts that are paramount to their organizational success. They are actively involved in creating strategies, developing plans, systems, and methods for achieving excellence, stimulating creativity and innovation, building knowledge and capabilities. These strategies and values help guide all activities and decisions in Qian Hu as a group. Through their leadership and personal involvement in planning, communicating, reviewing performance, recognizing and developing our people, Senior Management serves as role models, demonstrating and reinforcing values, behaviors and expectations, building leadership and championing customer excellence initiatives.

VisionObjectives

1) To achieve more than S$10 million profi t by year 2010;2) To make “Ocean Free” the most recognized aquarium accessories brand in Asia;3) To capture at least 10% of the China Aquarium Accessories market by year 2010;4) To expand aquarium accessories to more than 70 countries;5) To be one of the top 3 aquarium and pet accessories distributors in the Middle East;6) To capture 10% of the world market export of ornamental fi sh;7) To be the top 3 manufacturers of Aquarium Accessories in China;8) To be the most innovative and profi table Dragon Fish Breeder.

Mission To be the world biggest Ornamental Fish and Aquarium and Pet Accessories provider through Innovative and Quality Products and Services.

4 Core Values Integrity, Value Creation, Entrepreneurship, Teamwork

Strategic Thrust Guiding Principles

Customer Focus Our Customers is our priority. Our future depends on strong customer partnerships, which we strive to provide our best service, quality and value.

People Excellence

Our People are our biggest asset. We are committed to engaging and developing staff to their fullest potential so as to enable them to effectively participate and contribute effectively to Qian Hu’s growth.

Quality Excellence We are committed to provide superior Quality in our services and products. Through benchmarking, continuous learning and innovation, we will continuously improve our products and streamline our processes to not only meet customer requirements but also create value for all stakeholders.

Financial Strength Stability and growth through superior fi nancial performance. We view profi ts as the result of the value we created for our customers and from excellence in our people, systems and processes.

Value C

reation

IntegrityE

ntrepreneurship

Teamw

ork

Qian Hu Leadership System

Strategic Planning Process

Stakeholder Satisfaction Model

Leadership

Mission,Vision,Values,Policies, practices

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Platforms/Tools

Type of improvements

How improvement made Impact

360 feedback

Performance Appraisal, Annual Target Setting, Annual performance Target Bonus Plan

Employee Opinion Survey, EOS & Customer Feedback

Specifi c managerial competencies e.g. technical skills, fi nancial acumen, interpersonal skills etc.

Specifi c areas for improvement under self development target as part of annual performance target plan identifi ed by senior executives

Areas for developments identifi ed through the 360 and/or as discussed with superior would be put into their personal performance target plan for each executive to work on. Attendance of programs e.g. management development programs to further enhance their management capabilities, their global networking etc.

Enhance senior executive’s image in industry and among analysts – can be through participation in seminars, panel discussions and through analyst briefi ngs

Through general observation of behaviour and indirect feedback from peers and superiors.

Indirect feedback from staff and customers and stakeholders.

Senior Executives are more aware of how others perceive their behaviour/performance on the personal side as well as on the managerial competency aspects.

Thus efforts to change behavior style by adopting a more open & friendly approach in their communication, has further improved their leadership effectiveness and working relationship.

ORGANISATIONAL CULTURE

Recreational activities

Informal Gatherings

Suggestions/feedbacks

Learnings/CVM

Assessing current culture

• EOS• Performance• Feedback• Staff Involvement• Exit interview

Seek best practices

Open appraisals

Project Teams

Desired Culture

Desire to improve, take new challenges, exercise initiatives, ever wanting to do better

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Building a culture consistent with values that support innovation, learning and organizational objectives.

CORPORATE SOCIAL RESPONSIBILITY

“All lives should be cherished and treasured” is directed at two areas:

• Environment• Community at large (Social and Business Community)

The policy is built on three premises:

1. We aim to preserve the environment that is necessary for long-term viability, for example, effl ux water is treated/fi ltered. 2. We weigh economic interest as equal to the environmental interest.3. We must be mindful of the plight of underprivileged people in our society.

Areas Policy Program Goals

Environment Full compliance to regulatory requirements ISO 9001 and ISO 14001

EMS

Breeding of endangered species

Internal Audits/Training/Seminars

Nil Non-Conformance

Increase the number of endangered species

Community at large-Social Community

All staff to be involved

Build humanity in our employees

Promote Sports and Cultural events, eg. Advert promotion of Speak Mandarin campaign, etc

Participate in Company $1 for $1 donation by staff

Quarterly visit to old folks home

Annual Charity Fund raising event @ Parkway Parade

Poly/Teachers’ attachments and overseas youth internship

Free farm tour and use of facilities for the underprivileged

Visit as many special homes as possible and participate in socially positive activities.

Community at large- Business Community

Specifi c staff is involved

We give regular talks to fi sh hobbyist and some of our Directors are involved in relevant fi sh association (SAFEA: Singapore Aquarium Fish Exporters’ Association) and made speeches to share our success story on several occasions.

To share our business and management experiences to the community and help raise the standard in the industry.

Leadership, Review & Target setting; Assess

projects

Training & Participation;Induction, recreational and welfare activities

CULTURE

Rewards & Recognition;

Awards/Recognitions

Building and Infusing our Qian Hu DNA Values: Integrity, Value Creations, Entrepreneurship, Teamwork (I – T; V– E)

Communicate & Facilitate; display, meetings, staff handbook, analyst briefi ng, SIS

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CORPORATE GOVERNANCE

We maintain a high standard of Corporate Governance and comply as far as feasible in our context to the Singapore Code of Corporate Governance 2005.

Scope Tools and Compliance

Setting/Approval of strategic directions

Code of Corporate Governance 2005

Review of management performance

Code of Corporate Governance 2005

Organizational controls/Risk management

Code of Corporate Governance 2005; All 8 types of risks are comprehensively addressed: Business, Operational, Product, Investment, Foreign Exchange, Credit, Interest rate and Liquidity, Sensitivity Analysis

Confl ict of interest policy Code of Corporate Governance and internal Company operational policy

Disclosure, reporting and audits Code of Corporate Governance 2005

Governance Board Code of Corporate Governance 2005

Kenny YapExecutive Chairman and

Managing DirectorOctober 2007

””

………by doing the right things, the market will reward you

more than you think.

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Planning

The Corporate planning process includes participation from both the corporate and the business sectors, carried out to map out strategic directions and mid-term (2012) and long-term (2018) growth targets for the group as a whole to achieve. The business sectors will in turn develop their strategic thrusts and short-term/annual plans that aim to achieve these 5- and 10-years targets.

QIAN HU STRATEGIC PLANNING PROCESS

HR ALIGNMENT OF STRATEGIES TO STRATEGIC THRUSTS & VALUES

4 Strategic Thrusts

Customer FocusQuality ExcellencePeople ExcellenceFinancial Strength

HR strategies

Competitive EmployerCompetent Resource

Learning and Thinking workforceFamily culture environment

4 Values

IntegrityEntrepreneurship

Value CreationTeamwork

Strategic Direction & Objectives

Development of Strategic directions and objectives:• Globalisation/Regionalisation• Technology Investment• Product Sales & Marketing• Mergers & Acquisition, Diversifi cation• Operational Capability

Communicate to SBA

• Monthly Corporate/Management Meetings• Newsletters• Feedback Sessions

Deployment of Implementation Plans

• Divisional/Subsidiary Plans• Dept/Program Plans• Team/Individual Plans• Resource and Budget Requirements• Risk Assessment• New and Revised Operational Strategies• New and Improved Business Process

Business Sector Analysis and Strategic Development

Analysis of:• Business Environment & Resources• Stakeholders/Employee expectation,

objectives & control

Competition Analysis

Development of Strategic Thrust, Set Key Performance, Short term and Long term targets

Strategic Analysis

Analysis of:• Business Environment & Processes• Stakeholders, expectation,

objectives & control

Competition Analysis

Quarterly & Annual Review

Quarterly & Annual Review

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Risk consideration in planning

Types of Risks How is it managed? Resource allocation

Business risk A comprehensive fi sh health management and quarantine system, ISO 9001 certifi ed.

ISO committee, annual ISO audits; Management reporting

Operational risk A broad base of customers managed by different country subsidiaries

Management reporting

Product risk Diversity through 500 species and over 5,000 types of accessories, distributing to over 70 countries

Operational meetings and controls, improvement measures, R&D, best sourcing

Investment risk Organic growth through acquisition of healthy business entities

Proposals are reviewed by the Board of Directors, Consultancy, monitoring

Foreign Exchange risk

US$, Euros and J¥ are our main exposures, able to manage through hedging contracts with banks

Group Finance and individual subsidiary fi nancial monitoring

Credit risk Credit evaluations, strict monitoring; ceilings, and prudent accounting policy

Group Finance and individual subsidiary fi nancial monitoring

Interest rate risk Cash placed in reputable banks; get best rate without increasing foreign exchange exposure

Group Finance and individual subsidiary fi nancial monitoring

Liquidity risk Net operating cash fl ow to meet working capital requirements

Subsidiary senior management, Group Finance and individual subsidiary fi nancial monitoring

COMMUNICATING THE PLANS

Communication of the corporate strategic directions, objectives and targets/SBA objectives and long & short performance targets supporting the strategic thrusts are through various channels e.g.

• Annual Management Session;• Bi-annual Staff Forums and briefi ngs;• Senior Management meetings• Monthly Corporate meetings• Corporate e-Portal & Quarterly Newsletters

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PROCESS MONITORING AND REVIEW

Key Performance Indicators are tracked, monitored and reviewed at various platforms such as the monthly management meetings of the various business sectors and functional groups, corporate management meetings. The various boards are also updated periodically on developments and progress at its meetings.

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As a knowledge company committed to automation and use of advanced technologies, Qian Hu has continuously embarked on information management initiatives that provide an appropriate balance between short-term and long-term improvements to achieve its performance goals and optimise savings and effi ciencies.

TYPES OF INFORMATION REQUIRED:

Customer Care Information

Qian Hu’s objective of maximizing customer satisfaction and providing customers with a positive and satisfying experience whenever they interact with Qian Hu. Appropriate shortcomings are addressed through training and coaching.

Supply Chain Data Qian Hu’s goal is to cut delivery cycle times and costs signifi cantly so as to drive up profi tability and improve service level, time-to-market, and effective use of assets.

Corporate Information

As a public-listed company with a worldwide presence, Qian Hu aims to develop a strong public standing for the corporate entity and promote the company’s relationships with its partners and the fi nancial community. Such prompt dissemination of accurate information fostered a strong sense of inclusiveness, trust and collaboration with its current and potential investors and partners.

Intellectual Capital Qian Hu’s intellectual capital – industry knowledge and expertise as an ornamental fi sh breeder, distributor and manufacturer – is a major component in the fulfi llment of Qian Hu’s mission to provide product innovations, high quality services and instill a learning culture. We seek to convert tacit knowledge into explicit training document. A good example is the fi sh quarantine training manual which is used as the basis for training of new and existing staff.

KEY SYSTEMS OF QIAN HU

Qian Hu CRM Provides an avenue for global networking, exchanging ideas, knowledge and best practices among investors, customers, suppliers, experts, hobbyists, academics and even competitors.

Qian Hu Supply Chain Management

A suite consisting of– automated packing and delivery system– comprehensive accounting system integrated into a cohesive supply chain workfl ow (Navision). PDA stock taking.

Qian Hu Knowledge Management

Web-based system that captures and disseminates the working knowledge of individuals within the organization, providing features such as access control, info approval, info subscription, automated reminder and mass broadcast capabilities. A Staff Interactive System, SIS, was added in 2009.

Informat ion

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HOW INFORMATION IS ANALYZED AND SUPPORT ORGANIZATION PLANNING AND REVIEW?

Analyses are facilitated by a combination of traffi c analysis software, reporting tool and business intelligence tool developed on a web-based platform which is seamlessly integrated with the customer care information, supply chain data, corporate data and intellectual capital information.

• Qian Hu’s highly mobile workforce could gain instant access to measurements of its local and overseas operational, inventory, fi nancial and sales performance that affect the organisation's bottom line.

• Empowered to explore data and analyse key performance indicators deepens insight and helps in making crucial decisions faster with better quality and precision

• Assessing product pricing and sales performance across customers helps to predict trends and demand forecast

• Capability to relate cross-functional operation information, to drill-down information hierarchies and to provide exploratory analysis increases visibility beyond basic operational reporting. This helps in the innovation/improvement of processes to increase effectiveness and effi ciency and keep operational costs below current level.

MANAGEMENT OF INFORMATION TO CREATE VALUE

EVALUATING AND IMPROVING MANAGEMENT OF INFORMATION

• Competency enhancement, lower daily losses, etc.

• Process improvement, cost savings

• Better quality staff suggestions

• CVM, learning from mistakes

• Customer feedback, better service and product improvements

Senior Management

Plan,

Initiate,

Monitor,

Check,

Review

OJT Manual

Project Teams

Staff Suggestions

CVM sharing

Business Excellence Committee

Customer Feedbacks

Conduct System Performance

Reviews

Make changes to refl ect new developments

Examine variances of performance

Document steps & performance indicators

for each process

Expand & Update long-term information

management plan

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COMPARISON & BENCHMARKING

Areas Companies benchmark Explanation

Customer

Distribution OSIM Qian Hu learnt from OSIM’s chain store strategy, adapting strong points into our own chain store concept.

Customer Service 77th Street, G2000 Qian Hu has adopted good customer service standards and practices and continued to reinforce through regular training of the retail staff.

Operations

Export of Fish, including sales and quarantine

Sunbeam (leading fi sh exporter in Singapore)

Qian Hu learned much and adapted on export sales strategy and procedures in the past years.

Innovation practices;Warehousing

Philips Electronics (S), Nanyang Polytechnic;Singapore Food Industries.

The various processes put in place like project teams and aggressive support of staff suggestions, and increased expenditure into R&D had led Qian Hu to be certifi ed SQC Innovation Class in November 2008.

Financial

Corporate Governance

DBS, ST Engineering, SingTel

Qian Hu’s adoption and creation of several good practices in these 2 areas had won several recognitions at the national level. Our consistent actions toward these are refl ected in the Corporate Transparency awards repeatedly given.

Corporate Transparency

ST Engineering

People

Training/Development/People Excellence

Attending information sharing and best practices seminars.Conrad Centennial, Singapore Food Industries, Hamilton Sundstrand.

Qian Hu has adopted and certifi ed under People Developer Standard (2006), incorporating appropriate best practices from other companies.Innovative ways also infused into many activities and in-house performance awards.

Compensation issues Learning from other companies that have implemented better systems.

Implemented fl exible bonus system tied in to sales/profi t performance for our subsidiaries’ management. Will be looking at other fl exible wage issues like what had been done by Philips Electronics and other “Cafeteria’ points staff benefi ts system.

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People

HR strategies address the needs and development of the workforce

Deployment of the Qian Hu’s HR requirements and plans are deployed through 5 HR Systems, namely:

Implementation and review of plans are done through meetings with line managers, senior management, surveys and studying relevant best practices.

HR Strategies

* Competitive Employer* Competent Resource* Learning & Thinking Workforce* Family Culture Environment

Business Sector Inputs

PeopleExcellence

Environment, labour laws & practices

Needs of Workforce

• Manpower Planning & Staffi ng

• Employee Engagement

• Learning & Development

• Employee Well-being & Satisfaction

• Performance Management & Recognition

Competitive Employer

Strategies

Competent Resources

Learning & Thinking

Family Culture Env

Management Inputs

Qian Hu’s Vision/Core Values/Strategy

Delivery Systems

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EMPLOYEE ENGAGEMENT

Overall Employee Involvement Framework

MECHANISM, CHAMPIONS, PARTICIPATIONS AND OBJECTIVES

Mechanisms Champion Participants Objective

Staff Suggestion Scheme HR Department All employees Encourage improvement ideas from individuals, innovation

Project Team Operation Department Operation staff and some supporting staff

Promote continuous improvements (part of ISO9001 & innovation) and promote teamwork

Staff Dialogue sessions HR Department All employees Promote 2-way communication and common cause/understanding

Staff Recreation Activities Recreation Committee(HR and Ops Staff)

All employees Promote bonding and healthy lifestyle

Annual Charity Event Operations Department

All employees Promote compassion & obligations of good corporate social responsibility

Community Projects (Home visits & Donations)

HR Department All employees Promote compassion & obligations of good corporate social responsibility

Exhibitions (Aquarama/Inter-Zoo)

Business Department Operation and Sales employees

Staff on rotation to man the booth in sales and setup/bench-in, creates identity, and business appreciation

Fish Matrix, corporate newsletter

HR and Ops staff All employees Promote identity, bonding, information sharing.

Leadership InvolvementTraining & Development

Communication/FacilitationRewards & Recognition

• Staff Suggestions (individual)• Project Teams• Staff Dialogue sessions/Social event• Annual charity events, sales; home visits• Community projects• Exhibitions• Staff Recreation events• Fish Matrix, corporate newsletter

Staff Participation Committee/SQA Steering committee

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EMPLOYEE LEARNING AND DEVELOPMENT

TRAINING, DEVELOPMENT AND EVALUATION FRAMEWORK

Learning & Development using PDS Framework(Business Objectives)

Qian Hu Business Objectives

System Review

• Training Effectiveness• System Relevancy• Impact on business results

Implementation thru HODs

• Pre-Course Briefi ng• Post-course Review• Transfer of Learning Target

Achievements

Total Training Plan

Learning/Development Process Review Mechanism

• EOS• Feedback from customers • Pre & Post course evaluation• Feedbacks to/from HODs• Training Evaluation Review

Identify Education/Training Needs

TTP Implemented/Executed throughCourse Providers

(In House & External)

Education & Training Needs Analysis

• Inputs from Dept Heads• TNA Exercise• Annual Appraisal• Execs and Non Execs

Competency matrix

Monitoring by Line Managers and HR on

• Training investments• Utilisation rate• Training hours• Training evaluation• Review of training plan &

system

TechnicalCompetency

Soft skillsCreativity/Problem

SolvingIT Skills

Customer Oriented Skills

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EMPLOYEE WELL-BEING & SATISFACTION

EMPLOYEE WELL-BEING & SATISFACTION PROCESS

Review/Mechanism

1. HR-Line Manager meetings

2. Senior Manager meeting

3. Staff Participation Committee meeting

Employee Health & Satisfaction

Measures of Employee Satisfaction

1. Survey results

2.Turnover rate

3. Accident rate

4. Absenteeism rate

5. Participation in recreation activities

Attributes of Employee Health & Satisfaction

1. Open Communication

2. Equitable rewards system

3. People Development

4. Social, health and recreation activities

5. Conducive work environment

6. Good work relations

Method of Assessment

1. Employee Opinion Survey

2. Resignation/Exit interviews

3. Open Performance Appraisal

4. Staff Dialogue Sessions

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EMPLOYEE PERFORMANCE & RECOGNITION

Review Mechanism

* Benchmarking* Employee Opinion Survey* Management Review

Mgr/Exec

* Target* Annual Review

Non-Exec

* Annual Review* Annual Ranking

Effectiveness Measurement

* Staff Turnover* Employee Opinion

Survey Results* Innovation index

Performance Management System

CompanyP.I. Target

Employee Reward & Recognition

Non-Monetory

* Plaques for Contribution Awards, others

Monetary

* Cash Award* Incentive Payment* Performance Increment

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Kenny YapExecutive Chairman and Managing Director, BT

4 September 2007

”

”

Even in a family business, after you deplete all the capable members you must rely

on outsiders. You have to build a company culture and pull people in from outside.

How you define talent is important – everyone is talented but they may not be suitable for your

company. You don’t have to behave like an MNC, where everyone is determined by

data. There are thin layers of communication in an SME and you can get to know

each other better.

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Processes

Innovation Processes

Qian Hu senior management is always committed to innovation and is evident in the action we taken to improve the processes. Some of the innovations include:

• Automated packaging process, redesign, fl ow improvement• Mobile PDA sales transaction system• In IT, implemented VPN to link up our subsidiaries• New products in the Aquarium Accessories and Pet food• Arowana gender determination and reproductive behavioural study linked to genome and

variety identity through genome fi ngerprinting.

Qian Hu Corp’s behaviours and practices that encourage innovation comprise of:

• Openness to new ideas and trust in all relationships in the organisation• Innovation, creativity and encouragement of risk taking, also through the Creating Value from

Mistakes (CVM) initiative.• Teamwork mindset throughout project teams and CVM • Decision making is encouraged and supported at all levels• Stressed the importance of quality achievement• Full involvement in innovation process through projects and staff suggestions• Learning and development that supports the innovation process• Long term goals defi ned and recognised

PROCESS MANAGEMENT & IMPROVEMENT

QUARANTINE(Ornamental Fish)

PRODUCTION(Accessories, Pet Food)

Sales/D

elivery

PACKING

WAREHOUSINGArowana Breeding

Purchase

MARKETING

Supporting Processes

Outsource Processes

Custom

ersCus

tom

ers

Publication

Human Resource

Maintenance

P.R. & Design

Information System

Finance/Admin.

Research & Development

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QIAN HU KEY PROCESSES & SUPPORTING PROCESSES

Key Processes Requirements Key Performance Indicators

Marketing Customer Requirements • Sales and New Customers• Customers Complaints• Customer Satisfaction Survey• Competitors Rating

Purchase QualityTimeliness

• Vendor Performance• On-time Export Collection• Import Rejects

Packing & Warehousing Accuracy & Operation Standards

• Correctly picked items• Customer Returns

Quarantine/Production Quality and Effectiveness • Death on Arrival, DOA• Daily Losses• Export shipment return

Arowana Breeding Quality and Effectiveness • Death on Arrival• Daily Losses• Offsprings Production

Delivery Effi ciency • Export Shipment Return• Customer Returns• On-Time Delivery

Key Processes and main KPIs

Mgt Support Processes Requirements Performance Measures

Finance Accuracy & Timeliness • Accurate and timely fi nancial reporting• Cash and Cash equivalents

Quality Assurance (integrated in Operations)

System Effectiveness • Certifi cation to ISO 9001, ISO 14001• QA Audits

Human Resources Staffi ng • Employee Satisfaction Index• Staff Turnover Rate

Training • Average Training Hours/Places• Utilisation Rate

Product Development Meeting customer needs • Number of new products

Public Relations/Design Visitors satisfaction • Visitors’ feedback• Originality of packaging design

Publication Timeliness andMeeting requirements

• On-time delivery• Originality of designs

Information System ResponsivenessCompetency of staff

• Speed and quality of response• Reliability of service

Maintenance Availability of resources for operations

• Downtime frequency• Rectifi cation effi ciency

Support Processes and main KPIs

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Nature of Risks Processes/Measures Responsibility of

Computer server failure Daily backups and weekly maintenance Accounts and Admin.

Personnel risks • Succession plans• Overseas business trips to be planned

with continuity assurance in mind for home base operation, especially key personnel

Division Directors and Board

Electrical failure (critical as air pumps cannot be stopped)

• Activated sirens to prompt for re-setting• Standby generator

Operational staff; Security guard on duty

Water shortage (critical) Catchment/Ground water and huge storage tanks, enough to provide for 15 days of fi ltered water for all tanks.

Operational staff

Fire and injury related incidents; Risk assessment

• Fire drills and evacuation exercises as per ISO14001:2004

• Trained fi rst aid staff

Operation GM; Operational staff; Workplace Safety & Health Committee

Arowana protection/rescue Huge aquarium tanks, anytime available for recovery purpose in event where arowana survival is at risk.

Wan Hu division operational staff

Fraud • Whistle blowing policy and process in place

• Accounting approval limits/internal audits

Accounts and Admin.

Processes and measures to ensure business continuity in the event of disaster

SUPPLIER & PARTNERSHIP MANAGEMENT

Defi ning and selecting suppliers are achieved through maintaining stringent criteria for ‘Approved Vendor List” (AVL), suppliers performance monitoring and supplier partnership programme.

Key Performance Requirements

The key suppliers peformance indicators are as follows:

• Reject rate• On-time Export Collection• Import D.O.A.• Import Rejects• AVL retention rate

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The following methods are used to ensure the suppliers meeting the requirements:

1) Approved Vendor List The Approved Vendor List keeps a record of all the suppliers & grade them based on their past

performance in terms of quality and delivery.

All new suppliers are required to submit their company profi le and quality certifi cation in order to gauge their experience, capabilities and organisation resources for audit purposes.

2) Quality Audits Quality audit function conduct audits of major suppliers on a regular basis to ensure conformance to their

quality system, process parameters and product characteristics.

For suppliers of critical components, an audit of their quality system is required before issue of the purchase order. The audit is usually conducted by Operations Manager and the Administration Manager.

3) Supplier’s Quality Feedback Suppliers are informed through the purchaser on non-conforming incoming goods. Inspection results

are closely monitored and suppliers will be informed timely of any deviations/rejects through the issue of Corrective Action Request form. This will be followed by a discussion and/or on-site verifi cation with the suppliers.

Supplier/Vendor Partnership Program

We have meetings in informal setting with vendors in mind to discuss and understand what the supplier needs and the ability to support Qian Hu’s requirements on a continual and long term basis. We will rely on the out-going inspection at source, & these suppliers will be given priority for new orders and sustained orders over the others. Feedback is provided to help the vendors improve.

Quality Audits/Trouble-shooting

In cases where the suppliers encountered any diffi culties in achieving the desired specifi cation, Qian Hu is always willing to offer our help and advice on areas of non-conformances and improvements.

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Customers

Customer Requirements

We want:

• Timeliness• Value for money• Quality• Varieties• Product Knowledge

Customer Requirement Management Process

Customer Focus

Individual

Listening Posts

1 Multi-prong contacts2 Information sharing3 Agents4 Overseas offi ce5 Customer involvement6 Involvement in customer activities7 Participation in conferences and exhibitions8 Customer survey/annual feedback

Determine customer requirements

Evaluate and improve processes of determining customers’ current and future requirements

Incorporate into strategic plans, macro and micro levels

Retailer/Wholesaler

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Customer Relationship Manager

Customer

Senior Management

Marketing, Product,Operation Manager

CUSTOMER RELATIONSHIP

Access Channels for Customers

Qian Hu provides easy access for customers’ feedback, enquiries, assistance and complaints. In case of emergencies, customers are given contact information of the organisation.

Other channels of contact:

i) Dedicated marketing personnel or managers are assigned to specifi c customers. This gives every customer direct access to Qian Hu on a regular basis.

ii) The organisation web site gives readily contact/feedback facility and follow-ups are done on a timely basis.

iii) Sales and production staffs interact with customers on a weekly basis, and in some cases on a daily basis if there is a need. The managers assigned to these projects have to ensure constant communication with customers e.g. through regular project meetings. There are arrangements to enhance daily contact and facilitates face-to-face communication.

iv) Qian Hu practices an open-door management style. Customers have open and direct access to the Directors/Managers of Qian Hu.

v) Qian Hu capitalizes on information technology such as e-mails; PDAs for marketers and web based technology for remote access purposes. Every executive has an e-mail account to communicate with customers.

vi) Customer survey results are monitored, analysed and reviewed at management meetings.

vii) The group participates in local and overseas exhibitions. These exhibitions give the group an opportunity to reach out to new customers, facilitate interaction with overseas customers, allowing them to provide direct feedback

viii) Qian Hu’s senior management communicates with top management on customers on a regular basis. This is in addition to the regular visits by marketing and sales personnel. We have new product launch seminar for customers, eg. The launch of Arcadia’s new lightings.

Key Customers’ Contact Requirements

Customers’ contact requirements are responsiveness, excellent customer service, accessability, good quality products/services, value for money and prompt resolution of problems.

All customer contact personnel are trained to provide excellent customer service. Managers assigned to assist customers are given a certain degree of authority to satisfy customers. All valid complaints would be deliberated by contacted personnel and documented. Complaints would be channeled accordingly for corrective actions. Problems or issues raised by customers that cannot be resolved would be forwarded to senior management via phone calls or e-mails for prompt decision-making within 24 hours depending on the level of urgency.

Ensuring Complaints are resolved effectively and promptly

The Customer Relationship Manager with the committee members co-ordinate and involve key staffs to ensure effective and prompt address of customer issues.

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Customer Satisfaction

Customer satisfaction is determined through:

• Customer Satisfaction Survey• Customer Commendations• Performance Indices (No. of complaints; Sales Return; On-time Delivery)• Front Line Staff Feedback

Translating Customer Satisfaction into Improvement Plans

Feedback mechanism/

Performance Indices

Analysis by Divisions

Division Improvement Plans

Review by Qian Hu Management

Strategic Plan

ImplementationProcedure; Process;

Training; Product/Service improvements

Acquire technology; New product; Partnership

development

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Results

7.1 Customer Results

• Customer Satisfaction Survey• Number of Customer Complaints• Repeat Customers• New Customers• Competitors Rating• Customer Return of goods• On-Time Delivery• Export Shipment Return

Customer Satisfaction level, %

Qian Hu 2005 – 08 Average

81.7%

National Index, Retail 08 2008 68.1%

National Index, Others 2008 65.4%

Baldridge winner-US Company

2004/05 85.0%

National Index, Retail 2008 68.1%

UKCSI Jan 2009 77%

UKCSI: UK Customer Service Institute

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7.2 Financial & Market Results

• Sales Turnover• Profi t after tax• Value Added per employee• Return on Assets• Return on Equity• Total Value Added• Operating Cash Flow• Cash & Cash Equivalent• Earnings per share• Net Asset per share• Market Share• Product/Services Range and Varieties

Business benchmark: Transparency Awards (SIAS), BT-CTI, Best Investor Relations awards, Best Managed Board, Annual Report award.

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7.3 People Results

• Employee Opinion Survey (Satisfaction Index)• Staff Engagement Index 2009• Number of Suggestions• Suggestion Implementation rate• Quality of Suggestions• Staff Participation

Qian Hu Y05 – Y08 62.8

BE winner 1 Y04 – Y06 109

BE winner 2 Y04 – Y06 62

BE winner 3 Y03 – Y05 45.7

BE winner 4 Y03 – Y07 43.9

BE winner 5 Y04 – Y07 77.5

Comparable Learning hours per staff, average past years

Stall Turnover Rate

Y05 Y06 Y07 Y08

Qian Hu 1.26% 1.01% 1.54% 0.62%

BE winner 5 1.14% 1.23% 1.21% n.a.

BE winner 6 0.8% 0.65% 0.9% 1.1%

BE winner 4 0.95% 2.0% 1.3% n.a.

BE winner 3 2.15% n.a. n.a. n.a.

MOM 2.4% 2.2% 2.3% 2.3%

CIPD – UK [average 12 mths] 1.84% 0.88% 1.66% 0.81%

CIPD: Chartered Institute of Personnel and Development-UK

• Average Learning hours• Training Utilization rate• Average Training Places• Training expense against payroll• Staff Turnover rate• Accident rate• Absenteeism (M/C days per staff)

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7.4 Operational Results

• Daily Losses• Export D.O.A.• Correctly Picked Items• Arowana Off-springs production• Water Quality• Audit• Equipment breakdown• Number of Trademarks• Innovation, R&D expenses per $Sales

Y 2008 France, Coy A

France, Coy B

Germany, Coy C

Qian Hu

Daily Losses 5.7% 4.88% 4.3% 2.87%

Export DOA 2.8% 2.74% 2.9% 2.5%

• Import D.O.A.• Import Rejects• On-time Collection• Vendor Retention rate• System Time-up• Financial Result announcement• Announcement of results, days• Analyst briefi ngs per year• Release of Financial Report

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Our consistent effort over the years in various areas of corporate responsibilities in transparency and accountability has been well recognized. The following acknowledgements emanate our commitment:

1) With reference to the benchmark set by the Singapore Code of Corporate Governance issued by the Ministry of Finance, Qian Hu is committed to meeting the standards.

2) Best Managed Board Award, Singapore Corporate Awards 2008, as assessed and presented by The Business Times and SGX.

3) Best Corporate Governance Award, as assessed by Investor Relations Professional Association and the SGX, in 2007.

4) Most Transparent Company Award, as assessed and presented by Singapore Investor Association of Singapore. We had been presented with this award every year since 2001.

5) Best Annual Report (SESDAQ) Award, in 2003 and in 2006.

6) Corporate Transparency Index at a highly impressive 94 points, as assessed by SGX, and remains to date in top position ranking for many years.

7) Singapore 1000 Public Listed Companies 2009 (SME 500), as ranked by DP Information Group, February 2009.

ISO9001:2008 and ISO14001:2004 compliance: All ISO certifications renewed annually.

Qian Hu earnestly participates in several charitable activities and social commitment in line with our company’s Public Responsibility statement:

“We believed that Lives should be Treasured and Cherished”

Our participation rate in charitable events has been positive so far.

Charitable Commitment – Time

2004 2005 2006* 2007 2008*

Total Hours 770 524 84 554 40

Target 800 750 750 700 650

* DuetounavailabilityofsuitablelocationfortheCharityexhibitioninJune

Charitable donations average of 1.72% ratio, way above the national average of

0.22% against net profit.

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AWARDS

Date Award/Award by

Nov 2009 Business Excellence Award 2009 (BE Governing Council)1) Singapore Quality Award, SQA Winner 2009 (2nd time)2) People Excellence Award (PE Award)

Oct 2009 Most Transparent Company Award, Mainboard – Small Caps category 1st

Singapore Investor Association of Singapore

June 2009 ITE – COJT Centre certifi cation (QHFFT)

May 2009 Aquarama 2009 Exhibition (Competition): (14)Cichlid – Class 1: 2nd PrizeCichlid – Class 2: 2nd and 3rd PrizesCichlid – Class 3: 2nd prizeCorydoras – 2nd and 3rd PrizesGourami – Class 1: 2nd Prize; Class 2: 1st PrizeMolly – Class 2: 2nd PrizePleco – Class3: 1st prizeNew Species/FW – Class 1, 1st and 2nd PrizesNew Species/FW – Class 2, 1st and 2nd Prizes

Apr 2009 Companies less than $300 mil. market capitalization:1) Best Managed Board Award (Merit)2) Chief Financial Offi cer of the Year (Ms Lai Chin Yee)3) Best Investor Relations Award (Bronze)4) Best Annual Report Award (Gold)Organised by SPH; The Business Times, supported by SGX, other partners

Feb 2009 Singapore 1000 Public Listed Companies 2009 (SME 500)DP Information Group (ranking body)

Nov 2008 SQC Innovation ClassSPRING

Nov 2008 Pro-Family Business Mark certifi cationSingapore Productivity Association, SPA

Oct 2008 Most Transparent Company Award, Mainboard – Small Caps categorySingapore Investor Association of Singapore

June 2008 Top 10 Outstanding Entrepreneur Award 2008 (China)

Feb 2008 Best Managed Board Award, Singapore Corporate AwardsMarket Cap. Below $500 mil. – Business Times and SGX

Nov 2007 Professional Enterprise Award 2007 (Top Tier)AMA – Asian Management Association and CCA

Oct 2007 Most Transparent Company Award, Mainboard – Small Caps category(1st) Singapore Investor Association of Singapore

Sept 2007 Best Overall Investor Relations, small or mid-cap, WinnerBest Corporate Governance, small or mid-cap, WinnerInvestor Relations Professionals Association (S) & Singapore Exchange

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Date Award/Award by

May 2007 Aquarama 2007 Exhibition (Competition): (13)Congo Tetra – Class 1, 3rd PrizeCichlid, African – Class 1, 1st & 2nd PrizeCichlid, Central American – 1st & 2nd PrizeCorydoras – Class 1, 2nd PrizeGourami – 1st & 2nd Prize; Metallic Dwarf, 1st PrizeMolly – 2nd PrizeNew Species/Varieties – Class 1, 3rd PrizeNew Species/Varieties – Class 2, 2nd & 3rd Prize

Sept 2006 Most Transparent Company Award, Mainboard – Small Caps category(runners-up) Singapore Investor Association of Singapore

Mar 2006 1) Best Investor Relations Award (Market Cap: below S$500mil)2) Best Annual Report Award (Market Cap: below S$500mil)Under the Singapore Corporate Award organised by The Business Times, ICPAS, IMAS, SIAS, SID

Jan 2006 Corporate Transparency Index (CTI) scored highly at impressive 94 points – SGX

Jan 2006 People Developer Standard certifi ed (SPRING)

Oct 2005 Most Transparent Company Award, Mainboard – Small Caps categorySingapore Investor Association of Singapore

May 2005 Aquarama 2005 Exhibition (Competition): (8)Molly – Class 2, 1st PrizeTetra – Class 1, 1st PrizeSwordtail – Class 1, 3rd PrizePlaty – Class 1, 2nd PrizeNew Species/Varieties – Class 1, 3rd PrizeNew Species/Varieties – Class 2, 1st; 2nd; 3rd Prize

Sept 2004 Most Transparent Company Award, Mainboard – Small Caps categorySingapore Investor Association of Singapore

Sept 2004 SQA: Singapore Quality Award 2004 for Management Excellence(BE Governing Council/SPRING)

Nov 2003 Best-Managed Board Award – Special MentionSingapore Institute of Directors (SID), the Singapore Business Federation, Hewitt Associates & The Business Times, Singapore

Oct/Nov2003

Aquarama 2001 Exhibition (Competition): (8)Tetra – Class 1 (Open) 1st PrizeGourami – Class 1 (Dwarf) 1st PrizeSwordtail – Class 1 (Open) 1st PrizeSwordtail – Class 1 (Captive-bred, New Species) 1st PrizeSwordtail – Class 2 (Wild Caught, New Species) 1st PrizeGourami – Class 2 (Other Gourami) 2nd PrizeGourami – Class 2 (Wild Caught, New Species) 3rd PrizeDragon Fish – Class 1 (Red) 3rd Prize

2003 Services Entrepreneur of the Year Award – Dr Kenny Yap– Ernst & Young, Singapore

Sept 2003 Most Transparent Company Award under Services/Utilities/Agriculture category (3rd time recognition)– Singapore Investor Association of Singapore

Sept 2003 Golden Circle (Special Merit Award)– Singapore Investor Association of Singapore

2003 Singapore’s Top 3 Best-Run Small Companies– 11th Asiamoney Best-Managed Companies Poll, Hong Kong

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Date Award/Award by

July 2003 International Headquarters Status– Economic Development Board

2002/03 Best Annual Report, Companies (SESDAQ) – First Runner Up– 29th Annual Report Awards, Singapore (ICPAS; SID; SIAS; SGX; BT)

2002 Young Chinese Entrepreneur Award – Dr Kenny Yap– Yazhou Zhoukan, Singapore

2002 Highly Commended in “Grand Prix for Investor Relations by a Small or Medium Sized Company” category– Investor Relations Magazine Asia Awards 2002, Investor Relations Society (Asia) &

Asian Wall Street Journal

2002 Most Favoured SESDAQ Stock – 2002 – Smart Investor Magazine, Singapore

2002 Most Transparent Company Award, SESDAQ & Small Caps category– Singapore Investor Relations Association of Singapore

2002 #1: The Business Times Transparency Poll– The Business Times, Singapore

2001 “The Stars of Asia – Entrepreneurs” – Dr Kenny Yap– Asiaweek, Hong Kong

2001 Singapore Quality Class Award– SPRING Singapore

2001 Most Transparent Company Award, SESDAQ & Small Caps category– Singapore Investor Relations Association of Singapore, Singapore

2001 Aquarama 2001 Exhibition (Competition): (5)Dragon Fish – Class 1 (Red) 1st PrizeDragon Fish – (New Species/Varieties: Wild Caught) 1st PrizeGoldfi sh Orandas – 2nd PrizeGoldfi sh Ryukin – 3rd PrizeGoldfi sh Ryukin – (New Species/Varieties: Bred-in-Captivity) 3rd Prize

Nov 2000 International Management Action AwardInstitute of Management (Singapore) and Singapore Productivity and Standards Board, Singapore

Sept 2000 Entrepreneur of the Year Award12th Rotary-ASME Entrepreneur of the Year Award 2000

Nov 1999 The International Europe Award for QualityThe 13th International Europe Award for Quality, Paris

1999 Aquarama 1999 Exhibition (Competition)(5)Grand Champion, Dragon Fish CategoryDragon Fish – Class 2 (Gold) First PrizeDragon Fish – Class 1 (Red) First PrizeGoldfi sh – Class 2: Pearl Scaled Varieties (3rd Prize)Tetra – Class 1: Wild type (3rd Prize)

1998 Finalist: 10th Rotary ASME Entrepreneur of the Year AwardRotary Club of Singapore, Singapore

1998 Singapore Youth Award for EntrepreneurshipNational Youth Council of Singapore, Singapore

1998 ISO 14001 Award: Environmental Management SystemInternational Organization for Standard

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Produced by Qian Hu Corporation Ltd.

Copyright Notice© Qian Hu Corp. Ltd, 2010

All rights reserved. These materials are confi dential and proprietary to Qian Hu Corporation Ltd and no part of these materials should be reproduced, published in any form by any means, electronic or mechanical including photocopy or any information storage or retrieval system nor should the materials be disclosed to third parties without the express written authorization of Qian Hu Corporation Ltd.

QIAN HU CORPORATION LIMITED COMPANY REG. NO.: 199806124N

No. 71 Jalan Lekar Singapore 698950

Tel: (65) 6766 7087 Fax: (65) 6766 3995

www.qianhu.com