UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark one)

FORM 20-F

OR

For the fiscal year ended ________________.

OR

OR

Date of event requiring this shell company report: November 20, 2009
for the transition period from __________ to ___________

Commission file number 000-52275

China Ceramics Co., Ltd.

(Exact name of the Registrant as specified in its charter)

British Virgin Islands

(Jurisdiction of incorporation or organization)

c/o Jinjiang Hengda Ceramics Co., Ltd.
Junbing Industrial Zone
Anhai, Jinjiang City
Fujian Province, PRC
Telephone +86 (595) 8576 5051

(Address of principal executive offices)

Huang Jia Dong
c/o Jinjiang Hengda Ceramics Co., Ltd.
Junbing Industrial Zone
Anhai, Jinjiang City
Fujian Province, PRC
Telephone +86 (595) 8576 5051

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

with a copy to:

Stuart Management Company
33 Riverside Avenue
5 ^th Floor
Westport, CT 06880

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of each exchange on which registered
UNITS, EACH CONSISTING OF ONE ORDINARY SHARE AND ONE WARRANT		NYSE AMEX EQUITIES
ORDINARY SHARES		NYSE AMEX EQUITIES
WARRANTS TO PURCHASE ONE ORDINARY SHARE		NYSE AMEX EQUITIES

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

On November 20, 2009, the registrant had 8,950,171 ordinary shares outstanding.

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

o  Large Accelerated filer		o  Accelerated filer		x  Non-accelerated filer

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

o  US GAAP		x  International Financial Reporting Standards as issued by the International Accounting Standards Board		o  Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o  Item 17  o  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No o

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of the securities under a plan confirmed by a court.

Yes o No o

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		Page
PART I
Item 1. Identity of Directors, Senior Management and Advisers			3
Item 2. Offer Statistics and Expected Timetable			3
Item 3. Key Information			3
A. Selected financial data			3
B. Capitalization and indebtedness			3
C. Reasons for the offer and use of proceeds			4
D. Risk factors			4
Item 4. Information On The Company			4
A. History and Development of the Company			4
B. Business overview			4
C. Organizational structure			4
D. Property, plants and equipment			5
Item 4A. Unresolved Staff Comments			5
Item 5. Operating and Financial Review and Prospects			5
Item 6. Directors, Senior Management and Employees			5
A. Directors and senior management			5
B. Compensation			5
C. Board practices			5
D. Employees			5
E. Share ownership			5
Item 7. Major Shareholders and Related Transactions			5
A. Major shareholders			5
B. Related party transactions			6
C. Interests of experts and counsel			6
Item 8. Financial Information			6
A. Consolidated Statements and Other Financial Information			6
B. Significant Changes			6
Item 9. The Offer and Listing			7
A. Offer and listing details			7
B. Plan of distribution			7
C. Markets			7
D. Selling shareholders			7
E. Dilution			7
F. Expenses of the issue			7
Item 10. Additional Information			7
A. Share capital			7
B. Memorandum and articles of association			7
C. Material contracts			7
D. Exchange controls			8
E. Taxation			8
F. Dividends and paying agents			8
G. Statement by experts			8
H. Documents on display			8
I. Subsidiary Information			8
Item 11. Quantitative and Qualitative Disclosure About Market Risk			8
Item 12. Description of Securities Other Than Equity Securities			8
PART III
Item 17 Financial Statements			10
Item 18. Financial Statements			11
Item 19 Exhibits			56
Signatures			57

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CERTAIN INFORMATION

In this Shell Company Report on Form 20-F (the “Report”), unless otherwise indicated, “we,” “us,” “our,” and “China Ceramics” refers to China Ceramics Co., Ltd., a company continued in the British Virgin Islands, and its subsidiaries subsequent to the Business Combination referred to below. Unless the context indicates otherwise, all references to “Hengda” in this Report refer to Success Winner Limited, a subsidiary of China Ceramics and the entity through which the operating business is held, and its consolidated subsidiaries, including Jinjiang Hengda Ceramics Co., Ltd. The “Business Combination” refers to the merger of China Holdings Acquisition Corp. (“China Holdings”) with China Ceramics, resulting in the redomestication of China Holdings to the British Virgin Islands as China Ceramics and the acquisition of all of the outstanding securities of Hengda by China Ceramics, each of which transactions was consummated substantially concurrently on November 20, 2009. Unless the context indicates otherwise, the “Company” refers to China Holdings prior to the Business Combination and China Ceramics following the Business Combination.

Unless the context indicates otherwise, all references to “China” refer to the People’s Republic of China. All references to “provincial-level regions” or “regions” include provinces as well as autonomous regions and directly controlled municipalities in China, which have an administrative status equal to provinces, including Beijing.

All references to “Renminbi,” “RMB” or “yuan” are to the legal currency of the People’s Republic of China and all references to “U.S. dollars,” “dollars,” “$” are to the legal currency of the United States. This Report contains translations of Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. We make no representation that the Renminbi or U.S. dollar amounts referred to in this Report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On November 20, 2009, the cash buying rate announced by the People’s Bank of China was RMB6.8278 to $1.00.

FORWARD-LOOKING STATEMENTS

This Report contains “forward-looking statements” that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are ``forward-looking statements” including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.

These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings “Risk Factors”, “Operating and Financial Review and Prospects,” “Information on our Company” and elsewhere in this Report.

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C.  Reasons for the Offer and Use of Proceeds

Not required.

D.  Risk factors

The risks associated with Hengda’s business are described in the F-4 in the Section entitled “Risk Factors” beginning on page 29 and are incorporated by reference herein.

ITEM 4.  INFORMATION ON THE COMPANY

A.  History and Development of the Company

China Holdings was a special purpose acquisition company formed for the purpose of acquiring, through a stock exchange, asset acquisition or other similar business combination, an operating business in the People’s Republic of China. China Holdings consummated its initial public offering on November 21, 2007 and generated aggregate gross proceeds of $125 million. On November 20, 2009, China Holdings acquired Success Winner Limited (`Hengda`) by purchasing all of its outstanding shares from existing shareholders in exchange for an aggregate of 5,743,320 newly issued ordinary shares of its corporate successor, China Ceramics Co., Ltd. (“China Ceramics”), the surviving company of the redomestication of China Holdings to the British Virgin Islands. In addition, concurrent with the closing, 8,185,763 of the merger shares were delivered into an escrow account and be subject to release to the pre-Business Combination shareholders upon the attainment of certain financial thresholds as follows:

From escrow at the close of 2009 audit, if certain earnings thresholds are met			1,214,127
From escrow at the close of 2010 audit, if certain earnings thresholds are met			1,794,800
From escrow at the close of 2011 audit, if certain earnings thresholds are met			2,176,836
From escrow if the closing price of China Ceramics’ common stock is at or above $20.00 per share for twenty trading days in a thirty trading day period prior to April 30, 2012			2,000,000
From escrow if the closing price of China Ceramics’ common stock is at or above $25.00 per share for twenty trading days in a thirty trading day period prior to April 30, 2012			1,000,000
Total merger shares held in escrow not considered outstanding at closing			8,185,763

The escrowed shares will be released without regard to continued employment and are only contingent on future earnings and the stock price of China Ceramics. Upon their release from escrow, the shares will be recorded as outstanding, and will be included in the calculations of earnings per share from such date.

The Business Combination followed the favorable vote of the public stockholders of China Holdings in accordance with the SPAC business combination approval procedures established at the time of China Holdings’s IPO. Concurrent with the acquisition, China Holdings purchased an aggregate of 14,398,649 shares of its common stock from its public stockholders for an aggregate purchase price of approximately $74.0 million (in transactions intended to assure the successful completion of the Business Combination). As a result, following the acquisition China Ceramics had a total of 8,950,171 shares outstanding and approximately $11.9 million was available for working capital purposes from China Holdings’s trust account.

B.  Business Overview

The business of Hengda is described in the F-4 in the section entitled “Hengda’s Business” beginning on page 99, and the business of China Holdings is described in the F-4 in the section entitled “CHAC Business” beginning on page 127, which are incorporated herein by reference.

C.  Organizational Structure

The Company’s organizational structure is described in the F-4 in the section entitled “Summary – After the Business Combination” on page 10 and is incorporated by reference herein.

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D.  Property, plant and equipment

The facilities of the Company are described in the F-4 in the section entitled “Hengda’s Business—Production Process and Facilities” on page 103 and “Hengda’s Business—Properties” on page 107, which are incorporated by reference herein.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.  Directors and senior management

Our directors and executive officers immediately after the consummation of the Business Combination are described in the F-4 in the section entitled “Directors and Executive Officers after the Business Combination” beginning on page 135, which is incorporated herein by reference.

B.  Compensation

The compensation of the executive officers and directors of Hengda is described in the F-4 in the section entitled “Directors, Executive Officers, Executive Compensation and Corporate Governance — Compensation of Officers and Directors of Success winner” beginning on page 138, which is incorporated herein by reference.

C.  Board Practices

Information about our directors and audit, compensation and nominating and corporate governance committees are described in the F-4 in the sections entitled “Directors, Executive Officers, Executive Compensation and Corporate Governance—Board Committees” beginning on page 136, which is incorporated by reference herein.

D.  Employees

The table below provides information as to the total number of employees at the end of the last three fiscal years and as of June 30, 2009. There is no history of employee disputes or unrest.

		2006				2007				2008				June 30, 2009
Number of Employees			1,505				1,541				1,551				1,692

E.  Share Ownership

See Item 7A.

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As of November 20, 2009 there were a total of 8,950,171 ordinary shares outstanding. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them.

Name and Address of Beneficial Owner (1)		Number of Shares of Common Stock Beneficially Owned				Percentage of Ownership
Paul K. Kelly			1,370,100	(2)			13.9	%
James D. Dunning, Jr.			1,370,100	(2)			13.9	%
Cheng Yan Davis			144,000	(3)			1.6	%
Huang Jia Dong			0				—
Su Pei Zhi			0				—
Ding Wei Dong			0				—
Li Shun Qing			0				—
Hen Man Edmund			0				—
All directors and executive officers as a group (7 individuals)			2,884,200				26.4	%
Wong Kung Tok			5,743,320				64.2	%
Dorset Management Corporation (4)			1,350,000				15.1	%
Alan G. Hassenfeld			719,907	(5)			7.6	%

B.  Related Party Transactions

Related party transactions of China Holdings and Hengda are described in the F-4 in the section entitled “Related Party Transactions” beginning on page 143, which is incorporated by reference herein.

C.  Interests of Experts and Counsel

Not Applicable.

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ITEM 9.  THE OFFER AND LISTING

A.  Offer and Listing Details

Information about the market price of our units, common stock and warrants prior to the Business Combination is described in the F-4 in the section entitled “Market Price Information” on page 28 and incorporated herein by reference. The following table includes information of the high and low market prices for the last six months:

		Units								Common Stock								Warrants
November		$	13.00			$	8.83			$	10.01			$	8.40			$	1.85			$	0.36
October		$	10.40			$	9.66			$	9.76			$	9.62			$	0.51			$	0.12
September		$	10.49			$	9.75			$	9.75			$	9.65			$	0.50			$	0.26
August		$	10.05			$	9.60			$	9.75			$	9.55			$	0.44			$	0.08
July		$	9.90			$	9.55			$	9.68			$	9.48			$	0.12			$	0.07
June		$	9.86			$	9.30			$	9.58			$	9.38			$	0.12			$	0.04

Holders of our ordinary shares, warrants and units (sometimes referred to herein as “securities”) should obtain current market quotations for their securities. There can be no assurance that a trading market will develop for these securities.

B.  Plan of Distribution

Not Applicable.

C.  Markets

Our ordinary shares, warrants and units are quoted on the NYS Amex Equities under the symbols “HOL”, “HOL.WS” and “HOL.U”, respectively.

D.  Selling Shareholders

Not Applicable.

E.  Dilution

Not Applicable.

F.  Expenses of the Issue

Not Applicable.

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D.  Exchange controls

Under British Virgin Islands law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions that affect the remittance of dividends, interest or other payments to nonresident holders of our shares.

E.  Taxation

The material United States federal income tax consequences of the Business Combination and of owning and disposing of our securities following the Business Combination are described in the F-4 in the Section entitled “Material U.S. Federal Income Tax Consequences” beginning on page 158 and “Material PRC Income Tax Consequences” beginning on page 161, which are incorporated herein by reference.

F.  Dividends and paying agents

Information about our dividend policy is described in the F-4 in the section entitled “Dividend Policy” beginning on page 45 and incorporated by reference herein.

G.  Statement by experts

Not applicable.

H.  Documents on display

Documents concerning us that are referred to in this document may be inspected at Junbing Industrial Zone, Anhai, Jinjiang City, Fujian Province, PRC.

In addition, we will file annual reports and other information with the Securities and Exchange Commission. We will file annual reports on Form 20-F and submit other information under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders will be exempt from the insider short-swing disclosure and profit recovery rules of Section 16 of the Exchange Act. Annual reports and other information we file with the Commission may be inspected at the public reference facilities maintained by the Commission at Room 1024, 100 F. Street, N.E., Washington, D.C. 20549, and copies of all or any part thereof may be obtained from such offices upon payment of the prescribed fees. You may call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms and you can request copies of the documents upon payment of a duplicating fee, by writing to the Commission. In addition, the Commission maintains a web site that contains reports and other information regarding registrants (including us) that file electronically with the Commission which can be assessed at http://www.sec.gov.

I.  Subsidiary Information

Not required.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

COMBINED INCOME STATEMENTS
FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

						Year ended 31 December
		Notes				2006				2007				2008
						RMB’000				RMB’000				RMB’000
Revenue			4				495,820				649,970				776,570
Cost of sales							(346,269	)			(441,940	)			(533,330	)
Gross profit							149,551				208,030				243,240
Other income			4				1,586				2,339				2,685
Selling and distribution expenses							(30,424	)			(38,166	)			(46,008	)
Administrative expenses							(5,333	)			(6,158	)			(9,932	)
Finance costs			5				(301	)			(576	)			(941	)
Foreign exchange gains							—				—				16
Profit before taxation			6				115,079				165,469				189,060
Income tax expense			7				(13,825	)			(19,863	)			(24,027	)
Profit attributable to shareholders							101,254				145,606				165,033
Earnings per share – Basic (RMB cents)			8				N/A				N/A				N/A

 
 
The annexed notes form an integral part of and should be read in conjunction with these Combined Financial Statements

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

COMBINED BALANCE SHEETS
AS AT 31 DECEMBER 2006, 2007 AND 2008

						As at 31 December
		Notes				2006				2007				2008
						RMB’000				RMB’000				RMB’000
ASSETS AND LIABILITIES
Non-current assets
Property, plant and equipment			9				90,574				80,766				72,172
Land use rights			10				175				172				168
							90,749				80,938				72,340
Current assets
Inventories			11				115,031				156,244				131,562
Trade receivables			12				140,389				181,236				195,848
Other receivables			13				2,914				3,364				3,364
Cash and bank balances			14				12,593				18,507				51,606
							270,927				359,351				382,380
Current liabilities
Trade payables			15				110,570				137,948				92,888
Accrued liabilities and other payables			16				158,143				56,526				90,948
Interest-bearing bank borrowings			17				4,500				9,500				12,300
Income tax payable							3,197				5,443				5,133
							276,410				209,417				201,269
Net current (liabilities)/assets							(5,483	)			149,934				181,111
Net assets							85,266				230,872				253,451
EQUITY
Total shareholder’s equity							85,266				230,872				253,451

 
 
The annexed notes form an integral part of and should be read in conjunction with these Combined Financial Statements

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

COMBINED STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

		Share capital				Statutory reserve				Merger reserve				Retained earnings				Total equity
		RMB’000				RMB’000				RMB’000				RMB’000				RMB’000
		(Note 18)				(Note 19(a))
Balance at 1 January 2006			27,900				16,161				—				—				44,061
Net profit for the year			—				—				—				101,254				101,254
Total recognised income for the year			—				—				—				101,254				101,254
Transfer to statutory reserve			—				10,125				—				(10,125	)			—
Increase in paid-up capital			31,080				—				—				—				31,080
Dividends (Note 20)			—				—				—				(91,129	)			(91,129	)
Balance at 31 December 2006			58,980				26,286				—				—				85,266
Balance at 1 January 2007			58,980				26,286				—				—				85,266
Net profit for the year			—				—				—				145,606				145,606
Total recognised income for the year			—				—				—				145,606				145,606
Transfer to statutory reserve			—				3,204				—				(3,204	)			—
Balance at 31 December 2007			58,980				29,490				—				142,402				230,872
Balance at 1 January 2008			58,980				29,490				—				142,402				230,872
Net profit for the year			—				—				—				165,033				165,033
Total recognised income for the year			—				—				—				165,033				165,033
Arising from Reorganisation			(58,980	)			—				58,980				—				—
Dividends (Note 20)			—				—				—				(142,454	)			(142,454	)
Balance at 31 December 2008			0*				29,490				58,980				164,981				253,451

 
 
The annexed notes form an integral part of and should be read in conjunction with these Combined Financial Statements

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

COMBINED CASH FLOW STATEMENTS
FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

						Year ended 31 December
		Notes				2006				2007				2008
						RMB’000				RMB’000				RMB’000
Cash flows from operating activities
Profit before taxation							115,079				165,469				189,060
Adjustments for
Amortisation of land use rights			10				4				3				4
Bad debts written off			6				112				—				—
Depreciation of property, plant and equipment			6/9				13,728				14,792				15,613
Finance costs			5				301				576				941
Interest income			4				(154	)			(168	)			(394	)
Foreign exchange gains							—				—				(16	)
Operating profit before working capital changes							129,070				180,672				205,208
(Increase)/decrease in inventories							(26,217	)			(41,213	)			24,682
Increase in trade receivables							(20,919	)			(40,847	)			(14,612	)
Increase/(decrease) in trade payables							26,982				27,378				(45,060	)
Increase/(decrease) in accrued liabilities and other payables							5,258				(535	)			10,290
Cash generated from operations							114,174				125,455				180,508
Interest paid							(301	)			(576	)			(941	)
Income tax paid							(10,628	)			(17,617	)			(24,337	)
Net cash generated from operating activities							103,245				107,262				155,230
Cash flows from investing activities
Acquisition of property, plant and equipment			9				(3,728	)			(4,324	)			(7,019	)
Interest received							154				168				394
Net cash used in investing activities							(3,574	)			(4,156	)			(6,625	)
Cash flows from financing activities
Bank borrowings obtained							9,000				9,500				17,300
Repayments of bank borrowings							(4,500	)			(4,500	)			(14,500	)
Advances to related party							(1	)			(450	)			—
Advances/(repayments) to a director							(40,100	)			(10,500	)			1,694
Increase in paid up capital							31,080				—				0*
Dividend paid			20				(87,459	)			(91,242	)			(120,000	)
Net cash used in financing activities							(91,980	)			(97,192	)			(115,506	)
Net increase in cash and cash equivalents							7,691				5,914				33,099
Cash and cash equivalents at 1 January							4,902				12,593				18,507
Cash and cash equivalents at 31 December			14				12,593				18,507				51,606

 
 
The annexed notes form an integral part of and should be read in conjunction with these Combined Financial Statements

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

2.   THE REORGANISATION AND BASIS OF PRESENTATION  – (continued)

The Group structure is shown as follows:

As at the date of this report, the Company has direct interests in the following wholly owned subsidiaries and there are no other subsidiaries or associated companies of the Group.

Name of Subsidiaries		Jurisdiction of Incorporation/ Establishment		Principal Activities		Equity Interest Held		Registered Capital and Paid-up Capital
Stand Best Creation Limited		Hong Kong		Investment holding		100%		HK$10,000
Jinjiang Hengda Ceramics Co., Ltd		PRC		Design, development and manufacture of ceramic tiles		100%		RMB58,980,000

The Group is regarded as a continuing entity resulting from the Reorganisation since the management of all the entities which took part in the Reorganisation was controlled by the same directors and under common shareholders before and immediately after the Reorganisation. Consequently, immediately after the Reorganisation, there was a continuation of the control over the entities financial and operating policy decision and risk and benefits to the ultimate shareholders that existed prior to the Reorganisation. The Reorganisation has been accounted for as a Reorganisation under common control in a manner similar to pooling of interests. Accordingly, the Combined Financial Statements for the years ended 31 December 2006, 2007 and 2008 have been prepared on the basis of merger accounting and comprise the financial statements of the subsidiaries which were under common control of the ultimate shareholders and directors that existed prior to the Reorganisation Exercise during the Relevant Periods or since their respective dates of incorporation.

3.   SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The Combined Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) (“including related interpretations issued by the International Accounting Standard Board (“IASB”), and have been consistently applied throughout the years ended 31 December 2006, 2007 and 2008.

Basis of preparation of Combined Financial Statements

The Group has early adopted IFRSs and interpretations which are effective for accounting periods beginning on or after 1 January 2008 for the preparation of these Combined Financial Statements of the Group since 1 January 2005.

TABLE OF CONTENTS

SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

The accounting policies set out below have been applied consistently to all periods presented in these Combined Financial Statements and in preparing an opening IFRS balance sheet as at 1 January 2006 for the purpose of the first set of IFRS financial statements. The accounting policies have been applied consistently by the Group.

At the date of this report, the following new and amended IFRSs and interpretations were issued but not yet effective:

IAS 1 (Revised 2008)		Presentation of Financial Statements
IAS 1		Presentation of Financial Statements — Amendments Relating to   Disclosure of Puttable Financial Instruments and Obligations   Arising on Liquidation
IAS 23 (Revised)		Borrowing Costs — Comprehensive Revision to Prohibit   Immediate Expensing
IAS 24 (Amendments)		Related Party Disclosures
IAS 27		Consolidated and Separate Financial Statements — Consequential   Amendments Arising from Amendments to IFRS 3
IAS 27 (Amendments)		Cost of An Investment on First-Time Adoption
IAS 28		Investments in Associates — Consequential Amendments Arising   from Amendments to IFRS 3
IAS 28 (Amendments)		Cost of An Investment on First-Time Adoption
IAS 31		Interests in Joint Ventures — Consequential Amendments Arising   from Amendments to IFRS 3
IAS 32		Financial Instruments: Presentation — Amendments Relating to   Puttable Financial Instruments and Obligation Arising on   Liquidation
IAS 32 (Amendments)		Classification of right issues
IAS 39		Financial Instruments: Recognition and Measurement —    Amendments for Eligible Hedged Items
IFRS (amendments)		Cost of An Investment on First-Time Adoption
IFRS 1 (Revised 2008)		First-time Adoption of IFRS
IFRS 1 (amendments)		Additional exemptions for first time adopters
IFRS 2 (amendments)		Group cash settled share based payment transactions
IFRS 3		Business Combinations — Comprehensive Revision on Applying   the Acquisition Method
IFRS 7		Financial Instruments: Disclosures — Amendments Relating to   Puttable Financial Instruments and Obligations Arising on   Liquidation
IFRS 7 (amendments)		Improving disclosures about financial instruments
IFRS 8		Operating Segments
IFRS 9		Financial instruments
IFRIC 9 (amendments)		Embedded derivatives
IFRIC 13		Customer Loyalty Programmes
IFRIC 15		Agreements for the Construction of Real Estate
IFRIC 16		Hedges of a Net Investment in a Foreign Operation
IFRIC 17		Distributions of Non-Cash Assets to Owners
IFRIC 18		Transfers of assets from customers
Annual Improvement Process		Annual Improvements to IFRS 2009

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

Management does not anticipate that the adoption of the above IFRSs (including consequential amendments) and interpretations will result in any material impact to the combined financial statements in the period of initial application, except for IAS 1 (Revised) and IFRS 8 as indicated below.

IAS 1 (Revised)

The revised Standard requires:

The revisions also include changes in the titles of some of the financial statements primary statements. The Group will apply the revised standard from 1 January 2009 and provide comparative information that conforms to the requirements of the revised standard. The key impact of the application of the revised standard is the presentation of an additional primary statement, that is, the statement of comprehensive income.

IFRS 8

IFRS 8 replaces IAS 14 Segment Reporting. In doing so it extends the scope of segment reporting. It requires the identification of operating segments based on internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segment and assess its performance. It requires amongst others, reconciliations of total reportable segment revenues, total profit or loss, total assets, and other amounts disclosed for reportable segments to corresponding amounts in the entity’s Combined Financial Statements and an explanation of how segment profit or loss and segment assets are measured for each reportable segment. The Group will apply IFRS 8 from 1 January 2009 and provide comparative information that conforms to the requirements of IFRS 8. The Group expects operating segments to be disclosed under IFRS 8.

Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Depreciation of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of property, plant and equipment to be within 5 to 40 years. The carrying amounts of the Group’s property, plant and equipment as at 31 December 2006, 2007 and 2008 were RMB90,574,000, RMB80,766,000 and RMB72,172,000 respectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

TABLE OF CONTENTS

SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

Income tax

The Group has exposure to income taxes in the PRC. Significant judgement is required in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. When the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Critical judgement made in applying accounting policies

In the process of applying the Group’s accounting policies as described below, management is of the opinion that there are no instances of application of judgments which are expected to have a significant effect on the amounts recognised in the financial statements.

Impairment of trade receivables

The Group’s management assesses the collectability of trade receivables. This estimate is based on the credit history of the Group’s customers and the current market condition. Management assesses the collectability of trade receivables at the balance sheet date and makes the provision, if any.

Net realizable value of inventories

Net realizable value of inventories is the management’s estimation of future selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of “similar nature”. It could change significantly as a result of competitors in response to the severe industry’s cycles.

A business combination involving entities under common control is a business combination in which all the combining entities or business are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The reorganisation exercise described in Note 2 to the Combined Financial Statements resulted in a business combination involving common control entities, and accordingly the accounting treatment is outside the scope of IFRS 3 Business Combination. For such common control business combinations, the merger accounting principles are applied to include the assets, liabilities, results, changes in equity and cash flows of the combining entities in the Combined Financial Statements.

In applying merger accounting, components of financial statements of the combining entities or businesses for the reporting periods in which the common control combination occurs are included in the Combined Financial Statements of the combined entity as if the combination had occurred from the date when the combining entities or businesses first came under the control of the controlling party or parties.

A single uniform set of accounting policies is adopted by the combined entity. Therefore, the combined entity recognised the assets, liabilities and equity of the combining entities or businesses at the carrying amounts recognised previously in the Combined Financial Statements of the controlling party or parties prior to the common control combination. The carrying amounts are included as if such Combined Financial Statements had been prepared by the controlling party or parties, including adjustments required to conform to the combined entity’s accounting policies and applying those policies to all periods presented.

There is no recognition of any goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of the common control combination. The effects of all transactions between the combining entities or businesses, whether occurring before or after the combination, are eliminated in preparing the Combined Financial Statements of the combined entity.

TABLE OF CONTENTS

SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

For acquisition of subsidiaries under common control, the identifiable assets and liabilities were accounted for at their carrying values, in a manner similar to the pooling-of-interest method of consolidation.

In preparing the Combined Financial Statements, transactions, balances and unrealised gains on transactions between the combining entities are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the assets transferred.

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the working condition and location for its intended use. Expenditure incurred after property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the property, plant and equipment, and the expenditure of the item can be measured reliably, the expenditure is capitalised as an additional cost of that asset.

Depreciation is calculated on the straight-line basis to write off the cost of property, plant and equipment, less any estimated residual values, over the following estimated useful lives:

Buildings			40 years
Renovation			10 years
Plant and machinery			5 – 10 years
Motor vehicles			10 years
Office equipment			5 – 10 years

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.

The gain or loss on disposal or retirement of an item of property, plant and equipment recognised in the income statement is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Land use rights represent up-front payments to acquire long-term interests in the usage of land.

Land use rights are stated at cost less accumulated amortisation and impairment losses. Amortisation is charged so as to write off the cost of land use rights, using the straight-line method, over the period of the grant of 50 years, which is the lease term.

Assessment is made at each balance sheet date of whether there is any indication of impairment of the Group’s property, plant and equipment and land use rights, or whether there is any indication that an impairment loss previously recognised for an asset in prior years may no longer exist or may have decreased. If any such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to the combined income statement in the period in which it arises.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

A reversal of an impairment loss is credited to the combined income statement in the period in which it arises.

Financial assets which are under the scope of IAS 39, other than hedging instruments, can be divided into the following categories: financial assets at fair value through income statement, held-to-maturity investments, loans and receivables, and available-for-sale financial assets. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which the assets were acquired.

The designation of financial assets is re-evaluated and classification may be changed at the reporting date where permitted.

All financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the instrument. When financial assets are recognised initially, they are measured at fair value, plus directly attributable transaction costs.

De-recognition of financial assets occurs when the rights to receive cash flows from the instruments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. At each of the balance sheet date, financial assets are reviewed to assess whether there is objective evidence of impairment. If any such evidence exists, impairment loss is determined and recognised.

Receivables

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivables. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets.

Receivables include trade and other receivables. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. If there is objective evidence that the asset has been impaired, the financial asset is measured at the present value of the estimated future cash flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. The impairment or writeback is recognised in the income statement.

The Group’s financial liabilities include trade and other payables, accrued liabilities, dividend payable and interest-bearing bank borrowings.

Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the instrument. All interest related charges are recognised as an expense in “finance costs” in the income statement. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

Borrowings are recognised initially at fair value of proceeds received less attributable transaction costs, if any. Borrowings are subsequently stated at amortised cost which is the initial fair value less any principal repayments. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to the income statement over the period of the borrowings using the effective interest method. The interest expense is chargeable on the amortised cost over the period of the borrowings using the effective interest method.

Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through the amortisation process.

Borrowings which are due to be settled within twelve months after the balance sheet are included in current borrowings in the balance sheet even though the original terms was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date. Borrowings to be settled within the Group’s normal operating cycle are classified as current. Other borrowings due to be settled more than twelve months after the balance sheet date are included in non-current borrowings in the balance sheet.

Trade and other payables and accrued liabilities are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest rate method.

Dividend distributions to shareholders are included in current financial liabilities when the dividends are payable.

Inventories are valued at the lower of cost and net realisable value. Cost incurred in bringing each product to its present location and conditions are accounted for as follows:

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

For the purpose of the combined cash flow statements, cash and cash equivalents comprise cash on hand and in banks.

Provisions are recognised when present obligations will probably lead to an outflow of economic resources from the Group which can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the balance sheet date, including the risks and uncertainties associated with the present obligation. Any reimbursement expected to be received in the course of settlement of the present obligation is recognised as a separate asset, not exceeding the amount of the related provision.

Where there are a number of similar obligations, the likelihood that an outflow of economic resources will be required in settlement of the obligations is determined by considering the class of obligations as a whole. In addition, long term provisions are discounted to their present values, where the effect of the time value of money is material.

TABLE OF CONTENTS

SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

All provisions are reviewed at the balance sheet date and adjusted to reflect the current best estimates.

In cases where the possible outflow of economic resources as a result of present obligations is considered impossible or remote, or the amount to be provided for cannot be measured reliably, no liability is recognised in the balance sheet, unless assumed in the course of a business combination.

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of trade discounts, sales rebates and sales related taxes on the following bases:

Current tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. PRC corporate income tax is provided at rates applicable to an enterprise in the PRC on income for financial reporting purpose, adjusted for income and expenses items which are not assessable or deductible for income tax purposes.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Combined Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that is not a business combination and that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available.

Deferred tax assets and liabilities are not discounted. Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset realised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Valued-added tax

The Group’s sale of goods in the PRC are subjected to Value-added tax (“VAT”) at the applicable tax rate of 6% for PRC domestic sales. Input VAT on purchases cannot be deducted from output VAT. The amount payable to the taxation authority is included as part of “other payables” in the balance sheet.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

Revenues, expenses and assets are recognised net of the amount of VAT except:

Retirement benefits scheme

Pursuant to the relevant regulations of the PRC government, the Group participates in a local municipal government retirement benefits scheme (the “Scheme”), whereby the subsidiaries of the Company in the PRC are required to contribute a certain percentage of the basic salaries of its employees to the Scheme to fund their retirement benefits. The local municipal government undertakes to assume the retirement benefits obligations of all existing and future retired employees of the subsidiaries of the Company. The only obligation of the Group with respect to the Scheme is to pay the ongoing required contributions under the Scheme mentioned above. Contributions under the Scheme are charged to the income statement as incurred. There are no provisions under the Scheme whereby forfeited contributions may be used to reduce future contributions.

Key management personnel

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity. Directors and certain general managers are considered key management personnel.

The functional currency of the Company, Stand Best Creation Limited and Jinjiang Hengda Ceramics Co., Ltd is Renminbi, as the Group’s principal operations are predominantly conducted in the People’s Republic of China (PRC) where the group generate most of its revenue and incur most of its expenses. The financial statements are presented in Renminbi (to the nearest thousand), being the currency that best reflects the economic substance of the underlying events and circumstances relevant to the Group.

Foreign currency transactions are measured and recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rates ruling at the respective balance sheet dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The results and financial positions of the Group entities that have functional currencies different from the presentation currency are translated into the presentation currency as follows:

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

A party is considered to be related to the Group if:

Leases where substantially all the risks and rewards of ownership of assets remain with the lessor are accounted for as operating leases. Annual rentals applicable to such operating leases are charged to the combined income statements on a straight-line basis over the lease terms except where an alternative basis is more representative of the pattern of benefits to be derived from the leased assets. Lease incentives received are recognised in the combined income statements as an integral part of the aggregate net lease payments made. Contingent rentals are charged to the combined income statements in the accounting period in which they are incurred.

A segment is a distinguishable component of the Group within a particular economic environment (geographical segment) and to a particular industry (business segment) which is subject to risks and rewards that are different from those of other segments.

Business segments

As the Group operates principally in a single business segment which is the manufacture and sale of medium to high-end ceramic tiles, no reporting by business operations is presented.

Geographical segments

As the business of the Group is engaged entirely in the PRC, no reporting by geographical location of operations is presented.

TABLE OF CONTENTS

SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

3.   SIGNIFICANT ACCOUNTING POLICIES  – (continued)

Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from the proceeds (net of any related income tax benefits) to the extent that they are incidental cost directly attributable to the equity transaction.

Retained earnings include all current and prior period results as determined in the combined income statements.

Research costs are expensed as incurred, except for development costs which relates to the design and testing of new or improved materials, products or processes which are recognised as an asset to the extent that it is expected that such assets will generate future economic benefits.

4.   REVENUE AND OTHER INCOME

Revenue represents the net invoiced value of goods sold, after allowances for trade discounts. An analysis of the Group’s revenue and other income is as follows:

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Revenue
Sale of goods			495,820				649,970				776,570
Other income
Sale of scrap materials			1,432				2,171				2,291
Interest income			154				168				394
			1,586				2,339				2,685

5.   FINANCE COSTS

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Interest on bank borrowings			301				576				941

6.   PROFIT BEFORE TAXATION

The Group’s profit before taxation is arrived at after charging:

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Amortisation of land use rights			4				3				4
Bad debts written off			112				—				—
Cost of inventories recognised as expense			213,096				273,532				364,532
Depreciation expense charged to
– cost of sales			13,438				14,385				15,102
– administrative expenses			290				407				511
Directors’ remuneration

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

6.   PROFIT BEFORE TAXATION  – (continued)

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
– salaries and related cost			114				124				142
– retirement scheme contribution			4				3				5
Key management personnel (other than directors)
– salaries and related cost			435				494				596
– retirement scheme contribution			13				13				15
Foreign exchange gains			—				—				(16	)
Research and development personnel
– salaries and related cost			1,152				1,523				877
– retirement scheme contribution			17				24				14
Other personnel
– salaries and related cost			26,629				29,553				32,910
– retirement scheme contribution			402				462				526
Operating lease expenses			11,214				13,192				13,192

7.   INCOME TAX EXPENSE

No deferred tax has been provided as the Group did not have any significant temporary differences which gave rise to a deferred tax asset or liability at 31 December 2006, 2007 and 2008.

Reconciliation between tax expense and profit before taxation at applicable tax rates is as follows:

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Profit before taxation			115,079				165,469				189,060
Tax calculated at a tax rate of 27%(2008: 25%)			31,071				44,677				47,265
Tax effect of tax exemption and concession			(17,262	)			(24,820	)			(23,632	)
Tax effect on non deductible expenses			16				6				394
			13,825				19,863				24,027

Pursuant to the “Income Tax Law of the PRC for Enterprises with Foreign Investments and Foreign Enterprises”, the provision for PRC income tax for the foreign investment enterprises of production nature established in the Coastal Economic Open Zone is calculated based on statutory income tax at a rate of 27% for the relevant period, which included a 24% enterprise income tax and a 3% local income tax.

Pursuant to the PRC Enterprise Income Tax: Law passed by the Tenth National People’s Congress on 16 March 2007, the new enterprise income tax rates for domestic enterprises and foreign investment enterprises are unified at 25% and was effective from 1 January 2008.

Based on the “Income Tax Law of the PRC for Enterprises with Foreign Investments and Foreign Enterprises”, Jinjiang Hengda Ceramics Co., Ltd is entitled to full exemption from income tax for the first two years and a 50% reduction in income tax for the next three years starting from its first profitable year of operations.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

7.   INCOME TAX EXPENSE  – (continued)

The first profitable year of Jinjiang Hengda Ceramics Co., Ltd is the calendar year ended 31 December 2004 for the purpose of determining the tax holiday period. Jinjiang Hengda Ceramics Co., Ltd has obtained written confirmation from the relevant PRC tax authorities confirming that its 5 year tax holiday period commenced from 1 January 2004 and that the first profit making year was the calendar year ended 31 December 2004.

Any distributions by a PRC entity to an overseas parent made out of profits earned after 1 January 2008 will be subject to a 10% withholding tax. The company has not made and has no current plan to make such distribution.

8.   EARNINGS PER SHARE

Earnings per share information is not presented as its inclusion, for the purpose of this report, is considered by the director of the Company not meaningful due to the Group Reorganisation and the preparation of the results of the Group for the Relevant Periods on the consolidated basis as disclosed in Note 2 to the financial statements.

9.   PROPERTY, PLANT AND EQUIPMENT

		Buildings				Renovation				Plant and machinery				Motor vehicles				Office equipment				Total
		RMB’000				RMB’000				RMB’000				RMB’000				RMB’000				RMB’000
Cost
At 1 January 2006			2,913				—				135,742				3,445				731				142,831
Additions			—				—				11,765				558				245				12,568
At 31 December 2006			2,913				—				147,507				4,003				976				155,399
Additions			—				450				3,750				621				163				4,984
At 31 December 2007			2,913				450				151,257				4,624				1,139				160,383
Additions			—				—				6,281				512				226				7,019
At 31 December 2008			2,913				450				157,538				5,136				1,365				167,402
Accumulated depreciation
At 1 January 2006			496				—				49,826				580				195				51,097
Depreciation charge			69				—				13,183				335				141				13,728
At 31 December 2006			565				—				63,009				915				336				64,825
Depreciation charge			69				—				14,124				407				192				14,792
At 31 December 2007			634				—				77,133				1,322				528				79,617
Depreciation charge			69				43				14,802				472				227				15,613
At 31 December 2008			703				43				91,935				1,794				755				95,230
Net book amount
At 31 December 2006			2,348				—				84,498				3,088				640				90,574
At 31 December 2007			2,279				450				74,124				3,302				611				80,766
At 31 December 2008			2,210				407				65,603				3,342				610				72,172

All property, plant and equipment held by the Group are located in the PRC.

The Group’s building including renovation with a carrying value of approximately RMB2,729,000 and RMB2,617,000 was pledged as securities to secure the Group’s interest-bearing bank borrowings at 31 December 2007 and 2008 respectively (Note 17).

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

10.   LAND USE RIGHTS

		2006				2007				2008
		RMB’000				RMB’000				RMB’000
At beginning of the year
Cost			180				180				180
Accumulated amortisation			(1	)			(5	)			(8	)
Net book amount			179				175				172
For the year
Opening net book amount			179				175				172
Addition			—				—				—
Amortisation			(4	)			(3	)			(4	)
Closing net book amount			175				172				168
At end of the year
Cost			180				180				180
Accumulated amortisation			(5	)			(8	)			(12	)
Net book amount			175				172				168

The land use rights of the Group refer to lands located in PRC which were pledged to the banks as securities for interest-bearing bank borrowings granted to the Group in Note 17.

Amortisation expenses of approximately RMB4,000, RMB3,000 and RMB4,000 have been charged in administrative expenses on the face of the Combined Income Statement for the years ended 31 December 2006, 2007 and 2008 respectively.

11.   INVENTORIES

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
At cost
Raw materials			23,176				33,408				26,400
Work in progress			5,079				5,431				5,024
Finished goods			86,776				117,405				100,138
			115,031				156,244				131,562

There has been no inventory written off or allowance of inventory obsolescence for the years ended 31 December 2006, 2007, and 2008.

12.   TRADE RECEIVABLES

Trade receivables are non-interest bearing and generally have credit terms ranging from 90 days to 120 days and are denominated in Renminbi.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

12.   TRADE RECEIVABLES  – (continued)

The aging analysis of trade receivables past due is as follows:

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Past due 0 – 3 months			14,741				1,039				—
Past due 3 – 6 months			—				—				—
Past due over 6 months			—				—				—
			14,741				1,039				—

13.   OTHER RECEIVABLES

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Amount due by a former related party			—				—				3,363
Amount due by a related party			2,914				3,363				—
Others			—				1				1
			2,914				3,364				3,364

The amount due by a related party relates to purchase of property, plant and equipment and are denominated in Renminbi. These amounts are interest free, unsecured and repayable on demand. The amount remains outstanding as at the date of this report. The related parties ceased to be a shareholders or related parties of the Company from 23 ^rd April 2008. The amount due by former related party has been subsequently repaid on 3 ^rd August 2009.

14.   CASH AND BANK BALANCES

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Cash on hand			84				97				49
Cash at bank			12,509				18,410				51,557
			12,593				18,507				51,606

Cash and bank balances are denominated in the following currencies:

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Renminbi			12,593				18,507				51,603
Hong Kong dollar			—				—				3
			12,593				18,507				51,606

Bank balances denominated in Renminbi are deposited with banks in the PRC and are not freely convertible to foreign currencies. The conversion of these RMB denominated balances into foreign currencies is subject to the foreign exchange control rules and regulations promulgated by the PRC Government.

The cash at bank bears interest at rates of 0.72%, ranging from 0.72% to 0.81% and ranging from 0.36% to 0.81% per annum during the years ended 31 December 2006, 2007 and 2008 respectively.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

15.   TRADE PAYABLES

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Trade payables			110,570				137,948				92,888

Trade payables are denominated in Renminbi and generally have credit terms ranging from 30 days to 180 days.

16.   ACCRUED LIABILITIES AND OTHER PAYABLES

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Dividend payable			91,243				1				22,455
Amount owing to a director			11,940				1,440				3,118
Accrued liabilities			33,127				40,009				49,527
Deposits payables			11,200				11,200				12,400
Other payables for acquisition of property, plant and equipment			8,383				660				—
VAT payable			2,250				3,216				3,448
			158,143				56,526				90,948

Accrued liabilities and other payables are denominated in the following currencies:

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Renminbi			158,143				56,526				89,270
Hong Kong dollar			—				—				1,678
			158,143				56,526				90,948

Amount owing to a director relates to advances to the Group for working capital purposes and purchase of property, plant and equipment. The amount is interest free, unsecured and repayable on demand. The amount denominated in Hong Kong dollar has been capitalised to equity on 30 June 2009.

Accrued liabilities consist mainly of accrued rental, accrued wages, sales commission, repair and maintenance and electricity expenses.

17.   INTEREST-BEARING BANK BORROWINGS

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Current
Short-term bank borrowings
Secured and repayable within one year			4,500				9,500				12,300

The Group’s interest-bearing bank borrowings are guaranteed by a director and the pledge of the Group’s buildings and land use rights (Note 9 and 10). Short-term bank borrowings bear effective interests rates of 7.605%, ranging from 6.39% to 7.956% and ranging from 9.3375% to 9.711% per annum during the years ended 31 December 2006, 2007 and 2008 respectively.

The carrying amounts of interest-bearing bank borrowings are denominated in Renminbi.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

18.   SHARE CAPITAL

		As at 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Combined paid-up share capital			58,980				58,980				*

The Company was incorporated in British Virgin Islands on 29 May 2009 under the British Virgin Islands Business Companies Act as a limited liability company. At date of incorporation, the authorised share capital of the Company was US$50,000 comprising 50,000 ordinary shares of US$1.00 each. At the date of this report, the issued share capital of the Company was US$1 comprising 1 fully paid shares of US$1.00 each.

The share capital balances as at 31 December 2006 and 2007 represent the issued share capital of Jinjiang Hengda. The share capital balance as at 31 December 2008 represents the issued share capital of Stand Best Creation Limited as the Reorganisation Exercise as mentioned in Note 2 has not been completed as at 31 December 2008.

19.   RESERVES

In accordance with the relevant laws and regulations of the PRC, the subsidiaries of the Company established in the PRC are required to transfer 10% of its profit after taxation prepared in accordance with the accounting regulation of the PRC to the statutory reserve until the reserve balance reaches 50% of the respective registered capital. Such reserve may be used to offset accumulated losses or increase the registered capital of these subsidiaries, subject to the approval of the board of directors, and are not available for dividend distribution to the shareholders.

The reserve comprises all foreign exchange differences arising from the translation of the financial statements of Stand Best Creation Limited whose financial statements for 31 December 2008 were presented in Hong Kong dollar.

The merger reserve of the Group represents the difference between the nominal value of the shares of the subsidiaries acquired over the nominal value of the shares of the Company issued in exchange thereof.

20.   DIVIDENDS

Dividends disclosed during the Relevant Periods represented dividends declared by Jinjiang Hengda Ceramics Co., Ltd to its equity owners. The rate of dividend and the number of shares ranking for dividends are not presented as such information is not meaningful.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

21.   SIGNIFICANT RELATED PARTY TRANSACTIONS

Other than the related party information disclosed elsewhere in the Combined Financial Statements, the following are significant related party transactions entered into between the Group and former related parties at agreed rates:

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Rental paid to a former related party			1,566				1,566				522

The former related party refers to a former shareholder of Jinjiang Hengda, Jinjiang City Anhai Junbing Hengda Construction Material Factory Co., Ltd in which a director of Jinjiang Hengda has an interest in the said company. The former shareholder ceased to be a related party or a shareholder of the Company from 23 ^rd April 2008.

22.   COMMITMENTS

The Group leases office building from a former related party under non-cancellable operating lease arrangements. The former shareholder ceased to be a related party or a shareholder of the Company from 23 ^rd April 2008. The Group also leases production factories, warehouses and employees’ hostel from non related parties under non-cancellable operating lease arrangements. The leases have varying terms and the total future minimum lease payments of the Group under non-cancellable operating leases for assets are as follows:

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Not later than one year			13,192				13,192				13,192
Later than one year and not later than five years			35,118				21,926				8,734
			48,310				35,118				21,926

(b)

Other commitments

		Year ended 31 December
		2006				2007				2008
		RMB’000				RMB’000				RMB’000
Advertising expenditure contracted but not provided for in the financial statements			—				2,700				1,800

23.   FINANCIAL RISK MANAGEMENT OBJECTIVES — POLICIES

The Group’s overall financial risk management program seeks to minimise potential adverse effects of financial performance of the group. Management has in place processes and procedures to monitor the Group’s risk exposures while balancing the costs associated with such monitoring and management against the costs of risk occurrence. The Group’s risk management policies are reviewed periodically for changes in market conditions and the Group’s operations.

The Group is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks included credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

The Group does not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuations, if any, in interest rates and foreign exchange.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

23.   FINANCIAL RISK MANAGEMENT OBJECTIVES — POLICIES  – (continued)

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risk.

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the Group to incur a financial loss. The Group’s exposure to credit risk arises primarily from bank balances and trade receivables. For trade receivables, the Group adopt the policy of dealing only with customers of appropriate credit history to mitigate credit risk. For other financial assets, the Group adopt the policy of dealing only with high credit quality counterparties.

As the Group does not hold any collateral, the maximum exposure to credit risk for each class of financial assets is the carrying amount of that class of financial assets presented on the balance sheet.

Bank balances

The Group’s bank deposits are placed with reputable banks in the PRC.

Trade receivables

The Group’s objective is to seek continual growth while minimising losses incurred due to increased credit risk exposure.

The Group has significant concentration of credit risk as the Group’s top three largest trade receivables represent approximately 38%, 24%, and 20% of the trade receivable balance as at 31 December 2006, 2007 and 2008 respectively.

The Group’s exposure to credit risks is influenced mainly by the individual characteristics of each customer. The Group typically gives the existing customers credit terms ranging from 90 days to 120 days. In deciding whether credit shall be extended, the Group will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. In relation to new customers, the sales and marketing department will prepare credit proposals for approval by the managing director.

The Group performs ongoing credit evaluation of its customers’ financial condition and requires no collateral from its customers. The provision for impairment loss for doubtful debts is based upon a review of the expected collectibles of all trade and other receivables.

Further details of credit risks on trade receivables are disclosed in Note 12.

Liquidity risk is the risk that the Group will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value.

The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s financial liabilities, including trade payables, accrued liabilities and other payables and bank borrowings, for the years ended 31 December 2006, 2007 and 2008 have maturity period of less than 1 year or on demand from the respective balance sheet date.

The Group ensures that there are adequate funds to meet all its obligations in a timely and cost-effective manner. The Group maintains sufficient level of cash and cash equivalents and has available adequate amount of committed credit facilities from financial institutions to meet its working capital requirements.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

23.   FINANCIAL RISK MANAGEMENT OBJECTIVES — POLICIES  – (continued)

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risk arises primarily from short-term bank borrowings. The Group does not have investment in other financial assets. The Group’s policy is to maintain all its borrowings on a fixed rate basis. The interest rates and terms of repayment of the bank borrowings are disclosed in Note 17.

Bank borrowings subject to fixed interest rates are contractually repriced at intervals of 12 months. The other financial instruments of the Group are not subject to significant interest rate risk.

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Group’s operations are primarily conducted in the PRC. All the sales and purchases transactions are denominated in RMB. As such, the operations are not exposed to exchange rate fluctuation.

As at 31 December 2006, 2007 and 2008, all the monetary assets and monetary liabilities were denominated in RMB except for certain insignificant amount of bank balances (Note 14) and other payables (Note 16) which were denominated in foreign currencies.

In the opinion of the management, the Group does not have any significant currency exposure. Accordingly, the Group has not used any financial instrument to hedge its foreign currency risk as its risk exposure is considered to be minimal.

The management monitors its exposure to currency risk is on an on-going basis and endeavours to keep the net exposure at an acceptable parameter.

Price risk is the risk that the value of a financial instrument will fluctuate due to changes in market prices.

The Group does not hold any quoted or marketable financial instrument, hence is not exposed to any movement in market prices.

24.   CAPITAL MANAGEMENT

The Group’s objectives when managing capital are:

The Group actively and regularly reviews and manages its capital structure to ensure optimal capital structure and shareholder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities.

The Group is not subject to externally imposed capital requirements, except for, as disclosed in Note 19(a), the Group’s PRC subsidiary is required by the Foreign Enterprise Law of the PRC to contribute to and

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
  
NOTES TO THE COMBINED FINANCIAL STATEMENTS

24.   CAPITAL MANAGEMENT  – (continued)

maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the PRC subsidiary for the financial years ended 31 December 2006, 2007 and 2008.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, increase share capital, obtain new borrowings or sell assets to reduce debt.

There were no changes in the Group’s overall approach to capital management during the Relevant Periods.

25.   FINANCIAL INSTRUMENTS

As at 31 December 2006, 2007 and 2008, the Group’s financial instruments mainly consisted of cash and bank balances, trade receivables, other receivables, trade payables, accrued liabilities, other payables and bank borrowings.

Fair value

The carrying amounts of financial assets and financial liabilities with a maturity of less than one year approximate their fair values.

The Group does not anticipate that the carrying amounts recorded at balance sheet date would be significantly different from the values that would eventually be received or settled.

26.   SUBSEQUENT EVENTS

Except for the events disclosed in Note 2, no other item, transaction or event of a material or unusual nature has arisen in the interval between 31 December 2008 and the date of the report from the independent auditors.

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SUCCESS WINNER LIMITED AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008

Statement by director

The director is responsible for the preparation and fair presentation of these combined financial statements in accordance with the provisions of International Financial Reporting Standards as issued by the International Accounting Standards Board. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances

In the opinion of the director,

By Director WONG KUNG TOK

Dated: December 4, 2009

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial information has been prepared assuming that the Redomestication and Business Combination have occurred (i) at the beginning of the pro forma statements of operations for the six months ended June 30, 2009 and for the year ended December 31, 2008 and (ii) at June 30, 2009 for the pro forma balance sheet. The financial statements of China Ceramics are not included for the following reasons:

The unaudited pro forma condensed combined financial information is provided for illustrative purposes only. The historical financial information in the unaudited pro forma condensed combined balance sheet has been adjusted to give effect to pro forma events that are directly attributable to the Business Combination and are factually supportable. The historical financial information in the unaudited pro forma condensed combined statements of operations has been adjusted to give effect to pro form events that are directly attributable to the Business Combination, are factually supportable, and are expected to have a continuing impact on the combined results.

The historical financial statements of CHAC have been prepared under U.S. GAAP and presented in U.S. Dollars. The historical financial statements of Success Winner have been prepared under IFRS and presented in Chinese Renminbi and for these proformas have been converted into U.S. Dollars and U.S. GAAP. No material adjustments were made to Success Winners’ financial statements prepared under IFRS when converting them to U.S. GAAP. The unaudited pro form condensed combined financial statements included herein are prepared under U.S. GAAP and presented in U.S. dollars. However, following completion of the Redomestication and Business Combination, the combined entity intends to prepare its consolidated financial statements under IFRS and present such consolidated financial statements in Chinese Renminbi (with a convenience conversion to U.S. dollars).

You should not rely on the unaudited pro forma condensed combined balance sheet as being indicative of the historical financial position that would have been achieved had the Business Combination been consummated as of June 30, 2009, or the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2009 or the year ended December 31, 2008, as being indicative of the historical financial results of operations that would have been achieved had the Business Combination been consummated on the first day of such period. See “Risk Factors Relating to the Redomestication and Business Combination” in the F-4.

We are providing the following information to aid you in your analysis of the financial aspects of the Redomestication and Business Combination. We derived the historical financial information of CHAC from the unaudited financial statements of CHAC for the six months ended June 30, 2009 and from the audited financial statements of CHAC for the year ended December 31, 2008 included in the F-4. We derived the historical financial information of Success Winner from the unaudited consolidated/combined financial statements of Success Winner for the six months ended June 30, 2009 and from the audited consolidated/combined financial statements of Success Winner for the year ended December 31, 2008 included elsewhere in this proxy statement/prospectus. This information should be read together with CHAC’s and Success Winner’s audited financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for CHAC and Success Winner, and other information included elsewhere in the F-4.

In order to ensure that the Redomestication and Business Combination are approved by the shareholders, CHAC, Hengda and their respective affiliates entered into transactions to purchase or facilitate the purchase of common stock of CHAC from shareholders who have indicated their intention to vote against the acquisition and seek redemption of their shares for cash. Such transactions were entered into prior to the meeting of shareholders to approve the Redomestication and Business Combination, but were not completed until the Business Combination was consummated. The lack of trust funds to fund Hengda’s business operations could have a material adverse effect on its operations and business prospects. If any of the funds held in CHAC’s

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trust account were used to purchase common stock of CHAC from holders who would have otherwise voted against the Business Combination, holders of CHAC’s public stock who purchased such shares in CHAC’s initial public offering may have grounds to seek rescission of the purchase of the units the holder acquired in the initial public offering. In such event, CHAC would be required to reclassify those shares subject to rescission rights outside of stockholders’ equity.

The Business Combination is expected to be accounted for as a reverse recapitalization as, immediately following completion of the transaction, the shareholder of Success Winner immediately prior to the Business Combination has effective control of CHAC through (1) their significant shareholder interest in the combined entity and excluding the Escrowed Shares, (2) significant representation on the Board of Directors (initially three out of five members), with two other board members being independent, and (3) being named to all of the senior executive positions. The Seller owns a significant interest (a majority) with no other owner or organized group of owners having a significant voting interest. ⁽¹⁾ For accounting purposes, Success Winner will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of Success Winner, i.e., a capital transaction involving the issuance of stock by CHAC for the stock of Success Winner. Accordingly, the combined assets, liabilities and results of operations of Success Winner will become the historical financial statements of CHAC at the closing of the transaction, and CHAC’s assets (primarily cash and cash equivalents), liabilities and results of operations will be consolidated with Success Winner beginning on the Business Combination date. No step-up in basis or intangible assets or goodwill will be recorded in this transaction. All direct costs of the transaction will be charged to operations in the period that such costs are incurred. Neither the Board of Directors nor any employees of CHAC will receive exit packages in connection with the merger or have any equity securities vest except for the founders’ shares and warrants of CHAC. Although China Ceramics was legally formed on July 31, 2009, it had not been capitalized and it had no assets or liabilities. It is intended that China Ceramics will acquire all of the issued and outstanding shares of Success Winner and will become the parent company of the group. Consequently, China Ceramics has not been presented as a separate column in the following pro forma financial statements.

Actual results could differ from the pro forma information presented and depend on several variables, including, pursuant to provisions in the Acquisition Agreement, the release to Success Winner’s current shareholders in the aggregate amount of up to 8,185,763 ordinary shares from an escrow account for achieving certain income thresholds (as defined in the Acquisition Agreement) in each of the three years ending December 31, 2009 through December 31, 2011, and two stock price thresholds (as defined in the Acquisition Agreement) prior to April 30, 2012. Such Escrowed Shares will be recorded as outstanding, and will be included in the calculations of earnings per share from that date.

Note:

(1)

The following summarizes the percentage ownership at closing:

CHAC Current Public Shareholders		CHAC Founders		Seller
21.8%		14.0%		64.2%

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CHINA HOLDINGS ACQUISITION CORP. AND SUBSIDIARY AND SUCCESS WINNER LIMITED
(To be known as China Ceramics Co., Ltd.)
Unaudited Pro Forma Condensed Combined Balance Sheet
June 30, 2009
(In thousands of U.S. Dollars, except per share amounts, and in U.S. GAAP, unless otherwise noted)

		China Holdings Acquisition Corp.				Success Winner Limited				Pro Forma Adjustments and Eliminations								Pro Forma Combined Companies
										Debit				Credit
ASSETS
Current assets:
Cash and cash equivalents		$	12			$	13,623			$	125,278	(a)		$	1,255	(b)		$	13,442
															4,635	(g)
															10,000	(i)
															23,299	(c)
															86,282	(k)
Investments held in Trust			125,278				—								125,278	(a)			—
Accounts receivable, net			—				36,767												36,767
Other receivables			512				491												1,003
Inventories			—				15,756												15,756
Prepaid expenses			18				132												150
Total current assets			125,820				66,769												67,118
Property, plant and equipment, net			1				9,444				40,000	(h)							49,445
Land use rights, net			—				24												24
Deferred income taxes			257				—												257
Total Assets		$	126,078			$	76,237											$	116,844
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	—			$	13,857											$	13,857
Deferred underwriting fee			4,288				—				4,288	(b)							—
Income tax payable			—				2,100												2,100
Accrued expenses			120				2,217				4,635	(g)			2,219	(e)			2,253
															2,332	(f)
Deposits from distributors			—				1,812												1,812
Short-term loan			—				5,040				10,000	(i)			40,000	(h)			35,040
Accrued commissions			—				2,846												2,846
Due to director			—				210												210
Total current liabilities			4,408				28,082												58,118
Common stock subject to possible redemption			40,364				—				40,364	(c)							—
Stockholders’ equity:
Preferred stock, $.0001 par value			—				—												—
Common stock, $.001 par value (1)			16				—				2	(j)			6	(l)			10
											2	(c)
											8	(k)
Common stock, $1.00 par value (1)			—				—
Additional paid-in capital			80,724				7,825				6	(l)			3,033	(b)			22,937
											86,274	(k)			17,067	(c)
															566	(d)
															2	(j)
Statutory common reserve							3,783												3,783
Retained earnings			566				32,790				566	(d)							28,239
											2,219	(e)
											2,332	(f)
Accumulated other comprehensive income							3,757												3,757
Total stockholders’ equity			81,306				48,155												58,726
Total Liabilities and Stockholders’ Equity		$	126,078			$	76,237											$	116,844