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ZTC Telecoms plc (ZTC)

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Wednesday 21 March, 2007

ZTC Telecoms plc

Admission to AIM

ZTC Telecommunications plc
21 March 2007

                           ZTC Telecommunications Plc

                                Admission to AIM

ZTC Telecommunications plc ('ZTC' or 'the Company'), a People's Republic of
China ('PRC') based designer, assembler and distributor of mobile phone
handsets, announces its admission to AIM ('Admission'), via a reverse
acquisition of Cassian Investments Plc, an unlisted public company and cash
shell. Corporate Synergy is acting as Nominated Adviser and Broker.


•         Cassian Investments Plc will issue 70,000,000 New Ordinary Shares, at
20p, as initial consideration for the acquisition of Praise Ease Limited. A
deferred consideration of up to 15,000,000 additional New Ordinary Shares will
be payable dependent on profits for the year ending 30 June 2007.

•         Praise Ease Limited is a Hong Kong based holding company of Shenzhen
Zhong Tian Communication Equipments Co., Ltd ('Zhong Tian').

•         Cassian Investments Plc will change its name to ZTC Telecommunications
plc (AIM Ticker: ZTC) on Admission.

•         On Admission, ZTC will be capitalised at £18.7 million and will have a
cash balance of approximately £4m (gross).


•         Zhong Tian is located in the Longgang District of Shenzhen, PRC and
designs, assembles and markets mobile telephone handsets under the 'ZTC' brand.

•         The business was founded in 2003 and commenced business as an OEM
handset distributor with a focus on southern PRC.

•         Zhong Tian was awarded a handset manufacturing licence in 2005,
fundamentally changing the scope and nature of the business and allowing it to
develop its own handsets.

•         Zhong Tian has an extensive distribution network throughout the PRC.

•         Zhong Tian has considerably increased revenues in the year to June
2006 to RMB195 million (2005: RMB14 million) and net profits to RMB26 million
(2005: loss RMB0.8 million)

•         Zhong Tian's marketing strategy of producing handsets that are '
fashionable, economical and practical', is primarily aimed at the estimated 800
million Chinese who reside in the lesser developed north, central and western
regions of the PRC.

•         Mobile penetration in the rural areas are estimated to be 11.5%
(source: China Mobile-June 2006).

For Further Information:

Mark Syropoulo, Finance Director                             +61 406 181 975
Michael Liu, Executive Director                              +86 1390 1932 617

Conduit PR                                                   020 7429 6666
Christian Taylor-Wilkinson, Jos Simson

Corporate Synergy                                            020 7448 4400
Shane Gallwey, Romil Patel

Background on Zhong Tian


Zhong Tian, located in the Longgang District of Shenzhen, PRC, designs,
assembles and markets mobile telephone handsets under the 'ZTC' brand. The
Company was founded in June 2003 by its major shareholder, Charles Huang, as an
OEM handset distributor with an initial focus on southern PRC.

The scope and nature of the business changed fundamentally in 2005, when Zhong
Tian was awarded a GSM handset manufacturing licence, enabling the company to
design, assemble and market its own handsets under the 'ZTC' brand. These
events, in combination with the concurrent development of an extensive
distribution network, allowed the Company to considerably increase revenues to
RMB195 million and net profits to RMB26 million in the year ended June 2006.

In addition to revenues from the sale of mobile handsets, on 10 March 2006,
Zhong Tian entered into an agreement with SINA, one of the largest internet
portals and wireless content providers in the PRC. The agreement allows for SINA
customised software to be embedded in 'ZTC' java enabled phones allowing access
to the portals' wireless value added multimedia services. Zhong Tian and SINA
will share the revenues generated by these services.

Zhong Tian's handsets are primarily aimed at the estimated 800 million Chinese
who reside in the lesser developed north, central and western regions of PRC.
This focus is achieved through Zhong Tian's strategy of producing handsets that
are 'fashionable, economical and practical':

•         Fashionable - Zhong Tian manufactures small batches of a wide variety
of phones which can be quickly introduced to the market to cater for changing
fashions and market conditions.

•         Economical and practical - Zhong Tian focuses on a relatively low
price product range to accommodate the more cost sensitive consumers in the less
developed parts of the PRC.

Zhong Tian has targeted this geographical area as a major business opportunity
for the following reasons:

•         The PRC government is promoting strong growth policies outside the
major urban areas to address the wealth divide and to develop infrastructure
services. Market forces are also driving growth in these areas as businesses
relocate to lower cost areas. Per capita income is increasing.

•         China Mobile Limited ('China Mobile') has identified the rural market
as one of its three key revenue growth drivers. In areas where there are large
rural populations China Mobile has strengthened the construction of
infrastructure including telecommunications networks and sales channels,
actively developed products and services targeting rural customers and launched
sales packages that fit the unique mobile telephony usage characteristics of
rural areas.

•         The penetration rate in the rural areas has been estimated by China
Mobile to be 11.5 per cent. (source: China Mobile,

The Directors believe that the above factors have the potential to considerably
increase mobile phone penetration in these targeted areas. In addition to
selling handsets within the PRC, it is the Directors' intention to develop
overseas sales in the medium term.


The Directors believe the key strengths of Zhong Tian include the following;

•         ownership of the GSM manufacturing licence;

•         a wide product range and a development team with the ability to
respond competitively to changing market trends; and

•         an extensive distribution network in the central and western provinces
and rural areas, the next emerging major business opportunity in the mobile
phone business in China.

The Directors believe that these key strengths, along with the Company's
Admission to AIM, will allow the Company and its subsidiaries ('Enlarged Group')
to pursue its growth strategy, to capitalise on current market trends,
consolidate and increase market share, revenues and profits within the Chinese
mobile market.


Zhong Tian was granted a GSM handset manufacturing licence in July 2005 and
commenced independent production and marketing under the 'ZTC' brand in August
2005. Zhong Tian buys mobile phone components from suppliers and assembles new
generation 'ultra-slim' handsets using its own and contracted outer-casing
designs. The Company, which also assembles for OEMs, produced 748,930 handsets
in the twelve months to 30 June 2006. Zhong Tian was credited with ISO9001 (2000
edition) on 17 January 2006.

At June 2006, Zhong Tian had over 280 employees based in some 4,000sqm of
workshop floor space. The facility is located on an industrial park site which
is on a long term lease.

The components are supplied by multiple suppliers, and the outer-casing is
mainly designed by Zhong Tian's design team (and sub-contractors) based in
Shenzhen City. In order to minimise the risks associated with reliance on a
small number of suppliers, the Company has a minimum of two suppliers for its
critical component parts namely, main boards, cameras, displays and outer
casings. Apart from a main board supplier located in Shanghai all other critical
component suppliers are located in Shenzhen within a seventy kilometre radius of
the factory.

Currently there are four labour-intensive assembly lines, operating one shift,
with an output potential of 80-120 handsets per hour each, depending upon the
complexity of the handset. This equates to a potential annual capacity of
600,000-900,000 handsets based on a 46 week year. An increase in capacity could
be achieved through overtime and/or the introduction of a second shift when
demand has grown sufficiently.


The Company's handsets typically retail in the RMB800-RMB2000 (approximately £50
- £130) price range which is at the low-cost end of the market. Specifications
for the cheaper end of the recent or current mobile phone product range usually
contain a 1.6'' colour screen, music audio and a camera with 300K pixel
resolution whilst the more expensive handset has a 2.8'' screen, music audio,
video, MMS & PDA function and camera with at least 2.0 million pixels. In the
year ending 30 June 2006, Zhong Tian introduced twenty four new handsets,
including ten customized models, under the 'ZTC' brand which represented the
Company's complete range at that time.

Retail & Distribution

The marketing strategy has focused on developing an extensive retail and
distribution network concentrating on smaller cities and rural areas rather than
the major urban areas where cell phone penetration rates are high.

Zhong Tian currently has distribution agreements, which are typically of twelve
months duration, with:

•         three wholesalers who are entitled to market nationally but focus on
urban areas;

•         39 provincial distributors with at least one distributor in 23 of the
30 provinces of the PRC.

Included are ten core distributors covering Jiangsu, Hunan, Heilongjiang,
Zhejiang, Liaoning,

Sichuan, Hubei, Henan, Shandong and Shaanxi provinces. Three of these core
distributors are located in the east with the balance being north, central and
western provinces. The core distributors in turn collectively have 564 outlets.
The core distributors are obligated to install exclusive 'ZTC' branded counters,
at Zhong Tian's expense, in each of its outlets. The distributors tend to have a
combination of owned outlets and distribution agreements with some well
established national electronic & electrical wholesalers. For example, these
include certain outlets of Gome Appliance Inc in Shaanxi and Sichuan, Five Star
Appliance in Shenzhen, and Carrefour in Shanghai.

After sales service, repairs and maintenance have been outsourced to a Shenzhen
based company, Shenzhen Mobile Care Communications Technology Company Limited ('
MCCTC'), who specialise in such activities for multiple handset brands. MCCTC
has developed a service network covering approximately seventy cities in twenty
seven provinces and has developed a relationship with China Post to facilitate
timely delivery of distributors and end users.


As at the end of September 2006, the PRC had approximately 443.1 million mobile
phone subscribers, accounting for approximately 33.9 per cent. of the
population. Although the PRC is already one of the largest mobile phone markets
in the world, its penetration rates are almost half of those in more mature
markets such as the USA and UK. (source: MII,


The strategy of the Enlarged Group will be to focus on:

•         investing in its brand through staff training, advertising
(billboards, Internet, newspapers) and event and personality sponsorship to
increase brand awareness;

•         continuing to invest in new products;

•         establishing additional and improved distribution and sales outlets.
In particular the Company will focus on the major service providers such as
China Mobile in its targeted areas which could result in more rapid market

•         increasing production capacity in the medium term by utilising
existing infrastructure to add an additional four assembly lines to meet future
sales growth. This will allow the Company to maintain its cost advantage in
producing its own handsets, thereby protecting margins;

•         the preparation of an application in 2007 for a CDMA manufacturing
licence and to prepare for the registration for the application of a 3G
manufacturing licence the timing of which is still uncertain. The Company is
likely to take a low risk approach in respect to these licences by exploiting
its ability to manufacture for OEM's and becoming comfortable with the
technology before it develops its own low cost handsets utilising these
technologies; and

•         exploiting the cost advantages that Zhong Tian may obtain to develop
overseas markets with similar characteristics to China's, such as Indonesia,
India, and Africa.

The Directors believe that this strategy will entrench Zhong Tian's current
market position and drive sales volume growth to capitalise on current trends
and to increase market share and brand awareness.

The Directors believe that their collective experience in the telecommunications
industry, combined with skills in the areas of finance and management, provide a
solid platform to implement the Company's business strategy successfully.


                                            Year ended                 Year ended                 Year ended

                                               30 June                    30 June                    30 June

                                                  2004                       2005                       2006

                                                 (RMB)                      (RMB)                      (RMB)

Revenue                                     13,805,763                 13,529,743                194,713,009
Operating Profit                               104,039                  (783,516)                 26,119,793
Profit after Tax                               153,478                  (795,784)                 26,080,352

2005 was a year of major transition for Zhong Tian. In July 2005, Zhong Tian was
granted a GSM handset manufacturing licence which led to a significant growth in
the Company's operations as demonstrated in the results to 30 June 2006.

To date trading is in line with the Directors' expectations and they are
confident of the future prospects of the Company. The Directors are pleased to
report that the unaudited revenue for the period of 6 months ending 31 December
2006 is significantly ahead of the same period in the prior year.

In the last six months Zhong Tian has introduced 10 new models with a range of
appearance and functions, but most of which are equipped with a 300,000 pixel
camera, music and video player and a 128mb memory stick.

Zhong Tian continues to aim to strengthen its strategy in the second to fourth
tier markets in the PRC by low cost pricing of its handsets, whilst starting to
explore the high end market in Shanghai through the manufacture of PDA
functional mobile phones.


Frank Lewis, Non-executive Chairman (Aged 61)

Mr Lewis has over 25 years of experience in both listed and private companies.
He has held a number of board positions as Chairman and non-executive director
both in the UK and abroad with growing, mid-market companies. Frank is currently
a non-executive director of a number of AIM-listed companies including Teleset
Networks Public Company Limited, a Cypriot holding company for a Russian
telecommunications group, MTI Wireless Edge Ltd, a manufacturer of sophisticated
antennas and antenna systems and Polymer Logistics N.V., a provider of '
one-touch' logistics solutions. Frank is a fellow of the Institute of Chartered
Accountants of England and Wales and a member of the South African Institute of
Chartered Accountants.

Mr. Chaohui (aka Charles) Huang, Chief Executive Officer (Aged 39)

Mr. Huang has over 20 years experience in telecom and communication business in
China. He engaged in military communications during his service in the Army from
1983 to 1987. Thereafter he was engaged in a family business involved in the
distribution of telephone handsets and terminal products. In 1995 he joined
TELSDA Group a manufacturer of mobile handsets, as vice president. Mr. Huang
founded Zhong Tian Communication Equipment Co., Ltd. in 2003.

Dr Yi Xie, Non-executive director (Aged 49)

Dr Xie graduated from the Beijing University of Posts and Telecommunications
where he obtained a Doctorate Degree. Dr Xie has over 20 years research and
development experience in the information technology industry. He has
specialised in Optical Communication and Communication Protocols. Dr. Xie is the
vice-president of China Academy of Telecommunication Research Institution, a
subsidiary of the Ministry of Information Industry of China. He also the
chairman of TC9 of China Communications Standards Association and the chairman
of the China Testing Forum for Telecommunication Terminals.

Mark Syropoulo, Finance Director (Aged 55)

Mr Syropoulo has had 30 years experience in stock broking, finance or executive
positions primarily in the resources sector in Africa, Australia, USA, UK and
Asia. From 1987-1993 he was managing director of London listed Anglo Pacific
Resources Plc which was an associate company of Anglovaal Ltd. Mark has had 10
years experience investing in Chinese publicly quoted equities and was a
non-executive director of AIM listed Caledon Resources Plc, a China focused gold
explorer from 2005 to December 2006. He has completed Mandarin studies through
University of California, Berkeley, and at the Beijing Language and Cultural

Michael Liu (Age 44)

Mr Liu has over 20 years experience in general management, investment and
finance, marketing and sales, and project management in North America and China.
From 1993 to 2001, he was general manager for the China operations of CNT Group,
a TSX main board listed firm. Michael has been a director of TSXV listed Pacific
Imperial Mines Ltd since 2004 and a director of TSXV listed International
Barytex Resources Ltd since March 2006. Michael has an MBA from the University
of British Columbia.


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