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History

Our origins may be traced to 1979 when the Shandong Province Planning Committee (山东省计划委员会) established Shandong Feixian Chemical Factory ("Feixian Chemical Factory") (山东省费县化工厂) as a state owned enterprise to undertake the production of detonating cords with a production capacity of up to 0.5 million metres per annum, mainly for sales to customers in the Shandong Province. Our Managing Director, Sun Bowen, was employed as a technician at Feixian Chemical Factory in July 1980, and was promoted to a factory manager in 1983.

In March 1993, Feixian Chemical Factory and several of its employees established Yinguang Chemical as a company minority-owned by its employees (募集方式), to undertake the commercial explosives business activities of Feixian Chemical Factory. Feixian Chemical Factory became the holding company of Yinguang Chemical. Sun Bowen continued to spearhead and oversee the business operations of Yinguang Chemical. In the same year, Yinguang Chemical expanded its range of detonating cords and increased its production capacity for detonating cords to five million metres per annum.

In December 1997, Feixian Chemical Factory was converted into a limited liability company under the PRC companies law and was renamed Yinguang Chemical Group as a result of the PRC government’s policy at that time to convert factories in the PRC into limited liability companies.

Since 1995, Yinguang Chemical had placed emphasis on developmental activities to manufacture new products and to improve the quality of its products to meet international requirements. In 1998, Yinguang Chemical widened its range of products by commencing the production of boosters and nonel tubes. As a result of its developmental activities and product quality, Yinguang Chemical was able to increase its sales and made its first foray overseas by selling its products to companies located in countries such as the United States and Australia in 1998. To meet the increase in demand for boosters, Yinguang Chemical increased its boosters production capacity from 500 tonnes per annum in 1998 to 5,500 tonnes per annum in 1999.

In March 2000, Yinguang Chemical Group was recognised as an advanced and high technology enterprise (国家级重点高新技术企业) by the Ministry of Science and Technology of PRC (中华人民共和国科学技术部). In May of the same year, Yinguang Chemical was awarded ISO9002:1994 certification for Quality System. This has since been replaced by ISO9001:2000 certification for Quality Management System, which is a testament to the quality of our products and production process.

In 2001, in order to expand the range of explosive products, Yinguang Chemical established nonel detonator production facilities with a production capacity of approximately 5 million pieces per annum and commenced the production of nonel detonators.

In 2003, Yinguang Chemical expanded its range of detonating cords and production capacity to up to 50 million metres of detonating cords per annum.

As part of the PRC government’s policy to privatise certain industries in the PRC, the PRC government divested all its interests in Yinguang Chemical Group in October 2003, and these interests were acquired by 41 individuals who were the employees of Yinguang Chemical Group at that time. The consideration for the disposal was approximately RMB 5.3 million based on the audited net asset value of the company as at 30 September 2003. The consideration was paid by the 41 individuals in cash in October 2003. The transfer resulted in our Managing Director, Sun Bowen, becoming the majority shareholder of Yinguang Chemical Group.

Yinguang Chemical Group remained as the holding company of Yinguang Chemical until May 2004 when Yinguang Chemical Group undertook a restructuring exercise and transferred all its interests in Yinguang Chemical to Yinsheng Investments. The shareholders of Yinsheng Investments at the time of its establishment were Sun Qiang, Ji Chuanyuan, Qi Meili, Wang Jiaqi and Nie Xiaoying.

In February 2004, Yinguang Chemical received ISO9001:2000 certification for quality management system, ISO14001:1996 certification for environmental management system and OHSAS18001:1999 certification for occupational health and safety management system issued by the China Certification Centre for Quality Mark. These certifications allowed us to further strengthen our enterprise image and brands. These certifications were transferred to Yinguang Technology in April 2005.

On 5 November 2004, Yinguang Technology was established to undertake the business and assets of Yinguang Chemical in preparation for the public listing of our Company. On 6 November 2004, Yinguang Technology and Yinguang Chemical entered into a business and assets transfer agreement whereby Yinguang Technology acquired all the business and assets (excluding the land and building) relating to the explosives business of Yinguang Chemical. Yinguang Technology was subsequently converted to a WOFE on 23 November 2004 and our Company completed the acquisition of the entire interests in Yinguang Technology on the same day.

Since the establishment of our business in 1979, we have grown significantly. With repeat customers accounting for more 80% of average annual revenue, we have established a diversified clientele base of over 150 customers in the mining, infrastructure and exploration industries.