Thanks for your questions posted over the past week. I am happy to answer your questions online. I will repost the questions in blue italics followed by my comments in black.

Kenny the fish

Dear Eric Liou, you wrote:

From the latest 2013 half year results released today, it looks like Qian Hu financials is turning worse with the borrowings increasing a million to 13 million though there is a slight increase (400k) of cash and cash equivalent, moving forward how do you foresee Qian Hu achieving the vision of being debt free and a high dividend payout company?

By which year do you foresee this happening?

Also, it is nearing the special dividend (0.5cents) payout date of October, do you foresee the company having difficulty paying out the dividend or the company will look to borrow more in order to pay out the dividend?

Hi Eric,

I would like to thank you for taking the time to go through our financials and asking these questions.

We view the current lacklustre financials and slight increase in borrowing as a temporary situation due to the restructuring and transformation of our dragon fish business. The long term strategy of making Qian Hu a debt free and high dividend payout company is still intact.

Doing business is not as clear cut as solving a simple linear mathematic equation. Qian Hu encounters complex situations now and then and needs to react to the changing business environment accordingly. These events causes temporary fluctuation in the cash flow and profits of the Company. Hence, Qian Hu does not have a fixed dividend payout policy nor commit to a specific time frame when it would be debt free. Nonetheless, Qian Hu is committed to achieving its long term objectives. I hope our shareholders can comprehend the restructuring we are undergoing is to ensure the long term viability of the business.

The special dividend payable in October is a commitment which Qian Hu will honour. The fluctuation in our cash flow and borrowing is temporary and would normalise in the near future.

I appreciate the patience and support from our shareholders and public during our restructuring and transformation period. We are seeing light at the end of the tunnel. Slowly but surely, Qian Hu is coming back.

Regards.

Kenny the fish

Dear Jayster, you wrote:

SGX has increased the Mainboard listing fees recently. Has Qian Hu considered moving from the Mainboard to Catalist, changing its financial year, reporting its financials on a bi-annual basis, reducing the number of directors on its board, to reduce its listing and audit cost?

Hi Jayster,

Doing business is also about doing the right thing. We cannot downgrade our corporate governance standard simply because we are not doing well financially. Good or bad times, Qian Hu must be consistent in its corporate transparency and continue to improve on its corporate governance standard. Quarterly financials reporting is very much an internal financial team capability issue rather than higher audit cost.

Many Catalist company try to upgrade themselves to the Mainboard. It would be irrational and short-sighted if Qian Hu were to downgrade itself from the Mainboard simply to save on listing fees. Catalist company might incur higher overall cost due to the engagement of Sponsors.

The new corporate governance code requires companies to have more independent directors, not reduce it. None of the existing executive directors receive director fees.

Regards.

Kenny the Fish

Dear David Tan, you wrote:

May I know how many suppliers in China do you have to make your accessories? Do the suppliers have to compensate Qian Hu for the delay? Would diversifying geographically to OEMs in Vietnam and India help to reduce delays in production?

Hi David,

We have numerous suppliers supplying components parts for our new products. It is a tricky thing to ask for compensation. If the delay is not too serious, usually Qian Hu will work something out with the suppliers instead of asking for compensation outright.

China still has its comparative advantage for aquarium accessories manufacturing as components parts are easily available due to its well-established supply chain network. I do not see Vietnam, India or any other developing countries in Asia matching these capabilities in the near future.

Regards.

Kenny the fish

Dear Ah Huat, you wrote:

I saw on TV you say government haven't get back on you on the land lease in Singapore hence you cannot invest in infrastructure. Has the matter been settled? If the terms given by the Singapore government is too costly, will Qian Hu decide to move its production facilities elsewhere?

Hi Ah Huat,

Yes, Qian Hu is still awaiting the government's decision on the number of years they can allow us to operate in our current premises. We are expecting the answer from the government very soon.

Qian Hu have several options but I do not have the liberty to disclose them now.

Regards.

Kenny the fish

Dear Tony Lim, you wrote:

Your Accessories business is more profitable than selling fish because you switched to R&D and ditched manufacturing. Will you do the same for the fish business, sell all the fish rearing facilities and focus on R&D on breeding Dragon Fish?

Hi Tony,

One of our objective is to be the world's number one exporter of ornamental fish. When our new export facility in Indonesia is ready by next month, we will move closer towards the objective.

Qian Hu's dragon fish research and development capabilities is way ahead of our competitors. This enables us to gradually engage in breeding higher value fish and do selective breeding program. Qian Hu is currently upgrading its rearing facilities to do more intensive farming with higher productivity. We still need the facilities, but better, more innovative and efficient facilities.

Regards.

Kenny the fish

Thanks again to all the investors who have posted their questions here. I hope I have answered them to your satisfaction. The next chance for us to correspond again will be the time when we announce our Full Year 2013 results. In the meantime, do feel free to visit our corporate website: http://www.qianhu.com/ and our IR website: http://qianhu.listedcompany.com/ for more information.

Take care and I look forward to our next online Q&A.

Kenny the fish

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