MIRA INFORM REPORT

Report Date :

23.08.2013

IDENTIFICATION DETAILS

Name :	ARMSTRONG (CHINA) INVESTMENT CO., LTD.
Registered Office :	10/F, Block B, Green Centre, No. 600 Middle Long Hua Road, Xuhui District, Shanghai, 200032 Pr
Country :	China
Financials (as on) :	31.12.2012
Date of Incorporation :	17.08.2010
Com. Reg. No.:	310000400628959
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	Subject engaged in investment, and sales of ceiling, floor, building materials.
No. of Employees :	260

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Moderate
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
China	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

CHINA - ECONOMIC OVERVIEW

Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2012 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. Still, per capita income is below the world average. The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2010-11, China faced high inflation resulting largely from its credit-fueled stimulus program. Some tightening measures appear to have controlled inflation, but GDP growth consequently slowed to under 8% for 2012. An economic slowdown in Europe contributed to China's, and is expected to further drag Chinese growth in 2013. Debt overhang from the stimulus program, particularly among local governments, and a property price bubble challenge policy makers currently. The government's 12th Five-Year Plan, adopted in March 2011, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future. However, China has made only marginal progress toward these rebalancing goals.

Source : CIA

Company name and address

ARMSTRONG (CHINA) INVESTMENT cO., lTD.

10/F, BLOCK B, GREEN CENTRE, NO. 600 MIDDLE LONG HUA ROAD,

XUHUI DISTRICT, SHANGHAI, 200032 PR CHINA

TEL: 86 (0) 21-33386688-6611 FAX: 86 (0) 21-33386699

EXECUTIVE SUMMARY

INCORPORATION DATE : AUG. 17, 2010

REGISTRATION NO. : 310000400628959

REGISTERED LEGAL FORM : WHOLLY FOREIGN-OWNED ENTERPRISE

CHIEF EXECUTIVE : MR. KEN CHONG (CHAIRMAN)

STAFF STRENGTH : 260

REGISTERED CAPITAL : USD 85,000,000

BUSINESS LINE : TRADE AND INVESTMENT

TURNOVER : CNY 442,550,000 (AS OF DEC. 31, 2012)

EQUITIES : CNY 478,100,000 (AS OF DEC. 31, 2012)

PAYMENT : AVERAGE

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRLY STABLE

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : WELL KNOWN

EXCHANGE RATE : CNY 6.1237 = USD 1

Adopted abbreviations:

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Renminbi

SC was registered as a wholly foreign-owned enterprise at local Administration for industry & commerce (AIC - the official body of issuing and renewing business license) on Aug. 17, 2010.

Company Status: Wholly foreign-owned enterprise

This form of business in PR China is defined as a legal person. It is a limited co. established within the territories of PR China with capital provided totally by the foreign investors. More than one foreign investor may jointly invest in a wholly foreign-owned enterprise. The investing party/parties solely exercise management, reap profit and bear risks and liabilities by themselves. This form of companies usually have a limited duration is extendible upon approval of Examination and Approval Authorities.

SC’s registered business scope includes (one) to allow foreign investment in the permitted field; (two) written entrusted by the companies that it invests commission (unanimously adopted by the Board), provide the following services for the invested enterprises: 1, assisted or represented their investment enterprises to purchase self-used machinery and equipment, office equipment and raw materials needed for production, components, parts from domestic and overseas, and selling the products which produced by the invested enterprises in domestic and overseas market, and provide after-sales service; 2, under the consent and supervision of the foreign exchange management departments, to balance foreign currency among its foreign-invested enterprises; 3, to provide technical support, staff training, internal personnel management and other services for the invested enterprises in the process of production, sales and market development; 4, to assist its invested enterprises to seek loans and guarantees; (three) set up research and development centers or departments in China, engaged in new products and high-tech research and development, transfer of its research and development results, and provide technical services; (four) provide advisory services to its investors, provide market information relating to its investment, investment policies and other advisory services for its affiliated companies; (five) to undertake outsourcing services of its parent and affiliated companies; (six) wholesale, import and export, commission agency (excluding auction) of ceiling, floor, building materials (excluding concrete and steel), and provides related services.

SC is mainly engaged in investment, and sales of ceiling, floor, building materials.

Mr. Ken Chong is legal representative and chairman of SC at present.

SC is known to have approx. 260 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office in the commercial zone of Shanghai. SC’s employee refused to release the detailed information of the premise.

http://www.armstrong.cn/ The website belongs to Armstrong, and it includes the introduction on SC. The design is professional and the content is well organized. At present it is in both Chinese and English versions.

Email: china_flooring@armstrong.com

No significant changes were found during our checks with local AIC.

As of the end of 2011, SC’s paid-in capital was CNY 264,590,000; and as of the end of 2012, it was increased to CNY 542,660,000.

For the past two years there is no record of litigation.

MAIN SHAREHOLDERS:

Name % of Shareholding

Armstrong China Holdings, Limited (Hong Kong) 100

Registration no.: 0938855

Legal form: private

Incorporation date: 2004-12-8

19/F, No. 88 Gloucester Road, Wanchai Hong Kong

Phone: (852) 2585 7828

Fax: (852) 2598 7113/7181

E-Mail: asia_flooring@armstrong.com

l Legal Representative and Chairman:

Mr. Ken Chong（is currently responsible for the overall management of SC.

Working Experience(s):

At present Working in SC as legal representative and chairman.

Also working in Armstrong World Industries (China) Co., Ltd. as legal representative.

SC is mainly engaged in investment, and sales of ceiling, floor, building materials.

SC’s products mainly include: ceiling, floor, etc.

Vinyl Sheet Flooring (402)

Luxury Vinyl Tile (56)

Vinyl Composition Tile (63)

Specialty Products (73)

Linoleum Flooring (70)

Flooring Accessories (55)

SC sources its materials 50% from domestic market, and 50% from overseas market. SC sells 50% of its products in domestic market, and 50% to overseas market.

The buying terms of SC include Check, L/C, T/T and Credit of 30-60 days. The payment terms of SC include Check, L/C, T/T and Credit of 30-60 days.

Note: SC’s management refused to release its main suppliers and clients.

Armstrong (Shanghai) Building Materials Co., Ltd.

Armstrong Hot Water Equipment Trade (Shanghai) Co., Ltd.

Armstrong World Industries (China) Co., Ltd.

Armstrong World Industries (China) Co., Ltd. Shanghai Office

Shanghai Armstrong Building Products Co., Ltd.

Etc.

The information on SC’s subsidiaries is not available at present.

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience: SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record: None in our database.

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

SC declined to release its banking details.

Financial Summary

===============

Unit: CNY’000

	As of Dec. 31, 2012	As of Dec. 31, 2011
Current assets	105,710	185,200
Total assets	660,670	369,890
	=========	=========
Current liabilities	182,570	121,730
Long term liabilities	0	0
	--------------	--------------
Total liabilities	182,570	121,730
Equities	478,100	248,160
	--------------	--------------
Total liabilities & equities	660,670	369,890
	=========	=========
Turnover	442,550	467,150
Cost of goods sold	351,250	358,580
Profit before tax	-48,120	-16,430
Less: profit tax	0	0
Profits	-48,120	-16,430

Note: we did not find SC’s detailed financial reports.

Important Ratios

=============

	As of Dec. 31, 2012	As of Dec. 31, 2011
*Current ratio	0.58	1.52
*Liabilities to assets	0.28	0.33
*Net profit margin (%)	-10.87	-3.52
*Return on total assets (%)	-7.28	-4.44
*Turnover/Total assets	0.67	1.26
* Cost of goods sold/Turnover	0.79	0.77

PROFITABILITY: FAIR

l The turnover of SC appears fairly good in its line.

l SC’s net profit margin remains in a fair level.

l SC’s return on total assets remains in a fair level.

l SC’s cost of goods sold is average, comparing with its turnover.

LIQUIDITY: FAIR

l The current ratio of SC is maintained in a normal level in 2011 but fair in 2012.

l SC’s turnover is in an average level in 2011 but fair in 2012, comparing with the size of its total assets.

LEVERAGE: FAIRLY GOOD

l The debt ratio of SC is low.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly stable.

SC is considered medium-sized in its line with fairly stable financial conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.65.42
UK Pound	1	Rs.102.09
Euro	1	Rs.87.32

INFORMATION DETAILS

Report Prepared by :

PRL

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.