DELTA NETWORKS, INC.


(incorporated in the Cayman Islands with limited liability)
(Stock code: 722)
CONNECTED TRANSACTION
PURCHASE OF MACHINERY FROM DELTA ELECTRONICS, INC
TERMINATION OF AGREEMENTS FOR
CONTINUING CONNECTED TRANSACTIONS

Advised by
The Board announces that on the 28 December 2007, the Purchaser, DNI
Dongguan, a wholly-owned subsidiary of the Company, and the Vendor, DEI
Labuan, entered into the Agreement, in relation to the purchase of SMT Machine
by the Purchaser from the Vendor, at a consideration of US$1,432,683 (equivalent
to approximately HK$11,103,293). The consideration was agreed at after arm’s
length negotiation based on normal commercial terms.
The Vendor is a 94% indirect non wholly-owned subsidiary of DEI, the ultimate
controlling shareholder of the Company, and therefore it is a connected person of
the DNI Group. Accordingly, the Purchase constitutes a connected transaction of
the Company under Chapter 14A of the Listing Rules. As each of the relevant
percentage ratios (under Rule 14.07 of the Listing Rules) in respect of the Purchase
exceeds 0.1% but is less than 2.5%, the Purchase is subject to reporting and
disclosure requirements only and no independent shareholders’ approval of the
Agreement is required under the Listing Rules.
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As disclosed in the Prospectus and as a condition to the Company’s listing on the
Stock Exchange, with effect from 31 December 2007, the Company has terminated
(i) the agreement for supporting services by DEI Group in Dongguan (i.e. Category
3D transactions); (ii) the agreement for reciprocal arrangements with DEI Group
in relation to payment for certain administrative items (i.e. Category 3E
transactions); and (iii) the agreement for supporting services by DEI Group in
Hong Kong (i.e. Category 3F transactions).
In addition, as disclosed in the Company’s announcement dated 21 November
2007, with effect from 31 December 2007, the Company has terminated (i) the
agreement for DEI Group’s use of the Company’s premises and sharing of services
at the Company’s Dongguan manufacturing facility (i.e. Category 2B transactions
referred to in the Prospectus); and (ii) the agreement for the Company’s use of
research and development center operated by DEI Group in Shanghai (i.e.
Category 2C transactions referred to in the Prospectus).
Following the termination of the abovementioned agreements, the administrative,
supporting and, or leasing services contemplated under Category 2B, 2C, 3D, 3E
and 3F transactions will be either performed by the Group itself or other
independent third party suppliers. Accordingly, the reliance by the Company on
DEI, the ultimate controlling shareholder of the Company, has been significantly
reduced.
All the listing conditions as stated in the Prospectus in respect of Categories 3D,
3E and 3F transactions mentioned above have been fulfilled by 31 December 2007.
The Group will continue to conduct Categories 1, 2A, 3A, 3B, 3C and 4A
transactions stipulated in the Prospectus with the DEI Group.
THE AGREEMENT

Date: 28 December 2007
Purchaser: DNI Dongguan
Vendor: DEI Labuan
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Asset to be acquired: The SMT Machine together with its spare parts
amounting to US$1,432,683 (equivalent to
approximately HK$11,103,293) which is used for
production of networking products (the“SMT
Machine”). The SMT Machine was purchased by the
Vendor for about US$1,845,930 (equivalent to
approximately HK$14,305,958.) The accumulated
depreciation up to 31 December 2007 was US$413,247
(equivalent to approximately HK$3,202,664).
Consideration: The consideration of US$1,432,683 (equivalent to
approximately HK$11,103,293) was agreed at after
arm’s length negotiation between the Purchaser and the
Vendor with reference to (i) the estimated net carrying
value of the SMT Machine as at 31 December 2007; (ii)
the original cost of the SMT Machine of US$1,845,930
(equivalent to approximately HK$14,305,958; and (iii)
the accumulated depreciation up to 31 December 2007
of US$413,247 (equivalent to approximately
HK$3,202,664). The consideration shall be settled in
cash by the Purchaser within 30 days upon the approval
of the State Administration of Foreign Exchange of the
PRC.

Condition: The Purchase is conditional upon the settlement of the
consideration in full, the approval of the Purchase by
State Administration of Foreign Exchange of the PRC,
and the assignment of rights, interests and obligations in
relation to the SMT Machine under the Agreement to the
Purchaser by the Vendor.
Completion: Subject to the fulfillment of the condition precedents
mentioned above, the rights and title of the SMT
Machine will be transferred to the Purchaser after the
approval of the State Administration of Foreign
Exchange is obtained.
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REASONS FOR, AND BENEFITS, OF THE PURCHASE
DNI Dongguan is engaged in the business of manufacturing and sales of networking
products. The SMT Machine is no longer in use by DEI Labuan and it is more suitable
for the operational needs of DNI. Accordingly, the Board considers that the Purchase
can enhance production efficiency of DNI Dongguan and increase the sales of the
Company.
The Directors (including the independent non-executive Directors) believe that the
Purchase is on normal commercial terms and the terms of the Agreement are fair and
reasonable and in the interests of the Company and its shareholders as a whole.
IMPLICATIONS UNDER THE LISTING RULES

DEI Labuan is a wholly owned subsidiary of DEI, an ultimate controlling shareholder
of the Company, and is a connected person of the Company. DEI, through its wholly
owned subsidiary, DNHL, together its associates, are interested in 59.5% of the
Company’s issued share capital as at the date of this announcement. The Purchase
therefore constitutes a connected transaction under Chapter 14A of the Listing Rules.
As each of the relevant percentage ratios (under Rule 14.07 of the Listing Rules) in
respect of the transactions contemplated under the Agreement exceeds 0.1% but is
less than 2.5%, the Purchase is subject to reporting and disclosure requirements only
and no independent shareholders’ approval of the Agreement is required under the
Listing Rules.
THE TERMINATION OF THE AGREEMENTS FOR CONTINUING
CONNECTED TRANSACTIONS WITH DEI GROUP

As disclosed in the Prospectus, the Company entered into the following continuing
connected transactions which are subject to reporting, announcement and, or
independent shareholders’ approval requirements under Chapter 14A of the Listing
Rules. As disclosed in the
Prospectus, the agreement expired on 31 December 2007. Please refer to the
Company’s announcement dated 21 November 2007 for further details of the
arrangements under Category 2B transactions.
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No separate termination agreement was entered into between the Company and DEI
Dongguan.
Category 2C transactions: The Company and Delta Video entered into a three-year
agreement for the Company (i) to use the equipment and staff at the research and
development facility operated by DEI Group and (ii) to lease from DEI Group its
existing premises in Shanghai for carrying out such research and development work,
because the Company did not have a direct presence in Shanghai and did not own a
research and development facility in Shanghai, the PRC, at the time the agreement
was entered into. The agreement will expire on 31 December 2009. However, with the
establishment of a subsidiary of the Company in Shanghai (the “Shanghai
Subsidiary”), the arrangement of using DEI’s research and development staff and
their equipment has been terminated and the equipment and relevant staff have been
transferred to the Shanghai Subsidiary by the end of December 2007. The Company
also intends to lease another premises from a separate entity after the establishment
of the Shanghai Subsidiary. In this regard, subject to completion of the relevant
registration procedures in relation to the establishment of the Shanghai Subsidiary,
the Company has terminated the agreement before the end of December 2007
pursuant to an addendum entered into between the Company and Delta Video dated
28 December 2007. Please refer to the Company’s announcement dated 21 November
2007 for further details of the arrangements under Category 2C transactions.
Category 3D transactions: The Company and DEI Dongguan entered into an
agreement for general supporting services including building security services,
factory management services, IT support, import and export function and
procurement services by DEI Dongguan to the Group because the Company and DEI
Dongguan operate in the same Dongguan Industrial Park and are in close proximity
to each other (but operating independently in different factories). It is less efficient
and not cost-effective to procure the above mentioned services separately. As a
condition to the Company’s listing, the Company has ceased such arrangements with
DEI Group by the end of December 2007. No separate termination agreement was
entered into between the Company and DEI Dongguan.
Category 3E transactions: The Company entered into an agreement with DEI
Dongguan for reciprocal payment arrangements for certain administrative items.
Because the Dongguan factory of both DEI Group and the Company are located in the
same Dongguan Industrial Park and there is no central administrative center in the
Industrial Park, such reciprocal payment arrangement is more cost efficient and will
not waste resources to set up an additional administrative center. As a condition to
the Company’s listing, the Company has ceased such arrangement with DEI Group by
the end of December 2007. No separate termination agreement was entered into
between the Company and DEI Dongguan.
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Category 3F transactions: The Company entered into a support services contract
with Delta Power. Since the Company has limited presence in Hong Kong
immediately after listing, it is not cost effective to employ full time staff to provide
such basic logistic and data entry services. With the growing presence in Hong Kong
after listing, the Company has set up a subsidiary in Hong Kong to establish a fully
staffed office in Hong Kong to provide basic supporting services. As a condition to
the Company’s listing, the Company has ceased such arrangement with DEI Group by
the end of December 2007. No separate termination agreement was entered into
between the Company and Delta Power.
As disclosed in the Company’s announcement dated 21 November 2007, with effect
from 31 December 2007, the Company has terminated (i) the agreement for the
Category 2B transactions and (ii) the agreement for the Category 2C transactions
mentioned above.
In addition, as mentioned above, as a condition to the Company’s listing on the Stock
Exchange, with effect from 31 December 2007, the Company has terminated (i) the
agreement for the Category 3D transactions; (ii) the agreement for the Category 3E
transactions; and (iii) the agreement for the Category 3F transactions referred to
above.
Following the termination of the abovementioned agreements, the administrative,
supporting and or leasing services contemplated under Categories 2B, 2C, 3D, 3E and
3F transactions will be either performed by the Group itself or other independent
third party suppliers. Accordingly, the reliance by the Company on DEI, the ultimate
controlling shareholder of the Company, has been significantly reduced.
All the listing conditions as stated in the Prospectus in respect of Categories 3D, 3E
and 3F transactions have been fulfilled by 31 December 2007.
The Group will continue to conduct Categories 1, 2A, 3A, 3B, 3C and 4A transactions
stipulated in the Prospectus with the DEI Group.
INFORMATION ABOUT THE COMPANY AND DEI GROUP

The Company and DNI Dongguan are principally engaged in design and manufacture
of a wide range of networking products, including Ethernet switches, broadband
access products, wireless adaptors and routers.
DEI is principally engaged in design and manufacture of a wide range of power
management products, visual displays products, component and automotive products,
including switching power supplies, DC/DC converters, AC/DC adapters, digital
projectors, telecom and networking components. Its shares are listed on the Taiwan
Stock Exchange.
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DEI Labuan is principally engaged in trading of power supplies, electronic
components and visual display products.
DEFINITIONS

In this announcement the following words have the following meanings unless the
context requires otherwise:
“Agreement” the conditional purchase and sale agreement dated 28
December 2007 entered into between the Purchaser and
the Vendor in relation to the Purchase
“Board” the board of Directors of the Company
“Company” Delta Networks, Inc. ( ), an exempted
company incorporated in the Cayman Islands with
limited liability
“DEI” Delta Electronics, Inc. ( ), a
company incorporated in Taiwan whose shares are listed
on the Taiwan Stock Exchange
“DEI Group” DEI and its subsidiaries (other than the DNI Group)
“DEI Dongguan” Delta Electronics (Dongguan) Co., Ltd., a company
incorporated in the PRC and a subsidiary of DEI
“DEI Labuan” or
“Vendor”
Delta Electronics International Ltd., a company
incorporated in Labuan, Malaysia and a subsidiary of
DEI which is a 94% indirect non wholly-owned
subsidiary of the DEI
“Delta Video” Delta Video Display System (Wujiang) Ltd., a company
incorporated in the PRC and a subsidiary of DEI
“Delta Power” Delta Power Sharp Ltd., a company incorporated in
Hong Kong and a subsidiary of DEI which is a 94%
indirect non wholly-owned subsidiary of the DEI
“Directors” the directors of the Company
“DNI Group” the Company and its subsidiaries
“DNHL” Delta Networks Holding Limited, a company
incorporated in the Cayman Islands and a subsidiary of
DEI
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“DNI Dongguan” or
“Purchaser”
Delta Networks (Dongguan) Ltd. ( ),
previously known as Delta Electronics Industrial
(Dongguan) Co., Ltd., a company incorporated in the
PRC, a subsidiary of the Company
“Listing Rules” the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited
“Prospectus” the prospectus of the Company dated 22 June 2007
“Purchase” the purchase of the SMT Machine by the Purchaser from
the Vendor pursuant to the terms and conditions of the
Agreement
“SMT Machine” Surfaced Mounting Technology Machine currently
owned and operated by DEI Labuan for manufacturing
products, which are currently physically located at
Delta Plant 5, Delta Industrial Estate, Shiji Town,
Dongguan City, Guangdong Province, PRC
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“PRC” The People’s Republic of China. Geographical reference
in this announcement to the PRC excludes Hong Kong,
the Macau Special Administrative Region of the PRC
and Taiwan
For the purpose of this announcement, conversions of US$ into HK$ are based on the
approximate exchange rate of US$1.00 = HK$7.75
By order of the Board
DELTA NETWORKS, INC.

Cheng An, Victor
Executive Director
Taipei, Taiwan
31 December 2007
As at the date of this announcement, the executive directors of the Company are Mr. Liang Ker Uon,
Sam and Mr. Cheng An, Victor; the non-executive directors are Mr. Cheng Chung Hua, Bruce and Mr.
Hai Ing-Jiunn, Yancey; the independent non-executive directors are Mr. Zue Wai To, Victor, Mr. Liu
Chung Laung and Mr. Shen Bing.

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