Chairman's Statement

Dear Shareholders,

Asia Environment Holdings Ltd enjoys a most fruitful year in 2007 since the Group was listed, earning a better annual profit by 27% than the year before. In the meanwhile, the Group is achieving tremendous progress in investing, constructing, and expanding sales abroad, which also helps the Group prepare for further development.

REVIEW on 2007

The Group undertakes seven BOT projects with a total business of RMB 548 million, while the total investment is RMB 160 million in the year of 2007. Four of the main projects are: Suzhou Fenhu 50,000 tons/d sewage treatment project; the Shanghai Jinshan 25,000 tons/d sewage treatment project; Changsha WangCheng 40,000 tons/day sewage treatment plant and JiangXi Jingdezhen 40,000 tons/ day sewage treatment plant. At the end of the year, the Group became the successful tenderer for the project of Xining wastewater treatment plant (BOT + TOT) with a total investment of RMB 240 million, which is the first major BOT + TOT project the Group undertakes.

In order to maximize profi ts, the Group manages its construction risks through optimizing Design Plan and effective cost control. Last year, the HongGuTan sewage treatment plant in Nanchang passed the inspection and certifi cation tests by the Nanchang government and satisfi ed a pre-requisite condition for commercial operations. The Nantong construction project is almost completed and is expected to be in use in 2008. The civil works project of Jingdezhen is completed. Besides, Jiangning Nanjing, Shanghai Jinshan, Suzhou Fenhu, Changsha WangCheng have also started construction projects.

In 2007 the Company has also made major achievements in capital fund raising after successfully making two additional share placements. In addition, International Finance Corporation ("IFC") became the Company's partner and will provide loans for the funding of the Company's future projects. This not only optimize the structure of the shareholders, but also enhance our capacity of investment and financing in water infrastucture business.

We also have made certain achievements in overseas sales last year, laying a good foundation for expanding our future overseas market.

Shareholder Returns

As the company has achieved better results in 2007, the company will propose SGD 2 cents per share (S$0.02) dividend to shareholders.

The Company will continue to undertake more and better water projects. We also wish to achieve certain progress in solids and sludge treatment for further expanding of the business of the Company.

FY2006 Outlook

The Group looks forward to another good year in 2007. In 2007, the Group will press forward with the completion of the Nantong project, by the end of the year. Concurrently, the Pizhou project is also expected to be completed in 2007.

We will continue to improve or project management and explore alternatives to speed up the construction progress.

In 2008, most of the outstanding projects will be completed and will commence operation.

The Group has been operating in China as an integrated water and wastewater treatment solutions provider. With an in-depth understanding of the industry, combined with its technical and project capabilities, the Group is well placed to take the opportunities offered by the growing industry in China as well as in the Southeast Asia.

Even though 2008 will be a very challenging year for the Group. The management is confident to achieve our goals in 2008.

Acknowledgements

We appreciate all the employees and the management for their hard work and great contribution. In addition, we would like to thank all the strategic investment partners, financing organizations, banks, shareholders for their trust and support to us.

Last but not the least, we would like to thank our fellow Directors on the Board for their involvement and guidance.