Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.
SECOND QUARTER FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE PERIOD ENDED 30 JUNE 2011
Statements of comprehensive income for the financial period ended 30 June 2011


A) 2Q2011 vs 2Q2010
The Group's revenue decreased by 3% or RMB 3.8 million from RMB 140.7 million in 2Q2010 to RMB 136.9 million in 2Q2011. This was primarily due to the following:-
Net profit for the group attributable to owners of the Company for the quarter decreased by 94% to RMB 0.6 million (2Q2010: RMB 10.5 million). The decrease of RMB 9.9 million in net profit was mainly attributed to the one-off gain on the disposal of 22.02% stake in Nantong Penyao amounting to RMB 11.9 million taken up in 2Q2010.
B) 1H2011 vs 1H2010
The Group's revenue decreased by 24% or RMB 64.0 million from RMB 261.7 million in 1H2010 to RMB 197.7 million in 1H2011. This was primarily due to the following:-
which is offset by:
The Group's net profit attributable to the owners of the Company for 1H2011 decreased by 77% to RMB 4.5 million (1H2010: RMB 19.7 million). The decrease of RMB 15.2 million in net profit was mainly attributed to the one-off gain of RMB 11.9m from the disposal of 22.02% stake in Nantong Penyao and decrease in government grants and compensation for value added tax amounting to RMB 4.4 million.
China's 11th 5-year plan (2006 – 2010) called for an investment of RMB 200 billion in water infrastructure projects to raise wastewater treatment coverage to 70% in major urban areas and 30% in small cities. In the 12th 5-year plan (2011 – 2015) release in the No.1 document of 2011, China aims to increase its spending to RMB 4 trillion in the next decade to improve on its water infrastructure. Since privatization of the industry in 2002, investment in this area has resulted in a coverage of wastewater treatment from 36% in 2002 to 70% in 2009. Nevertheless, there is still room for expansion in the urban market, the rural market and the western regions which has been left very much untapped.
In the 12th 5-year plan, the Chinese government has set the stage for the continued growth of the industry with an planned investment RMB4 trillion over the next decade. Therefore, whilst the Groups' primary focus will continue be to on procurement of engineering procurement contract services ("EPC Services") projects and equipment supply contract via the expansion and investments in sales networks, the Group will be increasing its focus on obtaining new BOT water projects as the current BOT projects of the Group commence operation or trial operation over the course of this financial year. The ability of the Group to procure new BOT projects and to successfully complete them is dependent on the Group's ability to address its financing cost, obtain funding and to strengthen its capital base.
In recent months, the China Central Bank has imposed a number of moneraty measures to tighten the bank borrowings and to control inflation. As a result, financing has become more expensive and this has posed new challenges to the Group especially when we are in a capital intensive industry.
Baring unforeseen circumstances, the profitability of the Group is therefore dependent on the Group's ability to procure new BOT projects and to operate existing BOT projects efficiently and profitability to ensure sufficient level of revenue is being generated.