(Half Year Financial Statement for the year ended 30 June 2007)

Profit and Loss

Click here for the complete Half Year 2007 Financials
Click here for the previous Full Year 2006 Financials.

Review of Performance

Group Revenue
Compared to 1H2006, the Group's revenue increased by 7% or RMB 9.45 million from RMB 141.30 million in 1H2006 to RMB 150.77 million in 1H2007. This is primarily due to the following:-

a) increase in revenue recognised from turnkey servies rendered for BOT projects amounting to RMB 5.46 millions; and
b) increase in manufacturing sales of eqiupment amounting to RMB 3.62 million.

During the financial period, the Group commenced construction work of Suzhou Fenhu, Shanghai Jinshan, Jiangxi Jingdezhen and Hunan Wangcheng BOT projects.

Gross Margin
The Group's overall gross margin improved from 33.4% in 1H2006 to 34% in 1H2007. Both the gross margin of turnkey services and manufacturing segment remained relatively unchanged in 1H2007 as compared to 1H2006.

Profitability
Compared to 1H2006, the Group's net profit for the period increased by 13% to RMB 26.72 million. The increase in mainly due to higher profit margins arising from the Group's revenue, higher other operating income and lower allowances for doubtful debts, offset by higher distribution expenses, administrative expenses and foreign exchange loss.

Commentary

The Group started to recognise project revenue from the Nantong and Pizhou BOT projects in FY 2005 and FY 2006 respectively. The construction work of these two projects have been progressing as planned and the Group targets to complete construction work for both project before end of FY 2007. In addition, the Group has commenced construction of the Suzhou Fenhu, Shanghai Jinshan, Jiangxi Jingdezhen and Hunan Wangcheng BOT projects.

In China, the growth of water and wastewater treatment sector has been dynamic, given the government's aggressive environmental targets to arrest a mounting water crisis. Underpinned by the huge demand for a cleaner enironmental and cleaner water, there is no shortage of projects in China. With the momentum gain in securing four projects in 1H2007, the Group will continue to aggressively pursue viable projects and is confident that it will be to sercure more new projects for the rest of 2007.

Since 4Q2006, the Group began to commit resources in the development of overseas markets for the Group's wastewater treatment products. The Group is beginning to see the results of its effort. The joint venture with Development Construction Ltd, a reputable infrastructure civil contractor in Bangladesh, was the lowest bidder in a project tender in Bangladesh, with a tender price of USD 38 million. The Group expects to receive the tender awards notice from the Bangladesh authority soon. The Group will continue to leverage on its technical and manufacturing capabilities to gain access to the overseas markets.

Barring any unforeseen circumstances, the directors expect the performance of the Group for 2H2007 to better than 1H2007.

Balance Sheet