For 3QFY2008, the Group's revenue decreased by 15% from RMB408.5 million in 3QFY2007 to RMB348.6 million in 3QFY2008, and net profit decreased by 20.3% from RMB89.2 million in 3QFY2007 to RMB71.1 million in 3QFY2008. This is due to the shortage of attractive turnkey projects.

Revenue from turnkey projects in 3QFY2008 decreased by 26% from RMB365.4 million in 3QFY2007 to RMB271.5 million in 3QFY2008, representing 78% of the total revenue . The remaining 22% came from i) discharging fees received from BOT/TOT projects and ii) the sale of BMS product.

The decrease in distribution expenses by 41% from RMB11.8 million in 3QFY2007 to RMB7.0 million in 3QFY2008 was due to the decrease in transportation cost which the vendors and distributors had agreed to absorb in 3QFY2008.

The increase in administrative expenses by 52% from RMB12.5 million in 3QFY2007 to RMB18.9 million in 3QFY2008 was mainly due to additional cost arising from increased number of project companies and higher professional fee which relates to corporate finance activities in 3QFY2008.

The decrease in research and development cost by 23% from RMB10.2 million in 3QFY2007 to RMB7.8 million in 3QFY2008 was mainly related to reduction of fees paid to research institutions in 3QFY2008.

The increase in other operating expenses from RMB0.9 million in 3QFY2007 to RMB7.9 million in 3QFY2008 was mainly due to the provision of foreign exchange (forex) loss as a result of flunctuation of RMB against HKD and SGD.

The decrease in finance expense from RMB14.2 million in 3QFY2007 to RMB-2.1 million in 3QFY2008 was mainly due to the write-back of notional interest expense provided for the CB in conjunction with the partial redemption of the CB, and netted off with the financial expenses during the financial period.

Balance Sheet

Trade and other receivables increased by 11% from RMB874.8 million as at 30 June 2007 to RMB971.7 million as at31 Mar 2008 mainly due to late payment from turnkey projects customers.

Cash and cash equivalents decreased by 25% from RMB820.7 million as at 30 June 2007 to RMB619.0 million as at 31 Mar 2008 due to the payment made in the construction in progress for the BOT projects for the period ended at 31 Mar 2008.

Contracts work-in-progress decreased by 17% from RMB125.8 million as at 30 June 2007 to RMB104.5 million as at 31 Mar 2008 because the costs incurred on existing and newly secured projects as at 31 Mar 2008 were less than those in previous period.

Inventories increased by RMB4 million as at 30 June 2007 to RMB4.4 million as at 31 Mar 2008 mainly due to the increase in orders of BMS products as at 31 March 2008.

Construction in progress increased by 60.3% from RMB617.5 million as at 30 June 2007 to RMB989.6 million as at 31 Mar 2008 mainly due to the increase in the construction works of Suzhou, Lianyungang, Beijing and Nanjing BOT projects for the period ended 31 Mar 2008.

Loan increased by 54.9% from RMB455.3 million as at 30 June 2007 to RMB705.1 million as at 31 Mar 2008 mainly due to the Nanjing BOT Bank Loan and the shareholder 's loan .

Convertible bonds decreased by 14% from RMB1,025.7 million as at 30 June 2007 to RMB878.1 million as at 31 Mar 2008 due to the partial repayment for the CB.

Cashflow Statement

The Group had a cash position of RMB619.0 million as at 31 Mar 2008. Net decrease in cash and cash equivalents was mainly due to the net cash outflow from operating activities of RMB98.3 million, net cash outflow from investing activities of RMB236.2 million and net cash inflow of financing activities amounted RMB17.6 million in 3QFY2008.

Commentary

We believe the growing emphasis placed by the PRC Government on environmental protection, coupled with stringent enforcement of regulatory requirements, will continue to spur demand for waste and wastewater treatment solutions in the PRC. As stated previously, our Group will continue to focus its business in the large-scale municipal wastewater treatment sector and further our R&D in developing new commercial application for our BMS Technology. We will also continue to seek suitable strategic partners in developing new business for the Group.