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Extracted from Annual Report 2008

Dear Shareholders,

On behalf of the Board of Directors, it is our pleasure to present to you our Annual Report for the financial year ended 31 December 2008 ("FY2008").

FY2008 was a very challenging year which saw the Group's sales revenue increase by 10.9% to RMB 340 million. However, profits slid 76.3% to RMB 7.2 million.

Business Review

The "Squirrel" brand domestic wall-hung boilers were the main earnings contributor for the Group in FY2008. Sales revenue increased by 8.9% from RMB 180 million in FY2007 to RMB 196 million in FY2008 in this business sector. Out of which, export sales and PRC domestic sales grew from RMB 93.93 million and RMB 86.1 million in FY2007 respectively to reach RMB 104.7 million and RMB 91.65 million in FY2008 respectively. In April 2008, the Group acquired 51% of equity interest in Shaoxing Aike Electric Co., Ltd for a cash consideration of RMB 2.04 million. This strategic investment will enable the Group to enter into the major parts supply market for domestic wall-hung boilers.

The Liquefied Natural Gas ("LNG") business made good progress in FY2008, evidenced by increased sales revenue in this sector from RMB 39.48 million in FY2007 to RMB 43.65 million in FY2008.

Sales revenue from the Group's industrial boiler business sector increased from RMB 47.77 million in FY2007 to RMB 64.09 million in FY2008. However, the rising prices of raw material, especially steel, reduced the gross profit margin for this sector from 41% in FY2007 to 24% in FY2008.

Sales revenue decreased by RMB 3.28 million to RMB 36.46 million in FY2008 as compared with that in FY2007 for the Group's energy business. The Group faced challenges in FY2008 in promoting our energy products. The main reason was being the high pricing of petroleum coke which is the basic raw material of our energy products. In view of low market demand and high fixed cost derived mainly from depreciation, rental and labor costs, the Group's energy business in FY2008 reported a loss.

Although faced with macro economic factors beyond our control which affected the performance of our energy and industrial boiler business sectors, the Group made sound progress in terms of fund utilisation, cost control and cash flow management, which is evidenced by a reduction in account receivables and bank borrowings and a stronger net cash in flow from operating activities.

Business Forecast

The current global financial crisis will have a direct impact on the Group business in FY2009 with the Group's export sales of domestic wall-hung boilers expected to slow down, and boiler sectors will also be negatively affected by the current weaker PRC's property market. The progress and development of the Group's energy business will be largely dependent on fuel price and cost of petroleum coke.

"...the Group made sound progress in terms of fund utilisation, cost control and cash flow management, which is evidenced by a reduction in account receivables and bank borrowings and a stronger net cash in flow from operating activities."

The Group will be taking measures to deal with the current global financial and economic crisis, and will endeavour to emerge stronger after the crisis.

The Group will step up efforts to expand its domestic wall-hung boiler business by entering into the raw materials supply market, which should give the Group a price competitive advantage in the market. In addition, the Group will optimise its product mix by developing new types of energy saving, environmental friendly products. Buoyed by the Group's established sales network developed over the years and new marketing strategies to further build up the "Squirrel" brand which will be a combination of direct sales and distributor sales, the Group is targeting to increase its PRC domestic market share in the domestic wall-hang boiler industry.

After being in the market for a number of years, the Group has become a reputable LNG contractor. The Group would like to broaden its business scope by providing more technical services. For industrial boiler business, the Group will focus on R&D, manufacturing and sales of new types of environmental friendly products. The Group will also closely monitor and manage customers' credit assessment, cash flow and funds utilisation.

Although the price reduction for boiler fuels coupled with high prices of petroleum coke in China will affect its energy business segment, the Group remains optimistic that its direction in the green energy business will produce results. The Group is actively looking for alternative raw materials, and trying to increase sales volume by securing both long term and short term energy projects.

Further, the Group will continue with its R&D efforts to widen the usage scope of our energy products.

Though the global financial crisis has brought about certain elements of uncertainty and the Group's businesses are facing challenges, its determination to forge ahead in the green energy sector remains steadfast. The Group in 2009 will increase efforts in the areas of product research and development, exercise tighter cost control and cash flow management to weather the financial and economic crisis.

Rewarding Shareholders

As a sign of gratitude for the support given by the shareholders to the Group over years, the board of directors has recommended a tax-exempt first and final dividend of S$0.5 cents per ordinary share, which will be subject to shareholders' approval at the Annual General Meeting to be held on 24 April 2009.

Acknowledgement

We would like to take this opportunity to thank our shareholders, business partners, fellow board members and staff for your enduring support, hard work and belief in us. We look forward to your continued support.

Ng Fook Ai Victor Chairman Chang Houchun Chief Executive Officer