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evolveHANKORE ENVIRONMENT TECH GROUP LIMITED

ANNUAL REPORT 2013



CORPORATE VISIONAs an integrated water solutions provider, HanKore shall continuously strive to be at the forefront of China’s watertreatment industry and expands into other environment business sectors to include water recycling, sludge treatmentand refuse treatment.

Driven by HanKore’s core values of teamwork, innovation, integrity, dedication, passion and responsibility, the Groupwill keep evolving like the buttery, to realize its missions gradually. We believe that the Group has the capability to

soar new heights in China’s water and environment sector and create higher value to its stakeholders.



2 MESSAGE TO SHAREHOLDERS

6 CORPORATE PROFILE

7 F INANCIAL HIGHLIGHTS

8 BUSINESS REVIEW

12 CORPORATE OUTLOOK

14 BOARD OF DIRECTORS

19 KEY MANAGEMENT

22 CORPORATE INFORMATION

23 CORPORATE GOVERNANCE REPORT

35 REPORT OF THE DIRECTORS

39 STATEMENT BY DIRECTORS

40 INDEPENDENT AUDITORS’ REPORT

41 F INANCIAL REPORTS

118 STATISTICS OF SHAREHOLDINGS

119 NOTICE OF ANNUAL GENERAL MEETING

CONTENTS



Message toShareholders



HANKORE ANNUAL REPORT 2013 3

Dear Shareholders:

Since our restructuring in 2011, the Group has undergone remarkable improvements in its developments inthe water industry over the past two years. Against the headwinds of a slowdown in both the global andChinese economy, the Group has concerted its efforts to launch the Phase 2 projects. On top of that, wehave made improvements to our operational management. I would like to highlight that HanKore has over thepast two consecutive years achieved awards in China’s water industry and gained several recognition fromthe local municipal government. The remarkable changes clearly demonstrate that HanKore has successfully

transformed itself towards higher growth and positive development in the water and environment sector.

Key Water Projects Progressing Well

Over the past year, we have launched several projects in Henan, Shaanxi and Jiangsu provinces of China,namely, Henan Sanmenxia Project, Shaanxi Xianyang Phase 2 Expansion, the Second Stage of Phase 1 Expansionand Upgrading of the Group’s Nanjing Liuhe Project, Nanjing Pukou Phase 1 Upgrading, Phase 2 Expansion andSludge Treatment Project and Yangzhou HanKore Phase 1 Upgrading and Phase 2 Expansion Project.

A New Era of Transformation After Restructuring

Over the past two consecutive years, several of our water plants have achieved various awards and recognitionsfrom the Chinese government and water industry authorities. In February 2013, we have received our mostrecent award, the “2012 China’s Top Ten Fastest Growing Water Companies” by ChinaWaterNet, one ofChina’s influential and credible online media in the water industry.

We have returned to the black in FY2012 and FY2013 to achieve a net profit of RMB102.6 million andRMB99.5 million respectively from a reported loss in FY2011. These signify that the Group has successfullyentered into a new era of transformation after the completion of our restructuring.

We shall further improve and upgrade our existing operation standards and seek for new areas to develop asan urban environmental solutions provider to achieve better operating margins.

We hope that you will continue to placeyour trust in our ability to drive the Group’sdevelopments to emerge stronger in the

international environment and water sector.

Message to Shareholders



HANKORE ANNUAL REPORT 20134

Financial Review

The Group achieved a 50.4% surge in revenue toRMB369.1 million and gained a net profit of RMB99.5million for FY2013. The higher revenue for FY2013was achieved on the back of a 130.0% yoy increase inconstruction revenue to RMB167.5 million and a 16.2%yoy increase in recurring water treatment income toRMB200.5 million which consists of water dischargefees and finance income from service concessionarrangements.

We saw higher gross profit margin for both ourconstruction activities and recurring water treatmentoperation activities which rose from 9.0% for FY2012 to14.3% for FY2013 and 65.0% for FY2012 to 70.1% forFY2013 respectively.

Set To Benefit from Rising Water Tariffs

And More Stringent Discharge Standards

During FY2013, six of the Group’s water plants receivedthe green light to raise our water discharge fees.

According to the 12th Five-Year Plan, China’s wastewatertreatment industry will gradually shift its emphasis from

the rapid development of wastewater treatment plantsto the upgrading and enhancement of the in-depthoperations of these plants. Along with the improvementof the facilities of wastewater treatment plants, highercapabilities of sludge treatment and more stringent waterdischarge standards set by the Chinese government, weforesee higher water tariffs as an inevitable trend thatwill significantly benefit the Group.

To Become An Integrated Environmental

Solutions Provider

As China’s environment industry structure continuesto undergo restructuring, the Group is confident thatit is well-equipped with solid investment and financingcapabilities, advanced technologies, favorable corporatebranding and comprehensive wastewater solutionservices to attain new heights in China’s water sector.As a one-stop wastewater treatment service solutionprovider, the Group incorporates its planning, designing,construction, operation and supervision in a package tooffer higher value to its customers.




In our bid to be an integrated environmental solutionprovider, we focus on the aspects of investment, facilityintegration, engineering construction and operation ofthe environment and water sector.

Looking forward, the Group will proactively seek newacquisition of water projects to increase our domesticmarket share in China, enhance our corporategovernance and transparency and break into new areasof environment business segments to expand ourpotential earnings.

Appreciation & Acknowledgements

On a final note, I would like to take this opportunityto express my heartfelt appreciation to our boardof directors, management, staff and all of our keystakeholders for their long-term support to HanKore.

We hope that you will continue to place your trust inour ability to drive the Group’s developments to emergestronger in the international environment and waterindustry.

Executive Chairman

Chen Dawei, David




Corporate Profile

HanKore Environment Tech Group Limited (“HanKore” or the “Company”) and its subsidiaries (together withHanKore, collectively referred to as the “HanKore Group” or the “Group”) are an international group investingand operating in the water environment sector. Its headquarter is located in Beijing, China.

Listed on the Main Board of the Singapore Stock Exchange since February 2004, HanKore’s core businessescomprise wastewater treatment, water recycling, water supply and sludge treatment. With its cutting-edgetechnology and capital advantage, the Group has expanded rapidly in China’s water industry. The Group hassuccessfully implemented projects in various parts of China, and in doing so has accumulated vast experiencein project financing, construction and operation in the municipal public utilities area. Our strong track recordhas enabled the Group to be a leader in the water and environmental services market across China.

The Group’s long-term objective is to increase the scale of urban wastewater treatment, and actively developthe relative value chain, such as recycling water and sludge treatment. Through developing effective businessmodels and scale development, the Group aims to become a leading integrated environmental solution provider.

As of 30 June 2013, the Group has invested in a total of 11 large-scale municipal BOT (“Build-Operate-Transfer”) and TOT (“Transfer-Operate-Transfer”) water treatment projects. The majority of these projects

involved the financing, engineering & construction, operation, equipment and EPC in municipal utilities. Theseplants are to be located in Beijing and the provinces of Jiangsu, Shandong, Shaanxi and Henan etc.

As a large-scale water and environmental solutions specialist, the Group is capable of delivering investmentand financing, engineering, design and construction, as well as equipment and operational oversight formunicipal public utility projects. The Group uses its advanced water and environmental systems technologyto deliver the most effective solutions to customers that are customised to their individual needs. Our Groupis also strongly committed to promoting both the economic and environmental concerns of our customers.

As an urban environment resource recycling solutions provider, our Group is able to deliver a one-stop solutionfor local municipalities and strongly supports the development of the Chinese environmental protection industry.Our Group also advocates effective corporate social responsibility and long-term corporate sustainability,aiming to make a positive contribution to the society it operates in.

Lianyungang City TOT Wastewater Treatment Plant


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Financial Highlights

Revenue

2009 2010 2011 2012 2013

Revenue (RMB’million)

Earnings/Loss Per Share

Earnings Per Share (RMB cents)

(Loss) Per Share (RMB cents)

2009 2010 2011 2012 2013

Net Asset ValuePer Ordinary Share

2009 2010 2011 2012 2013

Net Asset Value Per Ordinary Share (RMB cents)

Net asset : RMB1,710,155,000No. of shares : 4,528,085,477NAV : RMB0.38

Net Profit & Loss

2009 2010 2011 2012 2013

Net Prof it (RMB’million)

Net (Loss) (RMB’million)

408

(79)

22

(22)24

(703)

94

130

34

3738

222

(407)

102 99

360

196

245

369



BusinessReview



Business Review

FY2013 is an eventful year for HanKore where

the Group has swiftly stepped up its effortsin project upgrading and expansion andattained great achievements in the waterindustry.

Successful Acquisition of Engineering, Procurement and Construction (EPC)

Company - Jiangsu Tongyong Environment Engineering Co., Ltd.

The Group has signed an acquisition agreement with the Jiangsu Tongyong Environment Group Co., Ltd.(“JTEG”) to acquire 100% stake in JTEG’s wholly-owned subsidiary, Jiangsu Tongyong Environment EngineeringCo., Ltd. (“JTEE”) in November 2012. In April this year, the Group has convened an Extraordinary GeneralMeeting (“EGM”) on this acquisition agreement and on 14 June announced the completion of the acquisition.

JTEE is primarily engaged in the equipment manufacturing, sales, designing and construction of environmentalengineering in the environmental protection sector. As JTEE has established long-term relationships withsome of China’s well-known water investment companies and main contractors of water projects, theJiangsu Tongyong brand is widely recognized in China’s water industry. The Jiangsu Tongyong brand has vastgeographical presence especially in Shanghai, Hainan, Guangxi, Inner Mongolia, Zhejiang, Shandong, Jiangsu

and Hunan Province. Via this acquisition, the Group will also strengthen its reputation and standing in China’swater industry and diversify its business scope to include environmental protection EPC as JTEE holds thequalifications, licenses and intellectual properties to operate in the EPC sector. The acquisition allows theGroup to enhance its product value chain, increase its profitability and reinforce its market competitivenessin this sector.




In August 2012, the Group’s Kunshan Port East Plant

located in Jiangsu Province, recorded significant

achievements in business operation and management.

This plant had received the government’s approval

to increase its water discharge fees by 20.0% from

RMB1.00 per ton to RMB1.2016 per ton. The localauthorities had agreed to start the fee increase from

the day it passed its operational checks in August

2011 to pay HanKore an additional RMB3.296 million.

In November 2012, the Group’s Xianyang Eastern

Suburbs Wastewater Treatment Plant located in

Xianyang City, Shaanxi Province, signed a Build-

Operate-Transfer(“BOT”) supplemental contract

with the local government and would see a 44.3%

hike in its water discharge fees from RMB0.70 per

ton to RMB1.01 per ton on completion of its Phase 2

Expansion. Spanning an area of 102 mu (16.8 acres),

with total wastewater treatment capacity 200,000

tons/day, the Group’s Xianyang plant is the largest

wastewater treatment plant in the Weihe River

Basin and a backbone project of the government’s

pollution prevention efforts of the area. This project

also plays an instrumental role in the infrastructure

and environmental protection development of

the Xianyang City in its bid to be a model city in

China. Officially launched in 2006, the Phase 1 of

Xianyang plant has a wastewater treatment capacity

of 100,000 tons per day with “Grade 1B” dischargestandard. With the completion of the Phase 2, total

wastewater treatment capacity would be raised

to 200,000 tons per day with “Grade 1A” water

discharge standard and a total investment value of

RMB170 million.

In March 2013, Yangzhou HanKore Water Development

Co., Ltd. has commenced its Phase 2 Expansion

and Phase 1 Upgrading and water discharge fees is

expected to increase by 16.9% from RMB1.42 per

ton to RMB1.66 per ton. The construction of Phase

2 is expected to cost approximately RMB45 million

with a treatment capacity of 12,500 tons per day

and upon completion, the water discharge standard

will be “Grade 1A”.

Similarly in March 2013, construction work for the

second stage of the Phase 1 and upgrading works

of the Group’s Nanjing Liuhe wastewater plant

commenced. Subsequently in April 2013, the Group

has signed with the local authorities a supplementary

agreement on the upgrading of the Phase 1 of the

plant. Upon completion, the estimated overall water

treatment capacity of the Phase 1 of the Group’s

Nanjing Liuhe BOT project would be 40,000 tons

per day, with an estimated investment value of

RMB45 million. Under the supplementary agreement,

the water discharge tariff will increase 57.6% from

RMB0.92 per ton to RMB1.45 per ton as waterdischarge quality upgrades from “Grade 1B” to

“Grade 1A”. The building pipelines and other related

facilities including water pumping, pretreatment

facilities, fan room and mechanical workshop to

support the 40,000 tons per day water treatment

capacity had been installed under the first stage of

Phase 1 of this plant.

In April 2013, the Group’s subsidiary, Beijing Hankelin

Environmental Technology Co., Ltd. has entered into

a Reuse Water Frame Agreement with Xianyang City

Environmental Protection Bureau (“Xianyang EPB”).

Xianyang EPB appoints Beijing Hankelin to manage

and operate a water reuse plant (“Qingwei Plant”)

with a capacity of 30,000 tons per day. The current

water reuse tariff is RMB0.56 per ton. Xianyang EPB

will assist Beijing Hankelin to increase the water

reuse capacity to 200,000 tons per day.

In August 2013, the Group’s subsidiary, Nanjing

Golden Idea Water Development Co., Ltd. has

entered into a BOT Supplementary Agreement with

the Administration of Housing and Urban-RuralDevelopment of Pukou District, Nanjing City, Jiangsu

Province to start Phase 1 Upgrading and Phase 2

Expansion for Nanjing Pukou wastewater treatment

plant. The total investment value of this project is

RMB140 million. Phase 2 of this plant shall increase

the treatment capacity by another 40,000 tons per

day from the initial 40,000 tons per day of Phase

1, with “Grade 1A” water discharge standard. In

view of more stringent water and sludge discharge

standards, the water fees is expected to be adjusted

upwards by RMB0.59, an increase of 66.3% from

RMB0.89 per ton to RMB1.475 per ton.

HanKore has realized its strategic plan in FY2013

to integrate an EPC company in order to reinforce

its EPC capabilities. For the coming year, the Group

shall actively strengthen its wastewater treatment

business segment and cultivate new businesses in

the environmental protection industry.

Operational Review of the Group’s Portfolio of Water Plants




Awards

HanKore Environment Tech Group Limited– Binzhou Project Company

October 2012: Awarded the title of “ModelCompany in Performance Assessment of WastewaterTreatment in 2011 in Shandong Province” by theShandong Provincial Department of Housing andUrban-Rural Development and Shandong ProvincialDepartment of Supervision.

February 2013: Awarded the “2012 AdvancedCompany In Energy Saving and Emission Reduction”

by the Binzhou Economic Development ZoneCommittee and Binzhou Economic DevelopmentZone Administration Committee.

HanKore Environment Tech Group Limited– Lianyungang Project Company (Dapu and Xugouwastewater treatment plants)

July 2012: Awarded RMB5,000 under the“Automatic Monitoring Data Acquisition andTransmission Subsidy” by the Lianyungang CityEnvironment Supervision Bureau.

July 2012: Awarded RMB40,000 under the“Installation of Ammonia Nitrogen Auto-monitoringEquipment Subsidy” by the Lianyungang CityEnvironment Supervision Bureau.

October 2012: Awarded RMB190,000 underthe “Automatic Monitoring Facilities SocializationOperating Subsidy” by the Lianyungang CityEnvironment Supervision Bureau.

HanKore Environment Tech Group Limited– Xianyang Project Company

June 2012: Awarded RMB3.1 million under the“Removal of Nitrogen and Phosphorus TransformationBonus” from the local government of Xianyang City.

HanKore Environment Tech Group Limited– Suzhou Project Company

August 2012: Honored and recognized as “SuzhouCity Water Saving Education Base” by the local waterauthority in China.

HanKore Environment Tech Group Limited– Kunshan Project Company

August 2012: Awarded RMB1.32 million under the“Upgrading and Reconstruction Subsidy” from theJiangsu Housing Development Department.

November 2012: Awarded RMB100,000 underthe “2012 Energy Saving and Emission ReductionSubsidy” from the Kunshan Environmental ProtectionBureau.

April 2013: Honored the “Green” category(highest level of recognition) under the “2012Company Environmental Protection Rank” by theKunshan Environmental Protection Bureau.

HanKore Environment Tech Group Limited– Beijing Project Company

December 2012: Awarded RMB700,000 under the“Special Funds for Environmental Protection” fromthe Beijing Daxing District Environmental ProtectionBureau.

Over the past fiscal year, the Group’s project companies had won a string of awards namely:

In February 2013, the Group was awarded the “2012 China’s Top Ten FastestGrowing Water Companies” which came on the heels of its “2011 China’s New WaterEnterprise” award last year. Both awards were given by ChinaWaterNet, one ofChina’s most influential and credible online media in the water industry. The selectionof the “2012 Top Ten Fastest Growing Water Companies” award was based on thesecriteria, namely fast growing financial results in 2012, achievement of more than

30.0% growth in operating revenue, strong development potential of the companyand overall evaluation by water industry experts. The Annual ChinaWaterNet Awardshas become a reliable platform with wide influence in China’s water industry.



CorporateOutlook



Corporate Outlook

Looking back at 2013, the global economy is still undergoing a period of adjustment over its crisis. In theshort run, the international business environment continues to be filled with complexities and uncertainties.

The Chinese economy faced challenges and is trying to find a proper balance amongst staying competitive,sustaining growth, weaker consumer confidence and instability in market expectations. At the same time,

developing countries have started to focus on developing the internet and driving new energy markets tohasten the world’s pace towards a third industrial revolution.

Under China’s 12th Five-Year Plan, the planned investment for the national urban wastewater treatment andrecycling of RMB430 billion clearly shows China’s higher emphasis placed on this industry. Capital shortageis still a key factor to the development of urban wastewater treatment services in China. With the financialtightening from the local authorities, facility construction of the wastewater industry requires more capitalfrom the market. After the implementation of the 12th Five-Year Plan, we have foreseen that the governmentwill continue to increase its efforts to clean up China’s environment and further develop the environmentalprotection industry as one of its key emerging strategic industries. During the next three to five years,funding of the water industry will mainly come from the central government and market and rather, less fromthe provincial authorities. We believe that the future water industry will be propelled by higher investmentsfrom the market.

Along with development in the water industry under the 12th Five-Year Plan, HanKore, a new star in China’swater industry, has adjusted its implementation of strategy accordingly. The Group continues to optimize itsindustry chain, actively incorporate provincial expansion plans, increase its water treatment capacity throughupgrading and improving its project management ability. At the same time, the Group shall endeavor to be anintegrated service provider to diversify its risks. In light of an ever-changing global economy, the Group willgradually broaden its focus to expand its array of solutions and services across the environment and watersector to bring in higher recurring income for the Group. Leveraging on its own assets as well as externalresources, the Group will strive to equip itself with cutting edge technologies and advanced internal operatingsystems in order to stay relevant and competitive in the environment and water sector.

To obtain long term and stable capital support, the Group has in July 2013 established its S$300 million

multicurrency Medium Term Note (“MTN”) program, and on 1 August 2013 successfully carried out its inauguralMTN issuance of a total value of $50 million. This marks a significant milestone deal for the Group and the SGDbond market as it is the first high yield transaction from a PRC company tapping the SGD market in 2013. Notonly does the MTN program open a new funding channel for the Group, but also elevate HanKore’s popularityin the bond market in Singapore. The income from the bond issue will be used to expand its portfolio ofinvestments and operations. Besides this, the Group has gained recognition from several potential investorsand received substantial investment from Mr Wang Yu Huei of Asdew Acquisitions Pte. Ltd. Mr Wang Yu Hueihas subscribed 293,617,000 new ordinary shares with the Group in August 2013 and this shows his strongvote of confidence in the Group’s potential development in the water and environment sector.

2014 will be a year of opportunities andchallenges for HanKore, and we strongly believethat with the continued trust and faith from ourstakeholders, we will be able to soar higher inour achievements in the water industry.



Board ofDirectors




Board of Directors

Chen Dawei, DavidExecutive Chairman

Mr Chen joined the Group as Executive Chairman

and CEO from 21 May 2011 to 20 December 2011.He relinquished his position as the Chief ExecutiveOfficer (“CEO”) and was re-designated as ExecutiveChairman on 21 December 2011. He is also a memberof our Nominating Committee. He is responsible forthe Group’s strategic planning and oversees themanagement and business development for theGroup.

Mr Chen is the sole shareholder and Director of GiantDelight Holdings Limited (“GDHL”), which holds16.47% of the shareholding in the capital of the

Company.

Prior to joining the Group in September 2010, MrChen was the CEO of China Media DevelopmentGroup and was responsible for its operations in China,and sat on the Board of Beijing Jun Tai InvestmentManagement Co., Ltd. He is also the Founder andCEO of Beijing Revolution Science and TechnologyCo., Ltd. Mr Chen has over 17 years of experience inbusiness operations, mergers & acquisitions in China,of which 10 years were spent in the wastewatertreatment industry.

Mr Chen holds an MBA from Southwestern Universityand an EMBA degree (majoring in China-AmericaFinance) from Peking University, China. Mr Chenis currently an Executive Master of BusinessAdministration Candidate at the National Universityof Singapore.

Nie Jian ShengExecutive Director and Chief Executive Officer

Mr Nie was appointed as our Executive Director and

Chief Executive Officer on 21 December 2011. Heis responsible for the daily operational activities andoperational development of the Group. He is alsoresponsible for establishing and consolidating corporateculture and team building for the Group.

Mr Nie has more than 21 years of experience ingovernment administration, capital operation, businessoperations and investment. Prior to joining our Group,Mr Nie worked at the Tianjin Commission of Commerceoffice. His other past positions were the Deputy GeneralManager of the Tsinlien Group Co., Ltd., Department

Chief and the Deputy Head of the Foreign Affairs Officeof the Tianjin Municipal People’s Government liaisonoffice in Hong Kong, and Executive Director and DeputyGeneral Manager at Tianjin Development HoldingsLimited, a company listed on the Main Board of theStock Exchange of Hong Kong Limited (“HKSE”) .

Mr Nie also served as Vice-Chairman of several companiesunder Tianjin Port Development Holdings Limited,including Tiangong Wine Co., Ltd. in Tianjin, TianjinPort Container Terminal Co., Ltd. and Tianjin HarbourSecond Port Company Limited. Between August 2004and January 2008, Mr Nie was the Executive Directorand Senior Vice-President of Dynasty Fine Wines GroupLimited, a company listed on the Main Board of theHKSE, as well as Vice-Chairman and Executive Director ofTianjin Port Development Holdings Limited, a companylisted on the Main Board of the HKSE.

Mr Nie graduated from Tianjin University in 1980majoring in economics and philosophy, and completedpostgraduate courses at the Tianjin Institute of Finance,

International Trade in 1998.




Board of Directors

Yau Wing-YiuExecutive Director and Chief Financial Officer

Mr Yau joined the Group as Independent Director on1 November 2011. He relinquished his position ofIndependent Director and was re-designated as ourExecutive Director and Chief Financial Officer on 6February 2013.

Mr Yau has more than 20 years of working experience.He is currently an Independent Director of CarryWealth Holdings Limited, a company listed on theHKSE. Prior to joining the Group, he was ExecutiveDirector of China Strategic Holdings Limited, acompany listed on the Main Board of the HKSE, theFinance Director of Microsoft China Company Limitedand Senior Vice-President, Mergers and Acquisitionof PCCW. He has extensive experiences in financialmanagement, corporate finance and investment. Priorto PCCW, he also worked for BNP Paribas Peregrine,Socie´ te´ Ge´ne´ rale and Arthur Andersen.

Mr Yau holds an MBA from the Hong Kong Universityof Science and Technology and a Bachelor of Arts

from the City University of Hong Kong. He is also amember of the American Institute of Certified PublicAccountants and the Hong Kong Institute of CertifiedPublic Accountants.

Lin Zhe YingExecutive Director

Mr Lin joined our Group as Executive Director on 21May 2011.

He is currently the Chairman of Jade CapitalManagement Limited. Mr Lin is also a specialist tothe State Development Bank, a member of the SMECommittee of the Shenzhen Stock Exchange and theChina - Italy Mandarin Fund Advisory Committee.

Previously, Mr Lin was the Deputy Director ofDepartment of Foreign Trade of Ministry ofCommerce of the PRC. Mr Lin also had a leading rolein the founding of the RMB fund-New DevelopmentFund, which is invested by the China DevelopmentBank and major State-Level development zones.

Mr Lin holds a Doctor degree of BusinessAdministration from ESC Rennes School of Businessand an MBA from the Peking University School ofGuanghua Management.




Chen Da ZhiNon-Executive Director

Mr Chen was appointed as Non-Executive Director on21 May 2011. He is also a member of RemunerationCommittee.

Mr Chen is currently the Board President of ProtownTechnology Development Ltd. Prior to this, MrChen was the CEO of China InfoWorld. His otherpast positions are CEO of Beijing CCID Capital, Non-Executive Director of CCID Consulting Co. Ltd. (acompany listed on the HKSE), and Director of RedFlag’s Software Co., Ltd.

Mr Chen holds a Master of Arts in Journalism fromthe Renmin University of China and a Bachelor ofComputer Science (Software Engineering) from theNanjing University of Science.

Lim Yu Neng, PaulLead Independent Director

Mr Lim joined the Group on 31 July 2007 and wasre-designated as Lead Independent Director on 6February 2013. Mr Lim is also the Chairman of AuditCommittee and a member of Nominating Committee.

Mr Lim has over 25 years of banking experience.He is the Managing Director of Leafgreen CapitalPartners Pte Ltd. and the Non-Executive Chairman ofPT BNI Securities Indonesia. Prior to his appointmentas Interim Acting CEO for our Group in June 2010,Mr Lim held various positions in Morgan Stanley,Deutsche Bank, Salomon Smith Barney, SchroderInternational Merchant Bankers Limited and BankersTrust.

Presently, Mr Lim is an Independent Director ofUnited Fiber System Ltd. and Nippecraft Limited.Both companies are listed on the Singapore ExchangeLimited.

Mr Lim obtained his MBA in Finance and Bachelor

of Science in Computer Science from the Universityof Wisconsin, Madison, USA. He is also a CharteredFinancial Analyst (CFA).




Board of Directors

Lee Kheng JooIndependent Director

Mr Lee was appointed as our Independent Directoron 21 May 2011. He is the Chairman of NominatingCommittee and a member of RemunerationCommittee and Audit Committee.

Mr Lee is currently the CEO of Longmen Group, aleading unconventional gas development company inChina. He is also the Vice-President of Xi’an Chamber

of Commerce and the Vice Chairman of the ShaanxiProvince International Chamber of Commerce.Mr Lee used to work as a commercial manager atPhilips Lighting in Asia Pacific Management Centerbased in Taiwan. He became the product managerof Singapore Telecommunications Limited and wassubsequently based in China as Sales and MarketingDirector of Hutchinson Telecoms. Mr Lee was theChief Operating Officer of Pacific Internet’s HongKong operations before joining Asia Online as theGroup General Manager.

Mr Lee graduated with a Bachelor degree of BusinessAdministration from the National University ofSingapore.

Cheng Fong Yee, FondaIndependent Director

Ms Cheng was appointed as our Independent Directoron 31 July 2007. She is the Chairman of RemunerationCommittee and a member of Audit Committee.

Ms Cheng currently heads the Insurance Divisionof the Bok Seng Group, AsiaOne Insurance AgencyPte Ltd. in Singapore and is also the principalrepresentative in the Cambodia Branch of AsiaOne

Insurance Agency in Singapore. Her role involvesrisk management and the development of insurancebusiness in emerging markets for the Company.She has more than 20 years of experience in theinsurance industry. Ms Cheng is an Associate of theAustralian Insurance Institute. She has been involvedin major overseas insurance projects, particularly inthe Asia Pacific, and is actively involved in utilizinginsurance as a financial tool for project developmentin this region.

Ms Cheng completed her insurance study at

Australian Insurance Institute.



KeyManagement




Ge Lun Can

Vice- President in Finance

Ms Ge was appointed Vice-President in Finance on 26

March 2012.

Ms Ge has more than 30 years of experience in

financial operations and listed companies, and is

familiar with the laws and regulations relevant to

these areas. Prior to joining our Group, Ms Ge was

the General Manager of the Investment Development

Department both at Tsinlien Group Company

Limited and Tianjin Development Holdings Limited,

as well as the Deputy General Manager at Tianjin

Development Holdings Limited, a company listed

on the Main board of the HKSE in 1997, and Chief

Representative of Tianjin Representative Office for

Tianjin Development Holdings Limited. Ms Ge’s other

past positions include the Vice- President of Finance

Department for Hong Kong Tsinlien Group Company

Ltd.(an outfit of Tianjin Municipal Government based

in Hong Kong) delegated by the former Tianjin

Foreign Economic and Trade Commission and ChiefRepresentative of Tianjin Representative Office and

Department Director.

Ms Ge majored in English and graduated from the

University of Tianjin Xinhua University in 1980.

Cui Jun

Vice- President

Mr Cui was appointed Vice-President in Engineering

Technology on 8 December 2010.

With over 21 years of environmental engineering

experience, Mr Cui brings to the Group strong

technical expertise. His career achievements include

being in-charge of the project design and engineering

of the North District Wastewater Treatment Plant in

Shanghai, a project which won the Third-Grade Award

of Shanghai Science and Research. He also designed

many other waste and wastewater treatment

projects including commercial, residential, industrial,

and municipal projects such as the mobile toilets for

Ministry of Railways of the PRC.

Mr Cui also serves as an Assistant Professor in

Tongji University, Shanghai, specializing in waste and

wastewater treatment. As many of his students are

from the environmental protection industry, Mr Cui

brings to the Group an extensive network of clientcontracts from both the private and public sectors.

Prior to working for the Group, Mr Cui worked

as a Senior Engineer in the Shanghai Railway City

Transportation Design Department for 20 years.

Key Management




Li Shi Hua

Vice -President

Mr Li was appointed Vice-President in investment

and financing and operations on 18 January 2013.

Mr Li has more than 13 years of experience in

corporate finance in water industry. Mr Li is very

familiar with domestic and worldwide financing

policies. He has accessed to many corporate financing

channels and fully understood the new corporate

accounting standard, be good at formulating a plan

of corporate budget system and financial analysis.

Prior to joining the Group, Mr Li was the manager

of corporate finance of Beijing Sound Global Group

Limited, Financial Controller of Beijing Haisidun

Environmental Protection Engineering Co., Ltd. and

Vice-President and Director of Finance of Beijing

Xiao Qing Environmental Protection Group.

Mr Li holds a Master Degree in World Economics from

the Renmin University of China. He is a Certified

Public Accountant (CPA).

Wang Wei Dong

Vice -President

Mr Wang was appointed Vice-President on 8 Dec

2010.

Mr Wang has more than 17 years of experience in

operations and marketing in the environmental

protection industry. Mr Wang was previously the Chief

Designer of the Beijing Metallurgical Department’s

Fusion Explosion Division, and was the Deputy

Plant Manager at Beijing Metallurgical Equipment

Manufacturing plant. Mr Wang had also previously

held the positions of Deputy General Manager at

Hong Kong Jin Tai International Technology & Trade

Limited, and General Manager at Shanghai Chang

Qiang Electrical and Mechanical Equipment Co., Ltd.

Mr Wang holds a Machine Building diploma at Shenyang

University and majoring Economic Management at

China Central Party School (“CCPS”).




Corporate Information

Board of DirectorsExecutive Directors:Chen Dawei, David

- Executive Chairman

Nie Jian Sheng

- Executive Director and Chief Executive Officer

Yau Wing-Yiu

- Executive Director and Chief Financial Officer

Lin Zhe Ying

- Executive Director

Non-Executive Directors:Chen Da Zhi

Independent Directors:Lim Yu Neng, Paul

Lee Kheng Joo

Cheng Fong Yee, Fonda

Company SecretaryTan Min-Li

Tay Chee Wah

Audit CommitteeLim Yu Neng, Paul (Chairman)

Lee Kheng Joo

Cheng Fong Yee, Fonda

Nominating CommitteeLee Kheng Joo (Chairman)

Lim Yu Neng, Paul

Chen Dawei, David

Remuneration CommitteeCheng Fong Yee, Fonda (Chairman)

Lee Kheng Joo

Chen Da Zhi

Registered OfficeClarendon House

2 Church Street

Hamilton HM 11, Bermuda

Head OfficeRoom 1105-1110,11F, Jialong International Tower, No.19

Chao Yang Park Road, Chao Yang District,

Beijing 100125 China

Bermuda Share Registrar

HSBC Bank of Bermuda Limited6 Front Street

Hamilton HM11, Bermuda

Singapore Share Transfer AgentBoardroom Corporate & Advisory Services Pte. Ltd.

50 Raffles Place

#32-01 Singapore Land Tower

Singapore 048623

AuditorsMoore Stephens LLP

10 Anson Road

#29-15 International Plaza

Singapore 079903

Partner-in-charge: Lao Mei Leng

Appointed since financial year ended June 30, 2011

Principal BankerIndustrial and Commercial Bank of China Limited

DBS Bank



Corporate Governance Report

23HANKORE ANNUAL REPORT 2013

The Company is committed to achieving high standards of corporate governance to ensure investor confidencein the Company as a trusted business enterprise. The Board and Management will continue to uphold goodcorporate governance practices to enhance long-term value and returns for shareholders and protectshareholders’ interests.

This report describes the Company’s corporate governance practices with specific reference made to each ofthe principles of the Code of Corporate Governance 2005, issued on 14 July 2005 (“Code”). The Board alsoconsidered certain practices with reference to the revised Code of Corporate Governance issued by the MonetaryAuthority of Singapore in May 2012 which is effective from financial year commencing on or after 1 November2012.

(A) BOARD MATTERS

The Board’s conduct of its affairs

The Board’s key responsibilities include providing leadership and supervision to the management of the Companyand its subsidiaries (the “Group”) with a view to protecting shareholders’ interests and enhancing long-termshareholders’ value.

The Board’s principal functions include the following:

(1) review and approve corporate strategies, financial objectives and direction of the Group;

(2) establish goals for management and monitor the achievement of these goals;

(3) ensure management leadership of high quality, effectiveness and integrity;

(4) approve annual budgets and investment and divestment proposals;

(5) review the internal controls, risk management, financial performance and reporting compliance; and

(6) assume responsibility for corporate governance.

All Directors exercise due diligence and independent judgement, and are obliged to act in good faith and considerat all times the interest of the Company.

To execute its responsibilities, the Board has delegated specific functions to various sub-committees, namely, theNominating Committee, the Remuneration Committee and the Audit Committee. These sub-committees functionwithin written terms of reference and operating procedures, which are reviewed on a regular basis.

The Board meets regularly, at least on a quarterly basis. Ad-hoc meetings are held at such times, as and whenrequired, to address any specific significant matters that may arise. At meetings of the Board, the Directorsare free to discuss and openly challenge the views presented by Management and other Directors. The decisionmaking process is an objective one.





The number of meetings and Directors’ attendance at the Board meetings, held during the year, are as follows:

Name Audit CommitteeNominating

Committee

Remuneration

Committee

Board

No. of Meetings Held No. of Meetings Held No. of Meetings Held No. of Meetings Held

Date 24/08/12 12/11/12 05/02/13 07/05/13 24/08/12 05/02/13 24/08/12 05/02/13 24/08/12 12/11/12 27/11/12 05/02/13 07/05/13 27/05/13

Mr Chen Dawei, David – – – – – 1 – – 1 1 1 1 1 1

Mr Nie Jian Sheng – – – – – – – – 1 1 1 1 1 1

Mr Lin Zhe Ying – – – – – – – – 1 1 1 1 1 1

Mr Lim Yu Neng, Paul (1) – 1 1 1 – – – – 1 1 1 1 1 1

Mr Chen Da Zhi – – – – – – – 1 1 1 1 1 1 1

Mr Yau Wing-Yiu (2) 1 1 1 – 1 1 1 – 1 1 1 1 1 1

Mr Lee Kheng Joo (3) 1 – – 1 1 1 1 1 1 1 1 1 1 1

Ms Cheng Fong Yee, Fonda 1 1 1 1 1 – 1 1 1 1 1 1 1 1

(1) Mr Lim Yu Neng, Paul was re-designated as the Lead Independent Director of the Company with effect from 6 February

2013.

Following Mr Lim’s re-designation as the Lead Independent Director of the Company, Mr Lim was appointed as the

Chairman of the Audit Committee of the Company and a member of the Nominating Committee of the Company with

effect from 6 February 2013.

(2) Mr Yau Wing-Yiu was appointed as the Chief Financial Officer and re-designated as an Executive Director of the Company

with effect from 6 February 2013.

Following Mr Yau’s re-designation as an Executive Director of the Company, Mr Yau ceased as the Chairman of the AuditCommittee and a member of the Nominating Committee of the Company.

(3) Mr Lee Kheng Joo was appointed as a member of the Audit Committee of the Company with effect from 6 February

2013.

In lieu of physical meetings, written resolutions were also circulated for approval by members of the Board. TheCompany’s Bye-Laws also provide for meetings by way of telephone, electronic or other communication facilities.

The current members of the Board are familiar with the Group’s business operations and corporate governancepractices. The Nominating Committee ensures that new Board appointees are provided with informationto familiarise themselves with the Group’s business, strategic goals and directions and corporate governancepractices.

Besides that, Directors also have the opportunity to visit the Group’s operational facilities and meet with theManagement to gain a better understanding of the Group’s business operations.

At Board meetings, the Company provides ongoing education on Board processes, corporate governancepractices and industry developments. Directors are encouraged to keep themselves abreast of the latestdevelopments relevant to the business of the Group.





Board Composition and Balance

The Board currently comprises of eight Directors, three of whom are Independent Directors. The Directors of theCompany as at the date of this report are:-

(i) Chen Dawei, David (Executive Chairman)(ii) Nie Jian Sheng [Executive Director & Chief Executive Officer (“CEO”)](iii) Yau Wing-Yiu [Executive Director and Chief Financial Officer (“CFO”)](iv) Lin Zhe Ying (Executive Director)(v) Chen Da Zhi (Non-Executive Director)(vi) Lim Yu Neng, Paul (Lead Independent Director)(vii) Lee Kheng Joo (Independent Director)(viii) Cheng Fong Yee, Fonda (Independent Director)

The independence of each Director is assessed and reviewed annually by the NC. Each Independent Director isrequired to complete a Director’s Independence Checklist annually to confirm his/her independence based on the

guidelines as set out in the Code. For FY2013, the NC has determined that all the three Non-Executive Directorsare independent.

The Board has determined that it is of an appropriate size to facilitate effective decision making, and to meetthe objective of having a balance of skills and experience, taking into account the size and scope of Company’soperations.

The current Board comprises of business leaders and professionals with industry, accounting, financial, businessand management backgrounds. This composition enables the management to benefit from a diverse andobjective external perspective, on issues raised before the Board. Each Director has been appointed based on thestrength of his caliber, experience and his potential to contribute to the Group and its businesses. Profiles of theDirectors are set out on pages 14 and 18 of this Annual Report.

The Directors and the sub-committees of the Board on which they sit as at the date of this report are as follows:

Name of Director Board Audit Nominating Remuneration

Mr Chen Dawei, David Executive Chairman – Member –

Mr Nie Jian Sheng Executive Director – – –

Mr Lin Zhe Ying Executive Director – – –

Mr Lim Yu Neng, Paul (1) Lead Independent Director Chairman Member –

Mr Chen Da Zhi Non–Executive Director – – Member

Mr Yau Wing–Yiu (2) Executive Director – – –

Mr Lee Kheng Joo (3) Independent Director Member Chairman Member

Ms Cheng Fong Yee, Fonda Independent Director Member Chairman

(1) Mr Lim Yu Neng, Paul was re-designated as the Lead Independent Director of the Company with effect from 6 February

2013.

Following Mr Lim’s re-designation as the Lead Independent Director of the Company, Mr Lim was appointed as the

Chairman of the Audit Committee of the Company and a member of the Nominating Committee of the Company with

effect from 6 February 2013.





(2) Mr Yau Wing-Yiu was appointed as the Chief Financial Officer and re-designated as an Executive Director of the Company

with effect from 6 February 2013.

Following Mr Yau’s re-designation as an Executive Director of the Company, Mr Yau ceased to be the Chairman of the

Audit Committee and a member of the Nominating Committee of the Company.

(3) Mr Lee Kheng Joo was appointed as a member of the Audit Committee of the Company with effect from 6 February

2013.

The Board is able to exercise objective judgment on corporate affairs independently from the Management.No individual or group of individuals is allowed to dominate the Board’s decision making. The Board is of theview that, given its current structure, there is sufficiently strong independent element on the Board to enableindependent exercise of objective judgment on corporate affairs of the Group by members of the Board, takinginto account factors such as the number of Independent Directors on the Board, as well as the size and scope ofthe affairs and operations of the Group.

Chairman and Chief Executive Officer

The Board recognises the Code’s recommendation that the Chairman and the Chief Executive Officer should beseparate persons to ensure that there is an appropriate balance of power and authority within the Company.

The Executive Chairman and CEO are responsible for exercising control over the quality and timeliness of theow of information between management and the Board and ensuring compliance with the Group’s guidelines oncorporate governance. They ensure that Board meetings are held regularly in accordance with as agreed scheduleof meetings. They are also responsible for the day to day management of the Company and work with the Boardfor strategic planning, business development and charting the growth of the Group.

The Board is of the view that there are sufficient safeguards and checks to ensure that the process of decisionmaking by the Board is independent and based on collective decisions without any individual exercising any

considerable concentration of power or inuence. Further, the Audit Committee, Remuneration Committee andNominating Committee are chaired by Independent Director.

The Board had appointed Mr Lim Yu Neng, Paul as the Lead Independent Director to co-ordinate and becomesthe principal liaison on Board issues between the Independent Directors and the Chairman. He is available toshareholders where they have concerns which contact through the normal channels of the Chairman, CEO or CFOhas failed to resolve or for which such contact is inappropriate.

Board Membership

The Nominating Committee comprises Mr Lee Kheng Joo as its Chairman, Mr Lim Yu Neng, Paul and Mr ChenDawei, David as its member with majority of whom, including the Chairman are Independent Directors. TheChairman of the Nominating Committee is not directly associated with a substantial shareholder of the Companywithin the meaning of the Code.

The principal functions of the Nominating Committee are as follows:

(1) establish procedures and make recommendations to the Board on all board appointments and re-nominations with regards to each Director’s contribution and performance, his or her attendance atmeetings of the Board or Board committees (where applicable), participation, candour and any specialcontributions;

(2) review and determine annually whether a Director is independent, bearing in mind the considerations setout in the Code;





(3) decide whether or not each Director is able to and has adequately carried out his duties as a Director ofthe company, in particular where the Director concerned has multiple board representations;

(4) identify any gaps in the mix of skills, experience and other qualities required in an effective Board and

nominate or recommend suitable candidate(s) to fill these gaps; and

(5) ensure that all Board appointees undergo an appropriate orientation programme.

In considering the re-appointment of a Director, the Nominating Committee evaluates such Director’s contributionand performance, such as his or her attendance at meetings of the Board or Board committees, where applicable,participation, candour and any special contributions.

All Directors are subject to the provisions of the Company’s Bye-Laws whereby each Director shall retire atleast once every three (3) years and shall be eligible for re-election. Mr Lim Yu Neng, Paul and Ms Cheng FongYee, Fonda are subject to retirement pursuant to the Company’s Bye-Laws at the forthcoming AGM. The NCrecommended that Mr Lim Yu Neng, Paul and Ms Cheng Fong Yee, Fonda be nominated for re-election at the

forthcoming AGM.

The NC conducts an annual review of Directors’ independence and is of the view that Mr Lim Yu Neng, Paul, MrLee Kheng Joo and Ms Cheng Fong Yee, Fonda are independent and that, no individual or small group of individualdominates the Board’s decision-making process.

Board Performance

The NC has adopted a formal process for the evaluation of the performance of the Board. The performancecriteria includes, amongst others, an evaluation of the size and composition of the Board, the Board’s accessto information, accountability, Board processes and Board performance in relation to discharging its principalresponsibilities in terms of the financial indicators as set out in the Code.

During the financial year, all Directors are requested to complete a Board Evaluation Questionnaire designed toseek their view on the various aspects of the Board performance so as to assess the overall effectiveness of theBoard. The assessment process involves and includes input from the Board members before submitting to theBoard for discussing and determining areas for improvement and enhancement of the Board’s effectiveness aswell as its implementation.

Following the review, the NC assessed the Board’s performance as a whole in FY2013 and is of the view that theBoard’s performance as a whole is satisfactorily.

Access to Information

To enable the Board to function effectively and to fulfill its responsibilities, Management strives to provide Board

members with adequate information for Board meetings and on an ongoing basis.

The Board is furnished with Board papers prior to any Board meeting. These papers are issued in sufficient timeto enable Directors to obtain additional information or explanations from Management, if necessary.

The Board also is informed of any significant developments or events relating to the Company timely.

Directors are given separate and independent access to the Management team to address any enquiries andalso have separate and independent access to the Company Secretary. The Company Secretary attends allBoard meetings and ensures that they are conducted in accordance with the Bye-Laws of the Company and theapplicable rules and regulations are complied with. When necessary, Directors can seek independent professionaladvice at the Company’s expense.





(B) REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

The Remuneration Committee comprises Ms Cheng Fong Yee, Fonda as Chairman, Mr Lee Kheng Joo and Mr ChenDa Zhi as its member with majority of whom, including the Chairman are Independent Directors.

The RC is responsible for ensuring that a formal and transparent procedure is in place for developing anappropriate executive remuneration policy and a competitive framework for determining the remunerationpackages of individual Directors and senior Management. The RC recommends for the Board’s endorsement, aframework of remuneration, including but not limited to Director’s fees, salaries, allowances, bonuses, options andbenefits in kind for each Director and senior Management. No Director shall be involved in any decision-making inrespect of any compensation to be offered or granted to him.

Level and Mix of Remuneration

Under the framework developed by the Remuneration Committee, the Remuneration Committee uses thefollowing factors to determine Directors’ remuneration:

(1) qualifications and experience of Directors required by the Company;

(2) for Independent Directors, the general level of fees earned by each Director in his professional capacity orbilled by professionals in their industry;

(3) time spent in preparing for meetings and actual attendance;

(4) indirect costs and expenses incurred by the Directors;

(5) such remuneration as may be considered fair and reasonable having regard to the nature and size of thebusiness of the Company;

(6) level of remuneration to vary in direct proportion to the extent of involvement and participation in andcontribution to the business of the Company;

(7) the level of commitment and the ability to devote sufficient time and attention to the business of theCompany; and

(8) where special circumstances justify, the payment of additional remuneration.

Annual reviews are carried out by the Remuneration Committee to ensure that key executives are appropriatelyrewarded, giving due regard to the financial health and business needs of the Group without being excessive and

thereby maximize shareholder value.

The Executive Directors have service agreements with the Company. Their compensation consists of salary,bonus, fixed fee and incentive bonus that is dependent on the Group’s performance.

The Group’s remuneration policy is to provide compensation packages appropriate to attract, retain and motivatekey executives and Directors.





Disclosure on Remuneration

A breakdown of the remuneration of Directors and the top five key executives (who are not Directors) for thefinancial year ended 30 June 2013 is set out below:

(a) The level and mix of each Director’s remuneration are as follows:

Remuneration Band and

Name of Director

Directors’

Fee%

Salary#

%

Bonus

%

Benefits in kind

%

Total

%

S$500,000 to below S$750,000

Mr Chen Dawei, David

Mr Nie Jian Sheng

–

–

52

56

48

44

–

–

100

100

S$250,000 to below S$500,000

Mr Yau Wing-Yiu 14 35 51 – 100

Below S$250,000

Mr Lin Zhe Ying

Mr Lim Yu Neng, Paul

Mr Chen Da Zhi

Mr Lee Kheng Joo

Ms Cheng Fong Yee, Fonda

–

100

100

100

100

49

–

–

–

–

51

–

–

–

–

–

–

–

–

–

100

100

100

100

100

# The salary amount shown is inclusive of allowances, statutory contributions, all fees other than Directors’ fees, and

other emoluments.

(b) The level and mix of each key executive’s (who are not also Directors) remuneration in bands are asfollows:

Remuneration Band and Name ofKey Executive

Salary#

%Bonus

%Benefits in kind

%Total

%

Below S$250,000

Ms Ge Lun Can

Mr Cui Jun

Mr Wang Wei Dong

Mr Li Shi Hua

70

100

70

70

30

–

30

30

–

–

–

–

100

100

100

100

# The salary amount shown is inclusive of allowances, statutory contributions, all fees other than Directors’ fees, and

other emoluments.

There are no employees of the Group who are immediate family members of a Director and whose remunerationexceeds S$150,000 during the financial year ended 30 June 2013.

No Director is involved in determining his own remuneration. The remuneration of the non-executive andindependent Directors is in the form of a fixed fee.

The Directors’ fees, as a lump sum, will be subject to approval by shareholders at the forthcoming Annual General

Meeting.





The Company had in June 2005 cancelled all outstanding options granted to Directors and employees under theBio-Treat Technology Employee Share Option Scheme (the “Scheme”). As at the date of this Report, there are nooutstanding options under the Scheme.

(C) ACCOUNTABILITY AND AUDIT

Accountability

The Board’s primary role is to protect and enhance long-term value and returns for shareholders. In thedischarge of its duties to shareholders, the Board, when reporting the Group’s financial performance via SGXNETannouncements and the Annual Report, has a responsibility to present a fair assessment of the Group’s financialperformance, position and prospects. Management currently provides the Board with detailed managementaccounts of the Group’s performance, position and prospects on a quarterly basis. Directors have access to theManagement at all times.

Audit Committee

The Audit Committee (“AC”) comprises three Independent Directors and is chaired by Mr Lim Yu Neng, Paul. Theother two members are Mr Lee Kheng Joo and Ms Cheng Fong Yee, Fonda.

The AC meets regularly with the Group’s external auditors and Management to review accounting, auditing andfinancial reporting matters, so as to ensure that an effective control environment is maintained in the Group.

The Audit Committee also monitors proposed changes in accounting policies, reviews the internal audit functionsand discusses the accounting implications of major transactions. In addition, the AC also advises the Boardregarding the adequacy of the Group’s internal controls and the contents and presentation of its reports.

The functions of the AC include:

(a) reviews with the external independent auditors their audit plan, their evaluation of the system of internalaccounting controls in the course of their external audit, their letter to management and managementresponse;

(b) reviews the quarterly and annual financial statements with management and the external independentauditors (where applicable) before submission to the board of Directors;

(c) reviews the adequacy of the Group’s internal controls, including financial, operational and compliancecontrols and risk management policies and systems;

(d) reviews and approves the internal audit plans of the internal auditors;

(e) evaluates the effectiveness of both the internal and external audit efforts through regular meetings;

(f) determines that no unwarranted management restrictions are being placed upon either the internal orexternal independent auditors;

(g) recommend to the board of Directors the appointment or re-appointment of the external independentauditors for the coming year;





(h) reviews the nature and extent of non-audit services provided by external independent auditors;

(i) meet with the external independent auditors, without the presence of the Company’s management, atleast annually; and

(j) reviews interested person transactions (if any), in accordance with the requirements of the SGX-ST ListingManual.

The Audit Committee is authorised to investigate any matter within its terms of reference, and has full access tothe Management and also full discretion to invite any Director or executive officer to attend its meetings, as wellas reasonable resources to enable it to discharge its functions properly.

The AC meets with the internal auditor and external auditors separately, at least once a year, without thepresence of the Management to review any matter that might be raised.

The AC is satisfied with the independence and objectivity of the external auditors, Moore Stephens LLP and

noted that there were no non-audit services provided by the external auditor during the financial year ended30 June 2013. The Audit Committee is satisfied with the independence and objectivity of the external auditorsand has recommended to the Board the re-appointment of Moore Stephens LLP as the external auditors of theCompany at the forthcoming Annual General Meeting. The Company has complied with Rules 712 and 715 of theSGX-ST Listing Manual in relation to the engagement of its auditors, which is registered with the Accounting andCorporate Regulatory Authority.

Internal Controls

The Group’s internal controls and systems are designed to provide reasonable, but not absolute assuranceto the integrity and reliability of the financial information and to safeguard and maintain the accountabilityof the assets. While no cost effective internal control system can provide absolute assurance against loss ormisstatement, the Audit Committee, with the participation of the Board, has reviewed the adequacy of theGroup’s internal controls and systems to ensure that they are designed to provide reasonable assurance thatassets are safeguarded, operational controls are in place, business risks are suitably managed, proper accountingrecords are maintained and the integrity of financial information used for business and publication are preserved.

The internal auditors conduct annual review of the effectiveness of the Group’s key internal controls includingfinancial, operational and compliance controls and risks management. The external auditors during the conductof their normal audit procedures may also report on matters relating to internal control. Any material non-compliance and recommendation for improvements are reported to the Audit Committee. The Audit Committeealso reviews and continues to monitor the effectiveness of the actions taken by the management on therecommendations made by the internal and external auditors in this respect.

Based on the work performed by the internal and external auditors (to the extent as required by the external

auditor to form an opinion of the financial statements), reviews of the findings from the internal auditors on theGroup’s internal controls and the management’s responses to the auditors’ recommendations for improvement tothe Group’s internal controls and discussions with the auditors and management, the Board, with the concurrenceof the Audit Committee, is satisfied with the adequacy of the Group’s internal controls, addressing financial,operational and compliance risks as at 30 June 2013 and that management has taken efforts to minimise the riskof recurrence of such lapses.

Internal Audit

The objective of the internal audit function is to provide an independent review of the effectiveness of theGroup’s internal controls and provide reasonable assurance to the Audit Committee and the management that theGroup’s risk management, controls and governance processes are adequate and effective.





The Internal Audit function of the Group has been outsourced to RSM Nelson Wheeler Consulting Limited (“RSM”)to strengthen the internal audit function and promote sound risk management, including financial, operationaland compliance controls and good corporate governance. RSM report directly to the Audit Committee on auditmatters and to the Chairman on administrative matters.

RSM is a Certified Internal Auditor and the audit work is carried out in accordance with the InternationalStandards for the Professional Practice of Internal Auditing pronounced by The Institute of Internal Auditors.

RSM’s main scope of work covers the review and evaluation of processes and areas of concerns identified.RSM assists management in enhancing existing risk management initiatives and carry out regular independentmonitoring of key controls and procedures. The findings and recommendations in relation to the adequacy andeffectiveness of internal controls and process improvements will be presented to the Audit Committee and themanagement.

Material non-compliance and internal control weaknesses noted during reviews are reported together withrecommended corrective actions to the Audit Committee on a regular basis. The results of the internal audit

findings are also shared with the External Auditors to assist them in their audit planning and also for them toperform further checks on the weak areas identified.

(D) COMMUNICATION WITH SHAREHOLDERS

In line with continuous disclosure obligations of the Company, and pursuant to the Singapore ExchangeSecurities Trading Limited (“SGX-ST”) Listing Rules and Bermuda Companies’ legislation, the Board ensures thatshareholders are fully informed of all major developments that impact the Group.

Information is disseminated to the shareholders on a timely basis through:

(i) SGXNET announcements and press releases;

(ii) Annual Reports prepared and issued to all shareholders; and

(iii) Company’s website at www.hankore.com at which shareholders can access information on the Group.

Quarterly results are released within 45 days of the quarter of the financial year. The Company ensures that itdoes not practise selective disclosure of material information. Material information is publicly released before theCompany meets with investors or analysts.

Shareholders are encouraged to attend the Company’s Annual General Meeting to be kept informed of theGroup’s strategy and goals. The notice of the Annual General Meeting is despatched to shareholders, togetherwith explanatory notes or a circular on items of special business, at least 14 working days before the meeting.

The Annual General Meeting is the principal forum for dialogue with shareholders.

The respective Board members will be available at the forthcoming Annual General Meeting to answer questionsrelating to the work of those sub-committees.

Our Management acknowledges that effective communication with investors is of paramount importance to theGroup. In order to reinforce mutual understanding between shareholders and the Company, we have establishedand maintained a number of ways to strengthen our communication with investors.





Measures that the Company has taken are as follows:

(a) organise analyst briefings to explain our latest published financial information as well as to provide ourbusiness update when necessary;

(b) attend meetings/ telephone conferences requested by investors/ shareholders/ analysts on an ongoingbasis throughout the year to assist them in understanding the latest updates relating to the Company;

(c) organise road shows for our investors/ potential investors. This may be done solely by ourselves orcoordinated with investment bankers;

(d) organise plant visits by investors/ potential investors to our facilities; and

(e) ensure important information of the Group will be announced in a timely manner without delay.

(E) GREATER SHAREHOLDER PARTICIPATION

Shareholders are informed of shareholders’ meetings through notices contained in annual reports or circulars sentto all shareholders. Theses notices are also published in the Business Times and posted onto the SGXNet.

If shareholders are unable to attend the meetings, the Bye-Laws allow a shareholder of the Company to appointnot more than two proxies to attend and vote instead of him.

Resolutions at general meetings are on each substantially separate issue. All the resolutions at the generalmeetings are single item resolutions.

The Chairman of the Executive, Audit, Remuneration and Nominating Committees are in attendance at theCompany’s AGM to address shareholders’ questions relating to the work of these Committees.

The Company’s external auditors, Moore Stephens LLP, are also invited to attend the AGM and are available toassist the Directors in addressing any relevant queries by the shareholders relating to the conduct of the auditand the preparation and content of the auditors’ report.

(F) DEALINGS IN SECURITIES

In line with Listing Rule 1207(19) of the Listing Manual, the Group prohibits its Directors and employees fromtrading in the Company’s securities on short-term considerations. In addition, the Group prohibits its Directorsand employees from dealing in the Company’s securities during the period beginning one month before therelease of any financial results of the Group or if they are in possession of any unpublished material price-

sensitive information relating to the Group.

(G) MATERIAL CONTRACTS

There are no material contracts of the Group involving the interests of any Directors or controlling shareholderssubsisting at the end of the financial year ended 30 June 2013, or entered into since the end of the previousfinancial year.





(H) INTERESTED PERSON TRANSACTIONS

The Company has established procedures to ensure that all transactions with interested persons are reportedin a timely manner to the Audit Committee and that transactions are conducted on arm’s length basis and not

prejudicial to the interests of the shareholders.

The Company does not have a general shareholders’ mandate for recurrent interested person transaction. TheCompany confirms that there were no interested person transactions during the financial year under review.

(I) RISK MANAGEMENT

The risk management is subject to the Audit Committee and no other dedicated committee will be set up. TheGroup has appointed the financial controller of the Group to manage the risk of the Group. He is responsiblefor summarizing the risk management results of each department and assessing the potential material risksconfronting the group according to the risk management program of the Group, formulating and implementing

the risk management plan for the next year.



Report of the Directors30 June 2013


The directors are pleased to present their report to the members together with the consolidated financialstatements of Hankore Environment Tech Group Limited (the “Company”) and its subsidiaries (the “Group”) forthe financial year ended 30 June 2013 and the audited statement of financial position of the Company as at 30June 2013.

1 Directors

The directors of the Company in office at the date of this report are as follows:

Chen Dawei, David Nie Jian Sheng Lin Zhe Ying Lim Yu Neng, Paul Cheng Fong Yee Chen Da Zhi

Yau Wing-Yiu Lee Kheng Joo

2 Arrangements to Enable Directors to Acquire Shares or Debentures

Neither at the end of nor at any time during the financial year was the Company a party to anyarrangement whose object is to enable the directors of the Company to acquire benefits by means of theacquisition of shares in or debentures of the Company or any other body corporate.

3 Directors’ Interests in Shares or Debentures

According to the register of directors’ shareholdings, none of the directors holding office at the end ofthe financial year had any interest in the shares or debentures of the Company or its related corporations,except as follows:

Name of directors

Shareholdings registered

in the name of directors

Shareholdings in which directors

are deemed to have an interest

As at

1/7/2012

As at

30/6/2013

As at

21/7/2013

As at

1/7/2012

As at

30/6/2013

As at

21/7/2013

The Company

Number of ordinary shares

Chen Dawei, David – – – 794,203,561 794,203,561 794,203,561

Lim Yu Neng, Paul – – – 1,000,000 1,000,000 1,000,000





3 Directors’ Interests in Shares or Debentures (cont’d)

Name of director Exerciseprice Exercise period

Holdings at the

beginning offinancial year

Holdings at the

end offinancial year At21 July 2013

Number of warrants

Deemed interest

Chen Dawei, David S$0.04 27/04/2011-27/04/2014 47,692,402 47,692,402 47,692,402

Except as disclosed in this report, no director who held office at the end of the financial year had interestsin shares, share options, warrants or debentures of the Company or of related corporations, either at thebeginning of the financial year, or date of appointment, if later or at the end of the financial year.

4 Directors’ Contractual Benefits

Since the end of the previous financial year, no director has received or become entitled to receive abenefit by reason of a contract made by the Company or a related corporation with the director orwith a firm of which he is a member, or with a company in which he has a substantial financial interest,except as disclosed in the financial statements. Certain directors also received remuneration from relatedcorporations in their capacity as directors and/or executives of those related corporations.

5 Share Options

(i) Options Granted

Other than as disclosed in paragraph 6 of this report, there were no options to take up unissuedshares of the Company or any corporation in the Group granted during the financial year.

(ii) Options Exercised

Other than as disclosed in paragraph 6 of this report, there were no shares of the Company or anycorporation in the Group issued by virtue of the exercise of options to take up unissued sharesduring the financial year.

(iii) Options Outstanding

Other than as disclosed in paragraph 6 of this report, there were no unissued shares of the Companyor any corporation in the Group under option as at the end of the financial year.





6 Warrants

At the end of the financial year, details of the unissued ordinary shares of the Company under warrants areas follows:

Date of issue

Warrants

outstanding at

01/07/2012

Warrants

issued

Warrants

exercised

Warrants

expired

Warrants

outstanding at

30/06/2013

Date of

expiration

26/04/2010 22,702,326 – 6,260,530 – 16,441,796 26/04/2015

27/04/2011 31,631,598 – – – 31,631,598 27/04/2014

27/04/2011 57,692,402 – – – 57,692,402 27/04/2014

Each warrant entitles the warrant holder to subscribe for one new ordinary share in the Company. Thewarrants do not entitle the holders of the warrants, by virtue of such holdings, to any rights to participate

in any share issue of any other company. During the financial year, the Company issued 6,260,530ordinary shares pursuant to the exercise of warrants as disclosed above.

As at the end of the financial year, except as reported above, no other warrants to take up unissuedshares of the Company were granted and no shares were issued by virtue of the exercise of warrants totake up unissued shares of the Company. Except for the above-mentioned outstanding warrants, no otheroptions to take up unissued shares of the Company were outstanding as at the end of the financial year.

7 Audit Committee

The members of the Audit Committee at the date of this report are as follows:

Lim Yu Neng, Paul (Appointed as Chairman of Audit Committee on 6 February 2013)Lee Kheng Joo (Appointed as Audit Committee Member on 6 February 2013)

Cheng Fong Yee (Member)

All members of the Audit Committee are independent and non-executive directors. The Audit Committeecarried out its functions as required by the Singapore Exchange Securities Trading Limited (“SGX-ST”)Listing Manual and the Code of Corporate Governance.

Based on the internal control established and maintained by the Group, the work performed by the internaland external auditors (to the extent as required by them to form an opinion on the statutory financialstatements), and the reviews conducted by management, the Audit Committee and the Board, withthe concurrence of the Audit Committee, is of the opinion that the Group’s internal controls addressing

financial, operational and compliance risks were adequate as at 30 June 2013.

The functions performed by the Audit Committee during the financial year are disclosed in the Company’sAnnual Report under the section on Corporate Governance Report.





8 Independent Auditors

The independent auditors, Moore Stephens LLP, Public Accountants and Chartered Accountants, haveexpressed their willingness to accept reappointment.

On behalf of the Board of Directors,

CHEN DAWEI, DAVID

Executive Chairman

NIE JIAN SHENG

Executive Director and Chief Executive Officer

25 September 2013



Statement by Directors30 June 2013


(a) The directors are of the opinion that the consolidated financial statements of the Group and the statementof financial position of the Company set out on pages 41 to 117 are drawn up so as to give a true andfair view of the state of affairs of the Group and of the Company as at 30 June 2013 and of the results,changes in equity and cash ows of the Group for the year then ended; and

(b) At the date of this statement, the directors are of the opinion that there are reasonable grounds tobelieve that the Group and Company will be able to pay their debts as and when they fall due as mentionedin Note 2 to the financial statements.

On behalf of the Board of Directors,

CHEN DAWEI, DAVID

Executive Chairman

NIE JIAN SHENG

Executive Director and Chief Executive Officer

25 September 2013



Independent Auditors’ ReportTo the Members of Hankore Environment Tech Group Limited(Incorporated in Bermuda)


We have audited the accompanying consolidated financial statements of Hankore Environment Tech GroupLimited (the “Company”) and its subsidiaries (the “Group”), as set out on pages 41 to 117, which comprisethe statement of financial position of the Company and of the Group as at 30 June 2013, and the consolidatedstatement of comprehensive income, consolidated statement of changes in equity and consolidated statement

of cash ows of the Group for the year then ended, and a summary of significant accounting policies and otherexplanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordancewith Singapore Financial Reporting Standards, and for such internal control as management determines isnecessary to enable the preparation of financial statements that are free from material misstatement, whetherdue to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with Singapore Standards on Auditing. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal controls relevant to the entity’s preparation of financial statementsthat give a true and fair view in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An auditalso includes evaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of financial position of theCompany are properly drawn up in accordance with the Singapore Financial Reporting Standards so as to give atrue and fair view of the state of affairs of the Group and of the Company as at 30 June 2013 and the results,

changes in equity and cash ows of the Group for the year ended on that date.

Moore Stephens LLP

Public Accountants andChartered Accountants

Singapore

25 September 2013



Consolidated Statement of Comprehensive IncomeFor the nancial year ended 30 June 2013

The accompanying notes form an integral part of these nancial statements


Group

Note 2013 2012

RMB’000 RMB’000

Revenue (5) 369,131 245,361

Cost of sales (203,272) (126,606)

Gross profit 165,859 118,755

Other income (6) 54,776 91,067

Administrative expenses (54,164) (50,632)

Other operating expenses (13,784) (17,310)

Finance income (7) 376 139

Finance costs (8) (47,120) (37,892)

Profit before income tax (9) 105,943 104,127

Income tax (10) (6,478) (1,484)

Net profit for the year 99,465 102,643

Other comprehensive income – –

Total comprehensive income for the year 99,465 102,643

Net profit attributable to:

Owners of the Company 99,465 102,643

Non-controlling interests – –

99,465 102,643

Total comprehensive income attributable to:

Owners of the Company 99,465 102,643

Non-controlling interests – –

99,465 102,643

Earnings per share (RMB) (11)

- Basic 0.02 0.02

- Diluted 0.02 0.02



Statement of Financial PositionAs at 30 June 2013



Group Company

Note 2013 2012 2013 2012

RMB’000 RMB’000 RMB’000 RMB’000

ASSETSNon-current Assets

Property, plant and equipment (12) 7,829 6,223 17 394

Intangible assets (13) 256,864 215,240 – –

Financial receivables (14) 1,972,006 1,817,500 – –

Investments in subsidiaries (15) – – 262,409 262,409

Goodwill (16) 90,047 – – –

Other receivables (19) 17,052 – – –

Land use rights (17) 37,996 40,015 – –

2,381,794 2,078,978 262,426 262,803

Current Assets

Financial receivables (14) 34,583 33,200 – –

Inventories (18) 3,345 758 – –

Trade and other receivables (19) 85,052 58,542 1,910,379 1,803,454

Other current assets (20) 75,438 10,084 409 48

Cash and bank balances (21) 118,111 83,844 252 987

316,529 186,428 1,911,040 1,804,489

Total Assets 2,698,323 2,265,406 2,173,466 2,067,292

EQUITY AND LIABILITIES

Share Capital and Reserves

Share capital (22) 409,242 380,040 409,242 380,040Reserves (23) 1,301,142 1,151,720 1,711,740 1,675,472

Equity attributable to ownersof the Company 1,710,384 1,531,760 2,120,982 2,055,512

Non-controlling interests (229) (229) – –

Total equity 1,710,155 1,531,531 2,120,982 2,055,512

Non-current Liabilities

Borrowings (24) 467,211 395,171 – –

Deferred tax liabilities (25) 25,111 14,097 – –

492,322 409,268 – –Current Liabilities

Trade and other payables (26) 277,633 141,852 9,593 2,861

Other financial liabilities (27) 42,891 8,919 42,891 8,919

Borrowings (24) 175,285 173,836 – –

Provision for income tax 37 – – –

495,846 324,607 52,484 11,780

Total Liabilities 988,168 733,875 52,484 11,780

Total Equity and Liabilities 2,698,323 2,265,406 2,173,466 2,067,292



Consolidated Statement of Changes in EquityFor the nancial year ended 30 June 2013



Attributable to equity holders of the Company

Sharecapital

Sharepremium

Foreign

currency

translationreserve

Statutoryreserve

(Accumulated

losses)/

Retainedearnings Total

Non–

controllinginterests Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Group

2013

As at 1 July 2012 380,040 1,171,715 1,977 62,785 (84,757) 1,531,760 (229) 1,531,531

Net profit for the year – – – – 99,465 99,465 – 99,465

Other comprehensive

income for the year – – – – – – – –

Total comprehensive

income for the year – – – – 99,465 99,465 – 99,465

Issue of ordinary shares

for acquisition of

subsidiaries 28,695 48,965 – – – 77,660 – 77,660

Exercise of warrants

(Note 27) 507 992 – – – 1,499 – 1,499

As at 30 June 2013 409,242 1,221,672 1,977 62,785 14,708 1,710,384 (229) 1,710,155

2012

As at 1 July 2011 378,356 1,168,032 1,977 62,785 (187,400) 1,423,750 (229) 1,423,521

Net profit for the year – – – – 102,643 102,643 – 102,643

Other comprehensive

income for the year – – – – – – – –

Total comprehensive

income for the year – – – – 102,643 102,643 – 102,643

Exercise of warrants(Note 27) 1,684 3,683 – – – 5,367 – 5,367

As at 30 June 2012 380,040 1,171,715 1,977 62,785 (84,757) 1,531,760 (229) 1,531,531



Consolidated Statement of Cash FlowsFor the nancial year ended 30 June 2013



2013 2012

RMB’000 RMB’000

Cash Flows from Operating ActivitiesProfit before income tax 105,943 104,127

Adjustments for:

Depreciation of property, plant and equipment 1,689 1,456

Amortisation of intangible assets 11,140 10,621

Amortisation of land use rights 2,019 1,963

Write-off of other receivables 808 2,000

Allowance for impairment loss of other receivables 484 3,883

Write back of impairment loss of intangible assets (20,000) (20,000)

Write back of impairment loss of financial receivables – (52,402)

Gain on disposal of service concession rights (21,820) –

Write-off of property, plant and equipment 639 79

Net loss on disposal of property, plant and equipment 21 –

Net fair value gain on derivatives (4,145) (5,664)

Unrealised foreign exchange loss 5 282

Finance income (376) (139)

Interest expense 46,902 37,840

Operating cash ows before working capital changes 123,309 84,046

Changes in working capital:

Financial receivables (155,889) (31,718)Inventories (2,290) (182)

Trade and other receivables (16,693) (5,255)

Other current assets (66,041) 1,007

Trade and other payables 126,100 (30,660)

Cash generated from operations 8,496 17,238

Interest received 376 139

Income tax refund – 449

Income tax paid (1,727) (328)

Net cash generated from operating activities 7,145 17,498



Consolidated Statement of Cash FlowsFor the nancial year ended 30 June 2013



(cont’d)

2013 2012

RMB’000 RMB’000

Cash Flows from Investing Activities

Purchase of property, plant and equipment (1,775) (2,767)

Purchase of intangible asset-computer software (402) (787)

Proceeds from disposal of property, plant and equipment 73 –

Increase in intangible assets (5,146) (9,364)

Net cash inow from disposal of concession rights 2,007 –

Net cash inow on acquisition of subsidiaries (Note 16) 3,867 –

Net cash used in investing activities (1,376) (12,918)

Cash Flows from Financing Activities

Proceeds from exercise of warrants 786 2,531

Proceeds from bank borrowings 190,723 42,960

Repayment of bank borrowings (93,597) (89,726)

Proceeds from other loans 27,491 82,600

Repayment of other loans (52,000) –

Interest paid (44,900) (37,840)

(Increase)/Decrease in bank balances pledged (14,000) 1,000

Net cash generated from financing activities 14,503 1,525

Net increase in cash and cash equivalents 20,272 6,105

Cash and cash equivalents at the beginning of the financial year 81,844 75,913

Effect of exchange rate changes on cash and cash equivalents (5) (174)

Cash and cash equivalents at the end of the financial year (Note 21) 102,111 81,844



Notes to the Financial Statements30 June 2013


These notes form an integral part of and should be read in conjunction with the accompanying financialstatements.

1 General

Hankore Environment Tech Group Limited (the “Company”) is incorporated in Bermuda as an exemptcompany with limited liability and is listed on the Mainboard of the Singapore Exchange Securities TradingLimited (“SGX-ST”). The registered address of the Company is Clarendon House, 2 Church Street, HamiltonHM11, Bermuda and its principal place of business is at 1105 Jialong International Tower, No.19 ChaoyangPark Road, Chaoyang District, Beijing, People’s Republic of China (“PRC”) 100125.

The principal activity of the Company is that of an investment holding company. The principal activities ofits subsidiaries are set out in Note 15 respectively.

The Board of Directors has authorised the issue of the financial statements in accordance with a resolution

of the directors on the date of the Statement by Directors.

2 Going Concern Assumption

Notwithstanding the Group incurred a net profit and total comprehensive income of RMB99,465,000(2012:102,643,000), as of that date, the Group’s current liabilities exceeded its current assets byRMB179,317,000 (2012: RMB138,179,000). This factor indicates the existence of uncertainties relatedto events or conditions which may cast doubts upon the Group’s ability to continue as a going concern.Management has prepared the financial statements on the assumption that the Group will continue as agoing concern based on the following:

– the Group’s ability to generate sufficient cash ows from its operations based on the variousstrategies that management is presently evaluating to improve operating performance and cashows of the Group;

– the issue of notes under the S$300,000,000 multicurrency medium term note programme (the“MTN” Programme) (Note 32(b)); and

– the continuing support from the Group’s bankers through re-financing of existing loans and obtainingadditional bank loans.





3 Significant Accounting Policies

(a) Basis of Preparation

The financial statements, which are expressed in Renminbi (“RMB”), have been prepared inaccordance with Singapore Financial Reporting Standards (“FRS”). The financial statements havebeen prepared under the historical cost convention, except as disclosed in the accounting policiesbelow.

The preparation of financial statements in conformity with FRS requires the management to exercise judgement in the process of applying the Group’s accounting policies. It also requires the use ofcertain critical accounting estimates and assumptions that affect the application of accountingpolicies and reported amounts of assets, liabilities, revenues and expenses, and the disclosure ofcontingent assets and contingent liabilities at the balance sheet date that are not readily apparentfrom other sources. Estimates and judgements are continually evaluated and are based on historicalexperience and other factors that are considered to be relevant, including expectations of future

events that are believed to be reasonable under the circumstances. However, actual results mayultimately differ from these estimates.

The areas involving a higher degree of judgement or complexity, or areas where assumptions andestimates are significant to the financial statements are disclosed in Note 4.

(i) Adoption of New and Revised FRS

On 1 July 2012, the Group adopted the following revised FRS for annual financial periodsbeginning on or after 1 July 2012:

Amendments to FRS 1 Presentation of Items of Other Comprehensive Income

The Amendment to FRS 1 Presentation of Items of Other Comprehensive Income requiresfor entities to group items presented in other comprehensive income (“OCI”) on the basis ofwhether they are potentially reclassifiable to profit or loss with effect from 1 July 2012. Asthis is a disclosure standard, it has no impact on the financial performance of the Group andCompany when implemented in the current financial year.

(ii) New and Revised FRS Issued But Not Yet Effective

At the date of these financial statements, the following revised or amended standards whichhave been issued and relevant to the Group but are not yet effective:

Effective for accounting periods

beginning on or after

FRS 27 Separate Financial Statements 1 January 2014

FRS 110 Consolidated Financial Statements 1 January 2014

FRS 112 Disclosure of Interests in Other Entities 1 January 2014

FRS 113 Fair value Measurements 1 January 2013





3 Significant Accounting Policies (cont’d)

(a) Basis of Preparation (cont’d)

(ii) New and Revised FRS Issued But Not Yet Effective (cont’d)

FRS 27 Separate Financial Statements

FRS 27 Separate Financial Statements will now solely address separate financial statements,the requirements for which are substantially unchanged. It is effective for annual periodsbeginning on or after 1 January 2014 and will not have any impact on the financialperformance or the financial position of the Group and Company when implemented.

FRS 110 Consolidated Financial Statements

FRS 110 Consolidated Financial Statements supersedes FRS 27 Consolidated and Separate

Financial Statements and INT FRS 12 Consolidation – Special Purpose Entities , which iseffective for annual periods beginning on or after 1 January 2014.

The standard changes the definition of control and applies it to all investees to determine thescope of consolidation. FRS 110 requirements will apply to all types of potential subsidiary. Itrequires an investor to reassess the decision whether to consolidate an investee when eventsindicate that there may be a change to one of the three elements of control, i.e. power,variable returns and the ability to use power to affect returns. The Group has reassessed theentities the Group controls and does not expect any substantial change.

FRS 112 Disclosure of Interests in Other Entities

FRS 112 Disclosure of Interests in Other Entities , which is effective from 1 January 2014,combines the disclosure requirements for subsidiaries, joint arrangements, associates andstructured entities within a comprehensive disclosure standard. FRS 112 specifies minimumdisclosures that an entity must provide. It requires for an entity to provide summarisedfinancial information about the assets, liabilities, profit or loss and cash ows of eachsubsidiary that has non-controlling interests that are material to the reporting entity. Asthis is a disclosure standard, it will not have any impact on the financial performance or thefinancial position of the Group and Company when implemented.

FRS 113 Fair Value Measurement

FRS 113 Fair Value Measurement provides guidance on how to measure fair values forincluding those for both financial and non-financial items and introduces significantly enhanced

disclosures about fair values. It does not address or change the requirements on when fairvalues should be used. When measuring fair value, an entity is required to use valuationtechniques that maximise the use of relevant observable inputs and minimise the use ofunobservable inputs. It establishes a fair value hierarchy for doing this. This FRS is to beapplied for annual periods beginning on or after 1 January 2013. The Group is in the processof assessing the impact on the financial statements.






(b) Currency Translation

(i) Functional and Presentation Currency

The individual financial statements of each group entity are presented in the currency ofthe primary economic environment in which the entity operates (its functional currency). Forthe purpose of the consolidated financial statements, the results and financial position ofeach group entity are expressed in Renminbi (“RMB”), which is the functional currency of theCompany and the presentation currency for the consolidated financial statements.

(ii) Transactions and Balances

In preparing the financial statements of the individual entities, transactions in currenciesother than the entity’s functional currency (foreign currencies) are recognised at the rates

of exchange prevailing at the dates of the transactions. At the end of each reporting period,monetary items denominated in foreign currencies are retranslated at the rates prevailing atthat date. Non-monetary items carried at fair value that are denominated in foreign currenciesare retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are notretranslated.

Exchange differences are recognised in profit or loss in the period in which they arise exceptfor:

l exchange differences on foreign currency borrowings relating to assets underconstruction for future productive use, which are included in the cost of those assetswhen they are regarded as an adjustment to interest costs on those foreign currencyborrowings;

l exchange differences on monetary items receivable from or payable to a foreignoperation for which settlement is neither planned nor likely to occur (therefore formingpart of the net investment in the foreign operation), which are recognised initiallyin other comprehensive income and reclassified from equity to the profit or loss ondisposal or partial disposal of the net investment.

(iii) Translation of Group Entities’ Financial Statements

The results and financial position of all the group entities (none of which has the currency ofa hyperinationary economy) that have a functional currency different from the presentation

currency are translated into the presentation currency as follows:

– Assets and liabilities are translated at the closing rate at the date of the statement offinancial position;

– Income or expense for each statements of comprehensive income or separate incomestatement presented (i.e. including comparatives) shall be translated at exchange ratesat the dates of the transactions; and

– All resulting exchange differences are recognised in other comprehensive income.






(b) Currency Translation (cont’d)

(iii) Translation of Group Entities’ Financial Statements (cont’d)

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in aforeign operation, or a disposal involving loss of control over a subsidiary that includes aforeign operation), all of the accumulated exchange differences in respect of that operationattributable to the Group are reclassified to profit or loss. Any exchange differences that havepreviously been attributed to non-controlling interests are derecognised, but they are notreclassified to profit or loss.

In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreignoperation, the proportionate share of accumulated exchange differences are re-attributed tonon-controlling interests and are not recognised in profit or loss. For all other partial disposals,

the proportionate share of the accumulated exchange differences is reclassified to profit orloss.

(c) Basis of Consolidation

(i) Investments in Subsidiaries

Subsidiaries are entities over which the Group has the power to govern the financial andoperating policies, generally accompanying a shareholding of more than half of the votingrights. The existence and effect of potential voting rights that are currently exercisable orconvertible are considered when assessing whether the Group controls another entity.

Investments in subsidiaries are carried at cost less accumulated impairment losses in thestatement of financial position of the Company.

On disposal of investments in subsidiaries, the difference between the net disposal proceedsand the carrying amount of the investments are recognised in profit or loss.

(ii) Consolidation

Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiableassets acquired and liabilities assumed in a business combination, with limited exceptions,are measured initially at their fair values at the acquisition date. Acquisition-related costs arerecognised as expenses in the periods in which the costs are incurred and the services arereceived.

The consideration transferred for the acquisition of a subsidiary comprises the fair value ofthe assets transferred, the liabilities incurred and the equity interests issued by the Group.The consideration transferred also includes the fair value of any contingent considerationarrangement and the fair value of any pre-existing equity interest in the subsidiary.

Contingent consideration arrangements arising from business combinations with acquisitiondates preceding the application of revised FRS 103 are accounted for in accordancewith the guidance in the previous version of FRS 103, at initial recognition, i.e. contingentconsideration is recognised at fair value if it is deemed to be probable of payment and can bemeasured reliably at the date of the acquisition.






(c) Basis of Consolidation (cont’d)

(ii) Consolidation (cont’d)

All subsequent changes in the contingent consideration are adjusted against the cost ofcombination. Under the revised FRS 103, at initial recognition, contingent consideration is nowrequired to be recognised at fair value even if it is deemed not to be probable of paymentat the date of the acquisition. All subsequent changes in debt contingent consideration arerecognised in the income statement, rather than the goodwill.

In business combinations achieved in stages, the Group recognises any non-controllinginterest in the acquiree at the date of acquisition either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The choiceof measuring non-controlling interests at fair value or at the proportionate share of the

acquiree’s net assets applies only to instruments that represent present ownership interestsand entitle their holders to a proportionate share of the net assets in the event of liquidation.

All other components of non-controlling interests are measured at fair value unless anothermeasurement basis is required by FRS.

The Group elects for each individual business combination, whether non-controlling interestin the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree net identifiable assets.

Any excess of the sum of the fair value of the consideration transferred in the businesscombination, the amount of non-controlling interest in the acquiree (if any), and the fair valueof the Group’s previously held equity interest in the acquiree (if any), over the net fair valueof the acquiree’s identifiable assets and liabilities is recorded as goodwill on the statementof financial position. In instances where the latter amount exceeds the former, the excess isrecognised as a gain on bargain purchase in profit or loss on the acquisition date.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Groupobtains control, and continue to be consolidated until the date that such control ceases.

The consolidated financial statements comprise the financial statements of the Companyand its subsidiaries as at the balance sheet date. The financial statements of the subsidiariesused in the preparation of the consolidated financial statements are prepared for the samereporting date as the Company. Consistent accounting policies are applied to like transactionsand events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting fromintra-group transactions are eliminated in full.

(iii) Transactions with Non-Controlling Interests

Non-controlling interests represent the equity in subsidiaries not attributable, directlyor indirectly, to owners of the Company, and are presented separately in the consolidatedstatement of comprehensive income and within equity in the consolidated statement offinancial position, separately from equity attributable to owners of the Company.






(c) Basis of Consolidation (cont’d)

(iii) Transactions with Non-Controlling Interests (cont’d)

Changes in the Company owners’ ownership interest in a subsidiary that do not result in aloss of control are accounted for as equity transactions. In such circumstances, the carryingamounts of the controlling and non-controlling interests are adjusted to reect the changesin their relative interests in the subsidiary. Any difference between the amount by which thenon-controlling interests is adjusted and the fair value of the consideration paid or received isrecognised directly in equity and attributed to owners of the parent.

(iv) Goodwill on Consolidation

Goodwill acquired in a business combination is initially measured at cost being the excess of

the cost of the business combination over the Group’s interest in the net fair value of theidentifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill ismeasured at cost less accumulated impairment losses. Goodwill is reviewed for impairmentannually or more frequently if events or changes in circumstances indicate that the carryingamount may be impaired.

For the purpose of impairment testing, goodwill acquired is allocated to each of the Group’scash-generating units that are expected to benefit from the synergies of the combination.The cash-generating unit (“CGU”) to which goodwill has been allocated is tested forimpairment annually and whenever there is an indication that the CGU may be impaired,by comparing the carrying amount of the CGU, including the allocated goodwill, with therecoverable amount of the CGU. Where the recoverable amount of the CGU is less thanthe carrying amount, an impairment loss is recognised in profit or loss. Impairment lossesrecognised for goodwill are not reversed in subsequent years.

When goodwill forms part of a CGU and part of the operation within that CGU is disposedof, the goodwill associated with the operation disposed of is included in the carrying amountof the operation when determining the gain or loss on disposal of the operation. Goodwilldisposed of in this circumstance is measured based on the relative fair values of theoperations disposed of and the portion of the CGU retained.

(d) Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulatedimpairment losses. The cost of an item of property, plant and equipment includes its purchase

price and any cost that is directly attributable to bringing the asset to the location and conditionnecessary for it to be capable of operating in a manner intended by management.

Depreciation on property, plant and equipment is calculated using the straight-line method toallocate their depreciable amounts over their estimated useful lives less residual values whereapplicable on the following basis:

Machinery – 10% – 20%

Motor vehicles and office equipment – 20%

Leasehold improvements – 25%






(d) Property, Plant and Equipment (cont’d)

The residual values, estimated useful lives and depreciation method of property, plant andequipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects ofany revision are recognised in profit or loss when the changes arise.

Fully depreciated assets still in use are retained in the financial statements. On disposal orretirement of an item of property, plant and equipment, the difference between the net disposalproceeds and its carrying amount is recognised in profit or loss.

(e) Land Use Rights

Land use rights are carried at cost less accumulated amortisation and impairment losses.Amortisation is charged to profit or loss on a straight-line method over the respective lease period

of the land use rights, which range from 25 to 50 years.

(f) Intangible Assets

Concession Rights

Concession rights are stated at the fair value of services provided less accumulated amortisation andimpairment losses. Concession rights are amortised to the profit or loss on a straight-line methodover the concession periods, which range from 25 to 32 years, from commencement of operation ofthe plants.

Computer Software

Acquired computer software licenses are initially capitalised at cost which includes the purchaseprice and other directly attributed cost of preparing the asset for its intended use. Capitalisedcomputer software licenses are subsequently carried at cost less accumulated amortisation andaccumulated impairment losses. These costs are amortised to profit or loss using the straight-linemethod over their estimated useful lives of 10 years.

Patents and Trademark

Patents and trademark are measured at cost less any accumulated amortisation and impairmentlosses. These costs are amortised to profit or loss using the straight-line method over theirestimated useful lives, which range from 10 to 20 years.

(g) Service Concession Arrangements

The Group has entered into various service concession arrangements with governing bodies oragencies of the government of the PRC (the “grantors”) to construct and operate water/wastewatertreatment plants for concession periods of between 25 to 30 years and transfer the plants to thegrantors at the end of the concession periods. Such concession arrangements fall within the scopeof INT FRS 112 Service Concession Arrangements and are accounted for as follows:

(i) Financial Receivables

The Group recognises a financial receivable arising from a service concession arrangementwhen it has a right to receive a fixed and determinable amount of payments during the

concession period irrespective of the usage of the concession infrastructure. The financialreceivable is accounted for in accordance with the accounting policy set out in Note 3(i).






(g) Service Concession Arrangements (cont’d)

(ii) Intangible Assets

The Group recognises an intangible asset arising from a service concession arrangementwhen it has a right to charge for usage of the concession infrastructure but does not haveany contractual rights under the concession agreements to receive a fixed and determinableamount of payments during the concession period. Intangible assets received as considerationfor providing construction services in a service concession arrangement are measured at fairvalue upon initial recognition, estimated by reference to the fair value of the constructionservices provided. When the Group receives an intangible asset and a financial asset asconsideration for providing construction services in a service concession arrangement, theGroup estimates the fair value of intangible assets as the difference between the fair valueof the construction services provided and the fair value of the financial assets received. The

intangible asset (“concession rights”) is accounted for in accordance with the accountingpolicy set out in Note 3(f).

Subsequent costs and expenditure related to infrastructure and equipment arising fromthe Group’s commitments to the concession contracts or that increase future revenue isrecognised as additions to the intangible asset and/or financial receivables are stated at cost.Capital expenditures necessary to support the Group’s operation as a whole and is recognisedas property, plant and equipment and accounted for in accordance with the accounting policystated under property, plant and equipment in Note 3(d). When the Group has contractualobligations that it must fulfill as a condition of its license to: a) maintain the infrastructureto a specified standard or, b) to restore the infrastructure when the infrastructure hasdeteriorated below a specified condition, it recognises and measures these contractualobligations in accordance with the accounting policy for provisions. Repairs and maintenanceand other expenses that are routine in nature are expensed and recognised in profit or loss asincurred.

(h) Impairment of Non-financial Assets Excluding Goodwill

Intangible Assets, Property, Plant and Equipment and Investments in Subsidiaries

At the balance sheet date, the Group reviews the carrying amounts of its intangible assets,property, plant and equipment and investments in subsidiaries to determine whether there is anyindication that those assets have suffered an impairment loss. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extent of the impairmentloss (if any), on an individual asset.

Where it is not possible to estimate the recoverable amount of an individual asset, the Groupestimates the recoverable amount of the cash-generating unit to which the asset belongs. Where areasonable and consistent basis of allocation can be identified, corporate assets are also allocatedto individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are testedfor impairment at least annually, and whenever there is an indication that the asset may be impaired.






(h) Impairment of Non-financial Assets Excluding Goodwill (cont’d)

Intangible Assets, Property, Plant and Equipment and Investments in Subsidiaries (cont’d)

Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessingvalue-in-use, the estimated future cash ows are discounted to their present value using a pre-taxdiscount rate that reects current market assessments of the time value of money and the risksspecific to the asset for which the estimates of future cash ows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than itscarrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to itsrecoverable amount. An impairment loss is recognised immediately in profit or loss, unless therelevant asset is carried at a revalued amount, in which case the impairment loss is treated as arevaluation decrease.

An assessment is made at each reporting date as to whether there is any indication that previouslyrecognised impairment losses may no longer exist or may have decreased.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that theincreased carrying amount does not exceed the carrying amount that would have been determinedhad no impairment loss been recognised for the asset (or cash-generating unit) in prior years. Areversal of an impairment loss is recognised immediately in profit or loss, unless the relevant assetis carried at a revalued amount, in which case the reversal of the impairment loss is treated as arevaluation increase.

(i) Financial Assets

Financial assets are recognised when the Group becomes a party to the contractual provisions of thefinancial instrument. Financial assets are derecognised if the Group’s contractual rights to the cashows from the financial asset expire or if the Group transfers the financial asset to another partywithout retaining control or transfers substantially all the risks and rewards of the asset.

(i) Loans and Receivables

Trade and other receivables that have fixed or determinable payments that are not quoted inan active market are classified as ‘loans and receivables’. Loans and receivables are measuredat amortised cost using the effective interest method, less any impairment. Interest incomeis recognised by applying the effective interest rate, except for short-term receivables when

the recognition of interest would be immaterial. They are presented as current assets, exceptfor those maturing later than twelve months after the balance sheet date which are presentedas non-current assets. Loans and receivables are presented as ‘financial receivables’, ‘tradeand other receivables’, ‘other current assets’ (excluding prepayments) and ‘cash and cashequivalents’ on the statement of financial position.

(ii) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and at banks or financial institutions, includingfixed deposits, less restricted bank balances, which form an integral part of the Group’s cashmanagement. Cash and cash equivalents are short-term and highly liquid investments thatare readily convertible to known amounts of cash and that are subject to insignificant risk of

changes in value.






(j) Impairment of Financial Assets

The Group assesses at each balance sheet date whether there is any objective evidence that afinancial asset or group of financial assets is impaired.

Loans and Receivables

For certain categories of financial asset, such as trade receivables, assets that are assessed notto be impaired individually are, in addition, assessed for impairment on a collective basis. Objectiveevidence of impairment for a portfolio of receivables could include the Group’s past experienceof collecting payments, an increase in the number of delayed payments in the portfolio past theaverage credit period of 90 days, as well as observable changes in national or local economicconditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the differencebetween the asset’s carrying amount and the present value of estimated future cash ows,discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financialassets with the exception of trade receivables, where the carrying amount is reduced through theuse of an allowance account. When a trade receivable is considered uncollectible, it is written offagainst the allowance account. Subsequent recoveries of amounts previously written off are creditedagainst the allowance account. Changes in the carrying amount of the allowance account arerecognised in profit or loss.

(k) Construction Contracts

A construction contract is a contract specifically negotiated for the construction of an asset ora combination of assets that are closely interrelated or interdependent in terms of their design,technology and functions or their ultimate purpose or use.

Contract costs are recognised when incurred.

When the outcome of a construction contract can be estimated reliably, contract revenue andcontract costs are recognised as revenue and expenses respectively by reference to the stage ofcompletion of the contract activity at the balance sheet date (percentage-of-completion method).When the outcome of a construction contract cannot be estimated reliably, contract revenue isrecognised to the extent of the contract costs incurred that are likely to be recovered. When itis probable that total contract costs will exceed the total contract revenue, the expected loss is

recognised as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations inthe contract work and claims that can be measured reliably. A variation or a claim is only includedin contract revenue when it is probable that the customer will approve the variation or negotiationshave reached an advanced stage such that it is probable that the customer will accept the claim.

The stage of completion is measured by reference to the contract costs incurred to date to theestimated total costs of the contracts. Costs incurred during the financial year in connection withfuture activity on a contract are excluded from costs incurred to date when determining the stageof completion of a contract. Such costs are shown as contracts work-in-progress on the statementof financial position unless it is not probable that such contract costs are recoverable from the

customers, in which case, such costs are recognised as an expense immediately.






(k) Construction Contracts (cont’d)

At the balance sheet date, the aggregated costs incurred plus recognised profit (less recognisedloss) on each contract is compared against the progress billings. Where costs incurred plusrecognised profits (less recognised losses) exceed progress billings, the balance is presented as duefrom customers on construction contract work-in-progress within “trade and other receivables” inthe statement of financial position. Where progress billings exceed costs incurred plus recognisedprofits (less recognised losses), the balance is presented as due to customers on constructioncontract work-in-progress within “trade and other payables” in the statement of financial position.

Progress billings not yet paid by customers and retentions are included within trade receivables.Advances received are included within trade and other payables.

(l) Inventories

Inventories are carried at the lower of cost and net realisable value. Cost is determined using thefirst-in-first-out method. The cost of finished goods and work-in-progress comprises raw materials,direct labour, other direct costs and related production overheads (based on normal operatingcapacity). Net realisable value is the estimated selling price in the ordinary course of business,less estimated costs of completion and costs necessary to make the sale. Allowance is made forobsolete and slow-moving stocks.

(m) Financial Liabilities and Equity Instrument issued by the Group

(i) Classification as Debt or Equity

Debt and equity instruments are classified as either financial liabilities or as equity inaccordance with the substance of the contractual arrangement.

(ii) Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets ofan entity after deducting all of its liabilities. Equity instruments issued by the Group arerecognised at the proceeds received, net of direct issue costs.

(iii) Financial Liabilities

Financial liabilities within the scope of FRS 39 Financial Instruments are recognised on thestatement of financial position when, and only when, the Group becomes a party to the

contractual provisions of the financial instrument.

Financial liabilities are classified as either financial liabilities at fair value through profit or loss“FVTPL” or “other financial liabilities”.

Finance liability is recognised initially at fair value and subsequently at amortised cost usingthe effective interest method. Gains and losses of financial liabilities on remeasurement, otherthan derivatives, are recognised in profit or loss when the liabilities are derecognised.






(m) Financial Liabilities and Equity Instrument issued by the Group (cont’d)

(iii) Financial Liabilities (cont’d)

A financial liability is derecognised when the obligation under the liability is extinguished.When an existing financial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability are substantially modified,such an exchange or modification is treated as a derecognition of the original liability andthe recognition of a new liability, and the difference in the respective carrying amounts isrecognised in profit or loss.

(n) Financial Guarantees

A financial guarantee contract is a contract that requires the issuer to make specified payments to

reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are initially recognised at their fair values plus transaction costs andare subsequently amortised to profit or loss over the period of the borrowing. If it is probablethat the liability will be higher than the amount initially recognised less amortisation, the liability isrecorded at the higher amount with the difference charged to profit or loss.

(o) Borrowing Costs

Borrowing costs are recognised in profit or loss as incurred except to the extent that they arecapitalised. Borrowing costs are capitalised if they are directly attributable to the acquisition,construction or production of a qualifying asset. Capitalisation of borrowing costs commences whenthe activities to prepare the asset for its intended use or sale are in progress and the expenditureand borrowing costs are incurred. Borrowing costs are capitalised until the assets are ready for theirintended use or sale.

(p) Share Capital

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incrementalcosts directly attributable to the issuance of ordinary shares are deducted against share capital.

(q) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable for the renderingof services in the ordinary course of the Group’s activities. Revenue is presented, net of value-added

tax, and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue and related cost can be reliablymeasured, when it is probable that the collectibility of the related receivables is reasonably assuredand when the specific criteria for each of the Group’s activities are met as follows:

Discharge Fees from Treatment of Wastewater

Discharge fees from treatment of wastewater are recognised based on the volume of wastewatertreated and are recognised in the period when the services are rendered.






(q) Revenue Recognition (cont’d)

Finance Income

Finance income represents the interest income on the financial receivable arising from a serviceconcession arrangement, and is recognised using the effective interest method.

Revenue from Construction Services

Revenue from construction services under a service concession arrangement is recognised inaccordance with the Group’s accounting policy on recognition of revenue for construction contracts(Note 3(k)).

Contract Revenue from Construction Services

Revenue from construction services under construction contract is recognised in accordance withGroup’s accounting policy on recognition of revenue for construction contracts (Note 3(k)).

Interest Income

Interest income is recognised on a time-proportion basis using the effective interest method.

(r) Employee Benefits

The Group participates in the national schemes as defined by the laws of the countries in whichit has operations. Defined contribution plans are post-employment benefit plans under which theGroup pays contributions to and are recognised as an expense in profit or loss as and when they areincurred.

(s) Operating Leases

Leases of property, plant and equipment in which a significant portion of the risks and rewardsof ownership are retained by the lessor are classified as operating leases. Payments made underoperating leases (net of any incentives received from the lessor) are taken to profit or loss on astraight-line method over the period of the lease. When an operating lease is terminated beforethe lease period has expired, any payment required to be made to the lessor by way of penalty isrecognised as an expense in the period in which termination takes place.

(t) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

(i) Current Tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs fromprofit as reported in profit or loss because of items of income or expense that are taxable ordeductible in other years and items that are never taxable or deductible. The Group’s liabilityfor current tax is calculated using tax rates that have been enacted or substantively enactedby the end of the reporting period.






(t) Taxation (cont’d)

(ii) Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts ofassets and liabilities in the financial statements and the corresponding tax bases usedin the computation of taxable profit. Deferred tax liabilities are generally recognised for alltaxable temporary differences. Deferred tax assets are generally recognised for all deductibletemporary differences to the extent that it is probable that taxable profits will be availableagainst which those deductible temporary differences can be utilised. Such deferred taxassets and liabilities are not recognised if the temporary difference arises from goodwill orfrom the initial recognition (other than in a business combination) of other assets andliabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated withinvestments in subsidiaries, except where the Group is able to control the reversal of thetemporary difference and it is probable that the temporary difference will not reverse inthe foreseeable future. Deferred tax assets arising from deductible temporary differencesassociated with such investments and interests are only recognised to the extent that it isprobable that there will be sufficient taxable profits against which to utilise the benefits ofthe temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting periodand reduced to the extent that it is no longer probable that sufficient taxable profits will beavailable to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to applyin the period in which the liability is settled or the asset realised, based on tax rates (and taxlaws) that have been enacted or substantively enacted by the end of the reporting period.The measurement of deferred tax liabilities and assets reects the tax consequences thatwould follow from the manner in which the Group expects, at the end of the reporting period,to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set offcurrent tax assets against current tax liabilities and when they relate to income taxes leviedby the same taxation authority and the Group intends to settle its current tax assets andliabilities on a net basis.

(iii) Current and Deferred Tax for the Period

Current and deferred tax are recognised as an expense or income in profit or loss, exceptwhen they relate to items that are recognised outside profit or loss (whether in othercomprehensive income or directly in equity), in which case the tax is also recognised outsideprofit or loss, or where they arise from the initial accounting for a business combination. Inthe case of a business combination, the tax effect is taken into account in the accounting forthe business combination.






(u) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided tothe executive committee whose members are responsible for allocating resources and assessingperformance of the operating segments.

(v) Government Grants

Government grants are not recognised until there is reasonable assurance that the Group will complywith the conditions attaching to them and that the grants will be received.

(w) Related Parties

A related party is defined as follows:

A related party is a person or entity that is related to the entity that is preparing its financialstatements (referred to as the ‘reporting entity’).

(a) A person or a close member of that person’s family is related to a reporting entity if thatperson:

(i) has control or joint control over the reporting entity;

(ii) has significant inuence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a parent ofthe reporting entity.

(b) An entity is related to a reporting entity if any of the following conditions applies:

(i) the entity and the reporting entity are members of the same group (which means thateach parent, subsidiary and fellow subsidiary is related to the others);

(ii) one entity is an associate or joint venture of the other entity (or an associate or jointventure of a member of a group of which the other entity is a member);

(iii) both entities are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the

third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either thereporting entity or an entity related to the reporting entity. If the reporting entity isitself such a plan, the sponsoring employers are also related to the reporting entity;

(vi) the entity is controlled or jointly controlled by a person identified in (a); or

(vii) a person identified in (a) (i) has significant inuence over the entity or is a member ofthe key management personnel of the entity (or of a parent of the entity).





4 Critical Accounting Estimates, Assumptions and Judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experienceand other factors, including expectations of future events that are believed to be reasonable under the

circumstances.

In addition to Note 3 to the financial statements, the Group makes judgements, estimates andassumptions concerning the future. They affect the application of the Group’s accounting policies, reportedamounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on anongoing basis and are based on experience and relevant factors, including expectations of future eventsthat are believed to be reasonable under the circumstances. However, actual results may ultimately differfrom these estimates.

(a) Key Sources of Estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation

uncertainty at the end of the reporting period that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the next financial year.

Financial receivables and/or intangible assets under INT FRS 112 Service Concession Arrangements

The Group recognises the consideration received or receivable in exchange for the constructionservices as a financial receivable and/or an intangible asset under a service concession arrangement.However, if the Group is paid for the construction services partly by a financial asset and partlyby an intangible asset, it is necessary to account separately for each component of the operator’sconsideration. The consideration received or receivable for both components shall be recognisedinitially at the fair value of the consideration received or receivable.

The segregation of the consideration for a service concession arrangement between the financialasset component and the intangible asset component, if any, requires the Group to make anestimate of a number of factors, which include, inter alia, fair value of the construction services,expected future water treatment volume of the relevant water treatment plant over its serviceconcession period, future guaranteed receipts and unguaranteed receipts, and also to choose asuitable discount rate in order to calculate the present value of those cash ows. These estimates,including revenue recognition under the financial asset and intangible asset components aredetermined by the Group’s management based on their experience and assessment on currentand future market conditions. The carrying amount of the intangible assets (“concession rights”)and financial receivables at the end of the financial year are disclosed in Notes 13 and 14respectively. A net of reversal of impairment loss of intangible assets amounting to RMB20,000,000(2012: Reversal of impairment loss of financial receivables and intangible assets amounting toRMB72,402,000) have been recognised during the financial year. A 5% difference in net reversal of

impairment losses of financial receivables and intangible assets will result in a 0.75% (2012: 2.65%)variance in the Group’s net profit after tax for the year.

Percentage of completion of construction work

The Group recognises contract revenue by reference to the stage of completion of the contractactivity at the end of reporting period. The stage of completion is measured based on Note 3(k) tothe financial statements. Significant assumptions are required to estimate the recoverable variationworks that will affect the stage of completion. The Group reviews and revises the estimates in eachconstruction contract as the contract progresses. A 5% difference in percentage of completion ofconstruction work will result in a 6.36% (2012: 2.66%) variance in the Group’s net profit after taxfor the year.





4 Critical Accounting Estimates, Assumptions and Judgements (cont’d)

(a) Key Sources of Estimation Uncertainty (cont’d)

Impairment of non-financial assets other than investments in subsidiaries and goodwill

The Group assesses whether there are any indicators of impairment for all non-financial assets ateach balance sheet date. Non-financial assets are tested for impairment when there are indicatorsthat the carrying amounts may not be recoverable.

Estimating the value-in-use requires the Group to make an estimate of the expected future cashows from the cash-generating unit and also to choose a suitable discount rate in order to calculatethe present value of those cash ows. For the current financial year, no allowance for impairmenthas been recognised for the Group’s non-financial assets (see Notes 12, 13 and 17 respectively).

Impairment of investments in subsidiaries

The Company assesses at each balance sheet date whether there is any objective evidence thatthe investment in a subsidiary is impaired. To determine whether there is objective evidence ofimpairment, the Company considers factors such as the industry performance, technology changes,operational and financing cash ow. Management will also consider the financial conditions andbusiness prospects of the investment.

Where there is objective evidence of impairment, the amount and timing of future cash ows areestimated based on the forecasted performance of the subsidiary. The carrying amounts of theCompany’s investments in subsidiaries at the balance sheet date are disclosed in Note 15 to thefinancial statements. A 5% increase/decrease in the estimated growth rate and discount rateused would not result in a recoverable amount lower than the carrying amount of investments insubsidiaries.

Impairment of loans and receivables

The Group assesses at each balance sheet date whether there is any objective evidence that afinancial asset is impaired. To determine whether there is objective evidence of impairment, theGroup considers factors such as the probability of insolvency or significant financial difficultiesof the debtor and default or significant delay in payments. Where there is objective evidenceof impairment, the amount and timing of future cash ows are estimated based on historicalloss experience for assets with similar credit risk characteristics. The carrying amount of theGroup’s loans and receivables at the balance sheet date is disclosed in Notes 14, 19, 20 and 21.In prior financial year, a net of reversal of impairment loss of financial receivables amounting toRMB52,402,000 had been recognised for the Group’s financial receivables. During the current

financial year, an allowance for impairment of RMB484,000 (2012: RMB3,883,000) and written offof RMB808,000 (2012: RMB2,000,000) have been recognised for the Group’s other receivables. A5% difference in impairment losses of financial assets will result in a 0.05% (2012: 5% differencein net reversal of impairment losses was 1.70%) variance in the Group’s net profit after tax for theyear.

Impairment of Goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires anestimation of the value-in-use of the cash-generating unit to which goodwill has been allocated.Estimating the value-in-use requires the Group to make an estimate of the expected future cashows from the cash-generating unit and able to choose a suitable discount rate in order to calculate

the present value of those cash ows. The carrying amount of the Group’s goodwill as at 30 June2013 was RMB90,047,000 (2012: Nil). Further details are given in Note 16.





4 Critical Accounting Estimates, Assumptions and Judgements (cont’d)

(a) Key Sources of Estimation Uncertainty (cont’d)

Fair value measurement on contingent consideration on business combination

Contingent consideration, resulting from business combinations, is valued at fair value at theacquisition date as part of the consideration transferred for business combination.

The determination of the fair value is based on profit forecast for the twelve months ended31 December 2013. The key assumption taken into consideration is the performance target ofJiangsu Tongyong Environment Engineering Co., Ltd.

The carrying amount of the contingent consideration on business combination at the end of thereporting period is disclosed in Note 27 (b). A 5% difference in the fair value measurement oncontingent consideration on business combination from management estimates would not have any

impact on the Group’s profit after tax for the year.

Useful lives of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated usefullives. The Group’s management estimates the useful lives of these property, plant and equipmentto be within 4 to 25 years. This estimate is based on the historical experience of the actual usefullives of property, plant and equipment of a similar nature and function. It could change significantlyas a result of technical innovations and competitor actions in response to severe industry cycles.Management will increase the depreciation charge where useful lives are less than previouslyestimated lives, or it will write-off or write-down technically obsolete or non-strategic assets thathave been abandoned or sold. The carrying amount of the Group’s property, plant and equipmentat the balance sheet date is disclosed in Note 12. A 5% difference in expected useful lives of theproperty, plant and equipment from management’s estimates would result in an approximately 0.06% (2012: 0.05%) variance in the Group’s net profit after tax for the year.

(b) Critical Judgements in Applying the Company’s Accounting Policies

In the process of applying the Company’s accounting policies, management has made the following judgements apart from those involving estimation, which have the most significant effect on theamounts recognised in the financial statements.

Fair values of financial instruments

Where the fair values of financial instruments recorded in the statement of financial position cannot

be derived from active markets, they are determined using a variety of valuation techniques thatinclude the use of valuation models. The inputs to these models are derived from observable marketdata where possible, but where observable market data are not available, judgement is required toestablish fair values. The judgements include considerations of liquidity and model inputs regardingvolatility and risk-free rates of return. The valuation of financial instruments is more fully describedin Note 27.





5 Revenue

Group

2013 2012RMB’000 RMB’000

Construction services from service concession arrangement 167,453 72,808

Revenue from construction contract 1,173 –

Finance income from service concession arrangement 181,653 150,550

Discharge fees from water and wastewater treatment 18,852 22,003

369,131 245,361

6 Other Income

Group

2013 2012

RMB’000 RMB’000

Write back of allowance for impairment loss

- Intangible assets (Note 13) 20,000 20,000

- Financial receivables (Note 14) – 52,402

Gain on disposal of service concession rights (Note 13) 21,820 –

Sundry income 8,561 13,001

Net fair value gain on derivatives 4,145 5,664

Gain on disposal of property, plant and equipment 171 –

Foreign exchange gain 79 –

54,776 91,067

Included in sundry income is an amount of RMB6,400,000 (2012: RMB11,800,000) relating to one-timeunconditional grants given by the PRC government.

7 Finance Income

Group

2013 2012

RMB’000 RMB’000

Interest income on bank deposits 376 139





8 Finance Costs

Group

2013 2012RMB’000 RMB’000

Interest expense on:

- bank borrowings 37,947 33,924

- other loans 8,955 3,916

46,902 37,840

Bank charges 218 52

47,120 37,892

9 Profit before Income Tax

Group

2013 2012

RMB’000 RMB’000

This is arrived at after charging the following items:

Included in cost of sales:

- cost of inventories 5,198 6,324

- amortisation of intangible assets 11,140 10,621 Included in administrative expenses:

- amortisation of land use rights 2,019 1,963

- depreciation on property, plant and equipment 1,689 1,456

- rental expense on operating lease 2,751 2,499

- write off of property, plant and equipment (Note 12) 639 79

Included in other operating expenses:

- loss on disposal of property, plant and equipment 192 –

- foreign exchange loss, net 260 927

- write-off of other receivables 808 2,000- repairs and maintenance 9,756 9,682

- allowance for impairment loss of other receivables (Note 19) 484 3,883

Staff costs (including directors’ remuneration):

- directors’ fees 1,135 1,491

- wages and salaries 28,763 24,292

- defined contribution plans 5,383 5,123

- welfare and other benefits 1,475 2,078

- contract termination fees 553 539





9 Profit before Income Tax (cont’d)

Group

2013 2012RMB’000 RMB’000

Audit fees:

- Auditors of the Company 1,899 1,300

- Other auditors 539 262

There are no non-audit fees paid to the Auditors of the Company and Other Auditors.

10 Income Tax

Group

2013 2012

RMB’000 RMB’000

Current tax:

- current year 1,764 (157)

Deferred tax (Note 25):

- current year

- origination of temporary differences 4,871 2,071

- reversal of temporary differences (157) (430)

4,714 1,641

Income Tax 6,478 1,484

The Group’s tax assessable profits were entirely derived by the operations of the Group’s subsidiaries inthe PRC.

A reconciliation of income tax expense and profit before tax multiplied by the applicable corporate taxrates are as follows:

Group

2013 2012

RMB’000 RMB’000

Profit before income tax 105,943 104,127

Income tax calculated at applicable tax rates 30,091 27,503

Tax concession (5,287) (1,871)

Non-taxable income (12,260) (30,303)

Non-deductible expenses 737 9,698

Net deferred tax assets utilised (6,803) (3,543)

6,478 1,484





10 Income Tax (cont’d)

The effect of non-taxable income is determined by applying the respective statutory rate of tax to non-taxable income arising from disposal of service concession rights, government grant and impairment loss

written back as disclosed in Note 6.

Foreign invested manufacturing enterprises in the PRC are entitled to full exemption from EnterpriseIncome Tax (“EIT”) for the first two years and a 50% reduction in the tax rate for the next three years,commencing from the first profitable year of operation after offsetting all tax losses brought forward fromprevious years (at most five years) (“Tax Holiday”).

As at the end of the financial year, certain of the Group’s subsidiaries in the PRC have unutilised taxlosses of approximately RMB138,619,000 (2012: RMB165,834,000) which are available for offset againstfuture taxable profits provided that the provisions of the PRC tax legislation are complied with. Therelated deferred tax benefits of approximately RMB34,655,000 (2012: RMB41,458,000) arising from theunutilised tax losses have not been recognised in the financial statements in accordance with Note 3(t).

As at 30 June 2013, the aggregate amount of temporary differences associated with undistributedearnings of the subsidiaries of the Group for which no deferred tax liability has been recognised amountedto RMB33,679,000 (2012: RMB49,850,000). In accordance with Note 3(t), the deferred tax liability notrecognised is estimated to be RMB3,368,000 (2012: RMB4,985,000).

11 Earnings Per Share

(a) Basic earnings per share

Basic earnings per share is calculated on the Group’s net profit for the year attributable to equityholders of the Company divided by the weighted average number of ordinary shares outstandingduring the financial year.

Group

2013 2012

Profit for the year attributable to equity holders of theCompany (RMB’000) 99,465 102,643

Weighted average number of ordinary shares outstandingduring the year (’000) 4,174,874 4,161,825

Basic earnings per share (RMB) 0.02 0.02





11 Earnings Per Share (cont’d)

(b) Diluted earnings per share

Diluted earnings per share is calculated by dividing the profit for the year attributable to equityholders of the Company by the weighted average number of ordinary shares outstanding afteradjusting for the effects of all dilutive potential ordinary shares, being the outstanding warrantsissued by the Company which are assumed to have been converted into ordinary shares at thebeginning of the financial year and the profit for the year is adjusted to eliminate the fair value gainon warrants.

Group

2013 2012

Profit for the year attributable to equity holders of the

Company (RMB’000) 99,465 102,643Fair value gain on financial liabilities-warrants (RMB’000) (4,145) (5,664)

Adjusted profit used to determine diluted earnings per share(RMB’000) 95,320 96,979

Weighted average number of ordinary shares outstandingduring the year for basic earnings per share (’000) 4,174,874 4,161,825

Adjustment for warrants (’000) 8,872 2,923

Adjustment for contingent consideration payable (‘000) 5,425 –

Adjusted weighted average number of ordinary shares (’000) 4,189,171 4,164,748

Diluted earnings per share (RMB) 0.02 0.02

* The diluted earnings per share is the same as the basic earnings per share as the effect of the warrants is

anti-dilutive.





12 Property, Plant and Equipment

Machinery

Motor vehicles

& officeequipment Leaseholdimprovements Total

RMB’000 RMB’000 RMB’000 RMB’000

Group

2013

Cost

As at 1 July 2012 3,208 20,530 402 24,140

Additions 641 725 409 1,775

Acquisition of subsidiaries 18 2,235 – 2,253

Disposals – (144) – (144)

Write off – (812) – (812)

As at 30 June 2013 3,867 22,534 811 27,212

Accumulated depreciationand impairment losses

As at 1 July 2012 3,128 14,750 39 17,917

Charge for the year 52 1,504 133 1,689

Disposals – (50) – (50)

Write off – (173) – (173)

As at 30 June 2013 3,180 16,031 172 19,383

Net book value

As at 30 June 2013 687 6,503 639 7,829

2012

Cost

As at 1 July 2011 3,024 18,430 – 21,454

Additions 194 2,171 402 2,767

Write off (10) (71) – (81)

As at 30 June 2012 3,208 20,530 402 24,140

Accumulated depreciationand impairment losses

As at 1 July 2011 2,939 13,524 – 16,463

Charge for the year 189 1,228 39 1,456

Write off – (2) – (2)

As at 30 June 2012 3,128 14,750 39 17,917

Net book value

As at 30 June 2012 80 5,780 363 6,223





12 Property, Plant and Equipment (cont’d)

Motor vehicles Total

RMB’000 RMB’000

Company

2013

Cost

As at 1 July 2012 402 402

Write off (383) (383)

As at 30 June 2013 19 19

Accumulated depreciation

As at 1 July 2012 8 8

Charge for the year 1 1

Write off (7) (7)

As at 30 June 2013 2 2

Net book value

As at 30 June 2013 17 17

2012

Cost

As at 1 July 2011 – –

Additions 402 402

As at 30 June 2012 402 402

Accumulated depreciation

As at 1 July 2011 – –

Charge for the year 8 8

As at 30 June 2012 8 8

Net book value

As at 30 June 2012 394 394





13 Intangible Assets

Concessionrights Computersoftware Patents andTrademark Total

RMB’000 RMB’000 RMB’000 RMB’000

Group

2013

Cost

As at 1 July 2012 586,530 787 – 587,317

Additions 5,146 402 – 5,548

Acquisition of subsidiary – – 27,216 27,216

Disposals (229,933) – – (229,933)

As at 30 June 2013 361,743 1,189 27,216 390,148

Accumulated amortisation andimpairment

As at 1 July 2012 372,077 – – 372,077

Additions 11,140 – – 11,140

Disposals (229,933) – – (229,933)

Reversal of impairment lossrecognised in profit or loss (20,000) – – (20,000)

As at 30 June 2013 133,284 – – 133,284

Net book value

As at 30 June 2013 228,459 1,189 27,216 256,864

2012

Cost

As at 1 July 2011 577,166 – – 577,166

Additions 9,364 787 – 10,151

As at 30 June 2012 586,530 787 – 587,317

Accumulated amortisation andimpairment

As at 1 July 2011 381,456 – – 381,456

Additions 10,621 – – 10,621

Reversal of impairment lossrecognised in profit or loss (20,000) – – (20,000)

As at 30 June 2012 372,077 – – 372,077

Net book value

As at 30 June 2012 214,453 787 – 215,240





13 Intangible Assets (cont’d)

The significant aspects of the service concession arrangements are summarised as follows:

(a) The arrangements are concession arrangements for water/wastewater treatment plants with variousmunicipal governments in the PRC under INT FRS 112 Service Concession Arrangements . As thecounterparties of the service concession arrangements are municipal governments in the PRC,management is of the view that the associated credit risk is not significant.

(b) The intangible assets of concession rights arose from three water/wastewater treatment plantslocated in various cities in the PRC. For these arrangements with concession years ranging between25 years to 32 years, the Group receives the right to charge users a fee for using the serviceswhich the grantor will collect and pay to the operator at fees agreed.

(c) All the water/wastewater treatment arrangements state the rights and obligations for the grantorand operator as follows:

(i) The operator has the obligation to treat the required amount of water/wastewater and also toensure the treated water fulfills the standard quality requirement of the grantor.

(ii) The infrastructure including the plant and equipment, “know-how”, operations manual, hand-over report, design of infrastructure and related documents, for the wastewater treatmentplant will be transferred over to the grantor or any grantor appointed agencies at the end ofthe concession period.

(iii) The arrangement is terminated only when the other party breaches the contract or due tounforeseeable circumstances.

(iv) The operator has the obligation to maintain and restore the water/wastewater plant to its

operational condition upon transferring to the grantor at the end of the concession period.

(d) During the current financial year, the service concession rights held by the Group for two water/wastewater treatment plants were disposed to third parties for RMB40,671,900. The net gainarising from the disposal of the service concession rights amounted to RMB21,820,000 (Note 6). Asat balance sheet date, the fair value of the outstanding proceeds due in one year and due in morethan one year amounted to RMB13,026,000 (Note 19) and RMB17,052,000 (Note 19) respectively.

(e) During the current financial year, the Group has reversed an impairment loss of RMB20,000,000(2012: RMB20,000,000) in respect of the intangible assets of the plant located in XianyangCity, PRC (collectively the “Xianyang Plant”). The impairment written back is made based onmanagement’s estimation of the recoverable amounts using value-in-use calculations. Consideration

includes increase in actual volume of water processed and government approval on expansion ofexisting plant.

(f) As at 30 June 2013, the carrying amount of intangible assets that amounted to RMB228,459,000(2012: RMB214,453,000), are pledged to secure additional loans taken up by the Group in FY2013.As at balance sheet date, the outstanding loans amounted to RMB98,724,000 (2012: Nil).





13 Intangible Assets (cont’d)

(g) The key management assumptions for the value-in-use calculations are those regarding the discountrates and expected cash ows generated from the concession arrangements during the concession

period. Management estimates discount rates using pre-tax rates that reect current marketassessments of the time value of money and the risk specific to the cash generating units. Expectedcash ows are based on past experience, terms of concession arrangement and expectations offuture changes in the market.

Based on the Group’s average interest rate of return and growth rate for the plants, the Groupprepares cash ow forecasts derived from the most recent financial forecasts approved bymanagement using an average discount rate of 7.5 % (2012: 7.5%).

14 Financial Receivables

Group

2013 2012

RMB’000 RMB’000

Current 34,583 33,200

Non-current 1,972,006 1,817,500

2,006,589 1,850,700

The significant aspects of the service concession arrangements are summarised as follows:

(a) The arrangements are concession arrangements for water/wastewater treatment plants with variousmunicipal governments in the PRC under INT FRS 112 Service Concession Arrangements . As thecounterparties of the service concession arrangements are municipal governments in the PRC,management is of the view that the associated credit risk is not significant.

(b) These water/wastewater treatment plants which are located in 8 different cities in the PRC haveconcession years ranging between 25 years to 30 years, of which the Group has a contractual rightunder concession arrangements to receive a fixed and determinable amount of payments during theconcession period irrespective of the usage of the plants. Under the terms of the arrangements, theGroup will receive a yearly minimum amount of RMB193,217,000 (2012: RMB182,275,000) fromthe contracted parties (grantors) in exchange for services performed by the Group.

The rights and obligations of these water/wastewater treatment arrangements are the same as

those disclosed in Note 13.

(c) The wastewater treatment plants with service concession receivables amounting toRMB363,907,000 (2012: RMB681,729,000) are pledged to secure the loans amounting toRMB62,112,000 (2012: RMB85,667,000) for the Group.

(d) The fair value of the non-current portion of financial receivables approximates its carrying amount,as management is of the opinion that the effective interest rates used are similar to market interestrates.





14 Financial Receivables (cont’d)

(e) The Group tests financial receivables annually for impairment or more frequently if there areindications that financial receivables might be impaired. Due to revisions in guaranteed amounts

receivable from the municipal governments in certain plants, management estimates the recoverableamounts of the cash generating units based on value-in-use calculations. The key assumptionsfor the value-in-use calculations are those regarding the discount rates and expected cash owsgenerated from the concession arrangements during the concession period. Management estimatesdiscount rates using pre-tax rates that reect current market assessments of the time value ofmoney and the risk specific to the cash generating units. Expected cash ows are based on pastexperience, terms of concession arrangement and expectations of future changes in the market.

The Group prepares cash ow forecasts derived from the most recent financial forecasts approvedby management using an average discount rate of 7.5% (2012: 7.5%) based on the Group’saverage internal rate of return and growth rate for the plants.

Based on the assessment for the financial year ended 30 June 2012, the Group had written back a netimpairment loss of RMB52,402,000 (Note 6). Considerations included the increase in unit discharge feesand government approval on expansion or upgrade of plants.

15 Investments in Subsidiaries

Company

2013 2012

RMB’000 RMB’000

Unquoted equity shares, at cost

At the beginning of the financial year 262,409 261,882

Addition – 527

At the end of the financial year 262,409 262,409

Details of the subsidiaries at the end of the financial year are as follows:

Country of Effective interest

incorporation held by the Group

Name of company Principal activities and operation 2013 2012

% %

Held by the Company

Ocean Force InternationalLimited

Investment holding British VirginIslands (“BVI”)

100 100

Joyer International Ltd Investment holding BVI 100 100

Aqua Shine Group Limited Investment holding BVI 100 100

HanKore International Pte Ltd Investment holding Singapore 100 100





15 Investments in Subsidiaries (cont’d)

Details of the subsidiaries at the end of the financial year are as follows: (cont’d)




% %

Held by subsidiaries

Bio-Treat Resources Limited Investment holding BVI 100 100

Bio-Treat International Limited Investment holding BVI 100 100

Ocean Master InternationalLimited

Investment holding BVI 100 100

Sky Billion Limited Investment holding BVI 100 100

Newsussex International Limited Investment holding BVI 100 100

Biopower International Limited Investment holding BVI 100 100

True Global Limited Investment holding BVI 100 100

World Pioneer Investments

Limited

Investment holding BVI 100 100

Trademart DevelopmentsLimited

Dormant BVI 100 100

Perfect Grace InvestmentsLimited

Dormant Hong Kong 100 100

Great Lucky Holdings GroupLimited


Profit Choice Investments

Limited


Oriental Fortune Limited Investment holding Hong Kong 100 100

New Efficient Limited Investment holding BVI 100 100

Beijing Hankelin EnvironmentalTechnology Co., Ltd

Investment holding andprovision of managementservice

PRC 100 100










% %

Held by subsidiaries (cont’d)

Sanmenxia HanKore Co., Ltd Construction and operation ofwastewater treatment plantfor provision of wastewatertreatment services

PRC 100 100

Xianyang Bai Sheng ShuiPurifying Co., Ltd.

Construction and operation ofwastewater treatment plantfor provision of wastewatertreatment services

PRC 100 100

Lianyungang King FortuneWater Co., Ltd


PRC 100 100

Suqian City Cheng BeiWastewater Treatment Co.,

Ltd

Construction and operation ofwastewater treatment plant

for provision of wastewatertreatment services

PRC 100 100

Suqian City Cheng Bei WaterTreatment Co., Ltd.


PRC 100 100

Kunshan Gang Dong WastewaterTreatment Co., Ltd


PRC 100 100

Nanjing Golden Idea WaterDevelopment Co., Ltd.


PRC 100 100

Beijing Bio-Treat Water Co., Ltd Construction and operation ofwastewater treatment plantfor provision of wastewatertreatment services

PRC 100 100










% %


Suzhou Jin Di Water Co., Ltd Construction and operation ofwastewater treatment plantfor provision of wastewatertreatment services

PRC 100 100

Nanjing Jin Huan WaterDevelopment Co., Ltd


PRC 100 100

Binzhou Jin Di Co., Ltd Construction and operation ofwastewater treatment plantfor provision of wastewatertreatment services

PRC 100 100

Yangzhou HanKore WaterDevelopment Co., Ltd

Construction and operation ofwastewater treatment plant

for provision of wastewatertreatment services

PRC 100 100

Liquan HanKore Water Co., Ltd Construction and operation ofwastewater treatment plantfor provision of wastewatertreatment services

PRC 100 100

Beijing Hankesen EnvironmentalTechnology Co., Ltd

Provide environmental protectiontechnologies, research anddevelopment of environmentalprotection products, consultancy

and development services ofwastewater treatmenttechnologies

PRC 100 100

Victor Best Holdings Ltd(1) Investment holding BVI 100 –

Tianjin Hanquan EnvironmentTechnology Limited(1)

Investment holding PRC 100 –










% %


Jiangsu Tongyong EnvironmentEngineering Co., Ltd(1)

Engineering, procurement andconstruction of equipmentproduction, provision of equipmentinstallation and design andconstruction of water treatment

engineering.

PRC 100 –

(1) These subsidiaries are acquired during the current financial year.

All the subsidiaries are audited by Moore Stephens LLP, Singapore for group consolidation purpose.

16 Goodwill

On 23 May 2013, the Group acquired equity interests of 100% in Victor Best Holdings Ltd. On the date ofacquisition, Victor Best Holdings Ltd was the immediate and ultimate holding company of Tianjin HanquanEnvironment Technology Limited and Jiangsu Tongyong Environment Engineering Co., Ltd (collectively the

“Target Group”). The total purchase consideration of the acquisition of Victor Best Holdings Ltd and itssubsidiaries is RMB116,511,000.

Consideration transferred

2013

RMB’000

Cash 21

Issuance of ordinary shares of the Company (a) 77,660

Contingent consideration arrangement (b) 38,830

Total 116,511

(a) In current year, 360,000,000 new ordinary shares of the Company have been issued as part of thepurchase consideration of the acquisition of the Target Group.





16 Goodwill (cont’d)

Consideration transferred (cont’d)

(b) The Group is required to pay the vendors an additional share consideration of 180,000,000 ordinaryshares of the Company (“Share Consideration”) and a cash consideration of up to RMB30,000,000(“Cash Consideration”) based on the following:

– If Jiangsu Tongyong Environment Engineering Co., Ltd’s December 2013 audited net profit(“Audited Net Profit”) does not meet RMB15,300,000, the Group will not issue the ShareConsideration or pay any Cash Consideration;

– If Jiangsu Tongyong Environment Engineering Co., Ltd’s December 2013 audited netprofit exceeds RMB15,300,000 but under RMB23,000,000, the Group will issue the ShareConsideration but will not pay any Cash Consideration; or

– If Jiangsu Tongyong Environment Engineering Co., Ltd’s December 2013 audited net profitexceeds RMB23,000,000, the Group will issue the Share Consideration and pay a CashConsideration that is calculated as follows:

(Audited Net Profit-RMB23,000,000) x 3

These Share Consideration has been taken up in other financial liabilities (see Note 27(b)) on the basis asfurther disclosed in Note 4(b).

Identified assets acquired and liabilities assumed on date of acquisition

2013

RMB’000At fair value

Cash and cash equivalents 3,888

Trade and other receivables and other current assets 8,792

Property, plant and equipment 2,253

Inventories 297

Intangible asset 27,216

Trade and other payables (8,052)

Amount due to Group (1,609)

Deferred tax liabilities (6,300)

Total identifiable net assets 26,485

Goodwill arising from acquisition 90,047

Less: Cash and cash equivalents of subsidiaries acquired (3,888)

Less: Cash consideration paid (21)

Less: Purchase consideration settled via issuance of ordinary shares of the Company (77,660)

Less: Contingent consideration payable (38,830)

Net cash inow on acquisition of subsidiaries (3,867)





16 Goodwill (cont’d)

Impact of acquisitions on the results of the Group

From the date of acquisitions, prior to intercompany elimination at Group level, the Target Groupcontributed total revenue of approximately RMB42,681,000 and profit for the year of approximatelyRMB11,439,000. If the acquisitions had occurred on 1 July 2012, the revenue of the Group would havebeen RMB369,175,000, and the profit of the Group for the year would have been RMB98,552,000.

Impairment of goodwill

The goodwill was assessed for impairment as at the balance sheet date. The recoverable amount of thecash-generating unit (“CGU”) is determined based on value-in-use calculations. The key assumptions forthe value-in-use calculations are as follows:

2013

1. Estimated discount rates using pre-tax rates that reect currentmarket assessments of the risks specific to the CGU

7.5%

2. Cash ow forecasts (5 years) derived from the most recentfinancial budgets approved by management

RMB123,694,000

3. Gross margin 24.0%

These assumptions were used for the analysis of the CGU. Management recognises the speed oftechnological change and the possibility of new entrants that can have a significant impact on the growthrate assumptions. The effect of new entrants is not expected to have a significant adverse impact onthe forecasts included in the budget. The budgeted gross margin is based on past performance and

expectations of market development.

Based on management’s assessment of the recoverable amounts of the CGU, no impairment on goodwillwas required as at 30 June 2013.

Sensitivity analysis

Management considered the possibility of an increase or decrease in the estimated growth rate andincrease in the discount rate used. A 5% decrease in the estimated growth rate and increase in thediscount rate used would not result in the recoverable amount lower than the carrying amount of goodwill.





17 Land Use Rights

Land use rights

RMB’000

Group

2013

Cost

As at 1 July 2012 and 30 June 2013 49,922

Accumulated amortisation

As at 1 July 2012 9,907

Additions 2,019

As at 30 June 2013 11,926

Net book value

As at 30 June 2013 37,996

2012

Cost

As at 1 July 2011 and 30 June 2012 49,922

Accumulated amortisation

As at 1 July 2011 7,944

Additions 1,963

As at 30 June 2012 9,907

Net book value

As at 30 June 2012 40,015

18 Inventories

Group

2013 2012

RMB’000 RMB’000

At cost:

Raw materials and consumables 3,345 758





19 Trade and Other Receivables

Group Company

2013 2012 2013 2012RMB’000 RMB’000 RMB’000 RMB’000

Non-current

Other receivables 17,052 – – –

Current

Trade receivables – third parties 45,473 44,323 – –

Due from subsidiaries – – 1,910,379 1,803,454

Due from a related party – 8 – –

Other receivables 13,026 – – –

Sundry debtors 30,920 18,094 – –

89,419 62,425 1,910,379 1,803,454

Less: Allowance for impairment loss (4,367) (3,883) – –

85,052 58,542 1,910,379 1,803,454

Other receivables pertain to outstanding proceeds arising from the disposals of service concession rightsheld by two subsidiaries of the Group in current year (Note 13(d)).

Trade receivables are non-interest bearing and are generally on 30 to 90 days terms.

The amounts due from subsidiaries and a related party are non-trade in nature, unsecured, interest-freeand repayable on demand.

The movement in the allowance for impairment loss is as follows:

Group

2013 2012

RMB’000 RMB’000

At the beginning of the year 3,883 –

Addition 484 3,883

At the end of the year 4,367 3,883

Sundry debtors includes amount due from former subsidiaries of RMB3,883,000 (2012: RMB3,883,000)and amount due from third parties amounting to RMB484,000 (2012: RMB2,000,000). Owing to the slowand uncertain settlement of the debt, an allowance for impairment loss of RMB484,000 was made andrecognised in profit or loss for a third party. In addition, an amount of RMB808,000 were fully written-offas management considered them to be not recoverable from a third party.

In prior year, management has fully impaired the amount due from former subsidiaries amounting toRMB3,883,000 and fully written-off the amount due from a third party amounting to RMB2,000,000 asmanagement considered them to be not recoverable.

The sundry debtors are non-interest bearing, non-trade in nature, unsecured and repayable on demand.





20 Other Current Assets

Group Company

2013 2012 2013 2012RMB’000 RMB’000 RMB’000 RMB’000

Deposits for bidding and contractssecured 4,600 4,600 – –

Sundry deposits 2,075 1,890 – –

6,675 6,490 – –

Prepayments to former shareholderof a subsidiary 47,523 – – –

Prepayments 21,240 3,594 409 48

68,763 3,594 409 48

75,438 10,084 409 48

Other current assets are

denominated in:

Renminbi 75,233 10,084 409 48

Singapore dollar 205 – – –

75,438 10,084 409 48

As at 30 June 2012, included in prepayments was the prepaid transaction cost of RMB422,400 asdisclosed in Note 24(a)(ix).

Prepayment to former shareholder of a subsidiary is in relation with the prepayment made to the formershareholder of Jiangsu Tongyong Environment Engineering Co., Ltd for the constructions of wastewaterplants of the Group.

21 Cash and Bank Balances

Group Company

2013 2012 2013 2012

RMB’000 RMB’000 RMB’000 RMB’000

Cash on hand 46 17 – –

Cash at banks 102,065 81,827 252 987

Short-term bank deposits 16,000 2,000 – –

118,111 83,844 252 987

Bank balances bear an average interest rate of 1.11% (2012: 1.12%) per annum. Short-term bankdeposits at the balance sheet date have a maturity period of 6 months (2012: 3 and 6 months) from theend of the financial year and bear an average interest rate of 0.39% (2012: 0.4%) per annum.





21 Cash and Bank Balances (cont’d)

For the purposes of the consolidated statement of cash ows, cash and cash equivalents comprised:

Group

2013 2012

RMB’000 RMB’000

Cash and bank balances 118,111 83,844

Less: Restricted bank balances (16,000) (2,000)

102,111 81,844

The restricted bank balances relate to bank deposits pledged to bank for bill payables (Note 26).

22 Share Capital

Group and Company

2013 2013 2012 2012

No. of

ordinary shares

of HK$0.10

each RMB’000

No. of

ordinary shares

of HK$0.10

each RMB’000

Authorised share capital

As at beginning and endof the year 6,000,000,000 672,146 6,000,000,000 672,146

Issued and fully paid

As at 1 July 4,161,824,947 380,040 4,141,182,643 378,356

Issue of shares for acquisitionof subsidiaries (Note 16) 360,000,000 28,695 – –

Issue of shares for exerciseof warrants (Note 27 (a)(i)) 6,260,530 507 20,642,304 1,684

As at 30 June 4,528,085,477 409,242 4,161,824,947 380,040

All issued ordinary shares are fully paid.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and areentitled to one vote per ordinary share at meetings of the Company. All ordinary shares rank equally withregards to the Company’s residual assets.





23 Reserves

Group Company

2013 2012 2013 2012RMB’000 RMB’000 RMB’000 RMB’000

Share premium 1,221,672 1,171,715 1,221,672 1,171,715

Foreign currency translation reserve 1,977 1,977 – –

Statutory reserve 62,785 62,785 – –

Retained earnings/(Accumulated losses) 14,708 (84,757) 490,068 503,757

1,301,142 1,151,720 1,711,740 1,675,472

The movements of the Group’s reserves are set out in the Group’s consolidated statement of changes inequity.

(i) Share premium

The share premium account may be applied only for the purposes specified in the Companies Act1981 of Bermuda.

(ii) Foreign currency translation reserve

The foreign currency translation reserve is used to record foreign exchange differences arising fromthe translation of the financial statements of group entities whose functional currency is differentfrom that of the Group’s presentation currency.

(iii) Statutory reserve

The Group’s subsidiaries which are incorporated in the PRC are required to appropriate 10% of theprofit arrived at in accordance with PRC Generally Accepted Accounting Practices for each year to astatutory reserve. The profit arrived at must be used to set off against any accumulated losses. Theappropriation to statutory reserve after offsetting against any accumulated losses must be madebefore the distribution of dividends to shareholders. The appropriation is required until the statutoryreserve reaches 50% of the registered capital. This statutory reserve is not distributable in the formof cash dividends.





24 Borrowings

Group

2013 2012RMB’000 RMB’000

Non-current

Bank borrowings at amortised cost (a) 446,941 364,571

Other loans at amortised cost (b) 20,270 30,600

467,211 395,171

Current

Bank borrowings at amortised cost (a) 135,794 121,836

Other loans at amortised cost (b) 39,491 52,000

175,285 173,836

642,496 569,007

(a) Bank borrowings at amortised cost

Group

2013 2012

RMB’000 RMB’000

Current:

Borrowing I – 10,880

Borrowing II 79,000 77,000

Borrowing III 7,500 7,500

Borrowing IV 4,500 4,000

Borrowing V – 7,000

Borrowing VI 2,300 1,900

Borrowing VII 5,556 5,556

Borrowing VIII 8,500 8,000

Borrowing X 13,000 –

Borrowing XI 9,000 –

Borrowing XII 6,438 –

135,794 121,836





24 Borrowings (cont’d)

(a) Bank borrowings at amortised cost (cont’d)

Group

2013 2012

RMB’000 RMB’000

Non-current:

Borrowing II 166,000 208,000

Borrowing III 29,500 37,000

Borrowing IV 21,500 26,000

Borrowing V – 7,000

Borrowing VI 13,200 15,500

Borrowing VII 30,556 36,111Borrowing VIII – 8,500

Borrowing IX 45,035 26,460

Borrowing X 29,793 –

Borrowing XI 46,931 –

Borrowing XII 64,426 –

446,941 364,571

Total bank borrowings at amortised cost 582,735 486,407

Non-current bank borrowings are repayable as follows:

1 to 5 years 421,469 283,443After 5 years 25,472 81,128

446,941 364,571

(i) Borrowing I

Borrowing I relates to a term loan facility amounting to RMB65,280,000 granted by a financialinstitution to a subsidiary of the Group to finance the subsidiary’s acquisition of a wastewatertreatment plant located in Lianyungang City, PRC.

This facility was fully drawn down in prior year and the balance outstanding at 30 June 2012has been fully repaid during the year. The loan was scheduled to be repaid within six years,with twelve equal installments of RMB5,440,000 each to be paid semi-annually in every Marchand September of the year, with the first installment commencing from September 2007. Theloan incurred an effective interest of 6.48 % (2012: 6.34%) per annum.






(a) Bank borrowings (cont’d)

(ii) Borrowing II

Borrowing II relates to a term loan facility amounting to RMB390,000,000 granted by afinancial institution to a subsidiary of the Group to finance its construction of a wastewatertreatment plant located in Suzhou City, PRC.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB245,000,000 (2012: RMB285,000,000). The loan is scheduled to be repaid, commencingfrom November 2009, by two equal installments of RMB30,000,000 each over the first twoyears, followed by an installment of RMB45,000,000 for the third year, and an installment ofRMB77,000,000 for the fourth year, and another four equal installments of RMB42,000,000each over the following four years, and a last installment of RMB40,000,000 by November

2017.

During the year, the loan is rescheduled to be repaid, RMB40,000,000 for the fourth year,RMB79,000,000 for the fifth year, and another three equal installments of RMB42,000,000each over the following three years, and a last installment of RMB40,000,000 by November2017. As a result, repayment during the year amounted to RMB40,000,000. The loan incurredeffective interest at 6.73 % (2012: 7.05%) per annum.

The term loan facility granted to the subsidiary includes the following covenants:

l Receipts from trade receivables from the operation of the wastewater treatment plantshall be processed through the financial institution.

l No dividends to shareholders of the subsidiary shall be declared or paid until fullrepayment of the loan.

l Assets of the wastewater treatment plant shall not be pledged or assigned to thirdparties.

(iii) Borrowing III

Borrowing III relates to a term loan facility amounting to RMB60,000,000 granted by afinancial institution to a subsidiary of the Group to finance its construction of a wastewatertreatment plant located in Beijing City, PRC.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB37,000,000 (2012: RMB44,500,000). In prior year, the original loan repayment wasrescheduled to be repaid, commencing from May 2011, by first installment of RMB1,250,000during the first year, followed by RMB5,500,000 in the second year, RMB6,750,000 in thethird year, five equal installments of RMB7,500,000 each year by 2017, and RMB7,000,000 in2018. The loan incurred effective interest at 6.80 % (2012: 6.80%) per annum.



l Guarantee from a former subsidiary, Golden Idea Bio-Engineering (Dongguan) Co., Ltd.







(iv) Borrowing IV

Borrowing IV relates to a term loan facility amounting to RMB42,000,000 granted by afinancial institution to a subsidiary of the Group to finance its construction of a wastewatertreatment plant located in Nanjing City, PRC.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB26,000,000 (2012: RMB30,000,000). The loan is rescheduled to be repaid, semi-annually in every May and October of the year, commencing from May 2011, by four equalinstallments of RMB1,500,000, followed by two equal installments of RMB2,000,000 each.Since then, quarterly in every March, June, September and December of the year, by eightequal installments of RMB1,000,000 each, twelve equal installments of RMB1,250,000 each,

four equal installments of RMB1,500,000 each and a last installment of RMB3,000,000 byMarch 2018. The loan incurred effective interest at 6.48% (2012: 7.05%) per annum.


l Upon completion of the construction of the wastewater treatment plant (the “assets”)in Nanjing City, PRC, the assets shall be pledged to the bank.


(v) Borrowing V

Borrowing V relates to a term loan facility amounting to RMB35,000,000 granted by afinancial institution to a subsidiary of the Group to finance the subsidiary’s acquisition of awastewater treatment plant located in Lianyungang City, PRC.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 hasbeen fully repaid during the year (2012: RMB14,000,000) . The loan was scheduled to berepaid within five years, with ten equal installments of RMB3,500,000 each to be paid semi-annually in every February and August of the year, with the first installment commencing fromAugust 2009. The loan incurred effective interest at 6.62% (2012: 7.04%) per annum.


l Daily bank balances shall not be less than RMB250,000.

l Assets of the wastewater treatment plant shall be pledged to the bank.







(iv) Borrowing VI

Borrowing VI relates to a term loan facility amounting to RMB20,000,000 granted by afinancial institution to a subsidiary of the Group to finance its construction of a wastewatertreatment plant located in Nanjing City, PRC.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB15,500,000 (2012: RMB17,400,000). The loan is scheduled to be repaid, annuallyin every November of the year, by nine installments with first installment of RMB200,000in 2009, RMB1,000,000 in 2011, RMB1,400,000 in 2012, RMB1,900,000 in 2013,RMB2,400,000 in 2014, RMB2,700,000 in 2015, RMB3,000,000 in 2016, RMB3,500,000 in2017 and last installment of RMB3,900,000 in 2018. The loan incurred effective interest at

8.84% (2012: 8.84%) per annum.

The term loan facility granted to the subsidiary includes the following covenant:


(vii) Borrowing VII

Borrowing VII relates to a term loan facility amounting to RMB100,000,000 granted by afinancial institution to a subsidiary of the Group to finance the subsidiary’s construction of awastewater treatment plant located in Kunshan City, PRC.

This facility has been partially drawn down and the balance outstanding at 30 June 2013 isRMB36,112,000 (2012: RMB41,667,000). The loan is scheduled to be repaid in 36 quarterlyinstallment with first installment of RMB1,389,000 starting in March 2011. The loan incurredeffective interest at 6.55% (2012: 6.39%) per annum.


l Assets of the wastewater treatment plant shall be pledged to the bank.

(viii) Borrowing VIII

Borrowing VIII relates to a long term facility amounting to RMB30,000,000 granted bya financial institution to a subsidiary of the Group in prior year to finance the subsidiary’s

working capital requirement.

This facility has been partially drawn down and the balance outstanding at 30 June 2013is RMB8,500,000 (2012: RMB16,500,000). The loan is scheduled to be repaid by twoinstallments of RMB8,000,000 in 2013 and RMB8,500,000 in 2014. The loan incurredeffective interest at 7.65% (2012: 6.80%) per annum.



l Guarantee from a third party, Jiangsu Tongyong Huanbao Co., Ltd.







(ix) Borrowing IX

Borrowing IX relates to a long term facility amounting to RMB48,120,000 granted bya financial institution to a subsidiary of the Group in prior year to finance the subsidiary’sworking capital requirement.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB45,035,000 (2012: RMB26,460,000), net of transaction cost of RMB3,417,000. Inprior financial year, RMB422,400 was reected as prepayment as at 30 June 2012 (Note20). The loan is scheduled to be repaid, semi-annually in every July and December of theyear, by sixteen installments with first installment of RMB4,500,000 and RMB500,000 in2015, RMB5,500,000 and RMB500,000 in 2016, RMB6,500,000 and RMB500,000 in 2017,

RMB6,500,000 and RMB500,000 in 2018, RMB5,500,000 and RMB500,000 in 2019, 2020and 2021, and last installment of RMB5,000,000 and RMB120,000 in 2022. The loan incurredeffective interest at 7.48% (2012: 7.48%) per annum.




l Guarantee from related companies, Xianyang Bai Sheng Shui Purifying Co., Ltd andSuzhou Jin Di Water Co., Ltd.

(x) Borrowing X

Borrowing X relates to a long term facility amounting to RMB44,000,000 granted by afinancial institution to a subsidiary of the Group during the year to finance its construction ofa wastewater treatment plant located in Xianyang City, PRC.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB42,793,000 (2012: Nil), net of transaction cost of RMB1,207,000. The loan is scheduledto be repaid within five years commencing in 2014, by three installments in the first yeartotaling RMB13,000,000, two installments in the second and third years of RMB10,000,000

each, one installment in the fourth year of RMB5,000,000 and last installment ofRMB6,000,000 in 2018. The loan incurred effective interest at 7.48% (2012: Nil) per annum.


l Intangible assets of the wastewater treatment plant shall be pledged to the bank; and

l Guarantee from related company, Suzhou Jin Di Water Co., Ltd.







(xi) Borrowing XI

Borrowing XI relates to a long term facility amounting to RMB98,000,000 granted by afinancial institution to a subsidiary of the Group during the year to finance its construction ofa wastewater treatment plant located in Xianyang City, PRC.

This facility has been partially drawn down and the balance outstanding at 30 June 2013 isRMB55,931,000 (2012: Nil), net of transaction cost of RMB4,069,000. The loan is scheduledto be repaid semi-annually within six years, commencing in June 2014 with installment ofRMB9,000,000, RMB19,000,000 in 2015, RMB20,000,000 from 2016 to 2018 and lastinstallment of RMB10,000,000 in 2019. The loan incurred effective interest at 7.48% (2012:Nil) per annum.


l Intangible assets of the wastewater treatment plant shall be pledged to the bank; and

l Guarantee from related company, Suzhou Jin Di Water Co., Ltd.

(xii) Borrowing XII

Borrowing XII relates to the long term facility amounting to RMB80,000,000 granted by afinancial institution to a subsidiary of the Group during the year to finance the subsidiary’sworking capital requirement.

This facility has been fully drawn down and the balance outstanding at 30 June 2013is RMB70,864,000 (2012: Nil), net of transaction cost of RMB7,385,000. The loan isscheduled to be repaid within ten years, quarterly commencing in 2013 with RMB1,750,000,RMB7,250,000 in 2014, RMB8,250,000 in 2015 and 2016, RMB9,000,000 in 2017and 2018, RMB10,000,000 in 2019, RMB10,500,000 in 2020, RMB9,000,000 in 2021,RMB4,500,000 in 2022 and RMB2,500,000 in 2023. The loan incurred effective interest at7.53% (2012: Nil) per annum.


l Guarantee from related companies, Beijing Hankelin Environmental Technology Co., Ltdand Binzhou Jin Di Co., Ltd.






(b) Other loans

Group

2013 2012

RMB’000 RMB’000

Current:

Other loan I – 10,000

Other loan II 20,000 30,000

Other loan III 12,000 12,000

Other loan IV 7,491 –

39,491 52,000

Non-current:

Other loan III 20,270 30,600

59,761 82,600

(i) Other loan I

Other loan I relates to an unsecured short term facility amounting to RMB10,000,000 grantedby a third party to a subsidiary of the Group in prior year to finance the subsidiary’s workingcapital requirement.

The loan was fully repaid in one lump sum during the year. The loan incurred effective interest

at 18 % (2012: 18%) per annum.

(ii) Other loan II

Other loan II relates to an unsecured short term facility amounting to RMB30,000,000 grantedby the same third party as in Other loan I to a subsidiary of the Group during the year tofinance the subsidiary’s working capital requirement. During the year, an additional unsecuredshort term facility amounting to RMB20,000,000 is granted by this third party.

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB20,000,000 (2012: RMB30,000,000) where the previous unsecured short term facilityamounting RMB30,00,000 has been fully repaid during the year. The loan incurred effectiveinterest at 22% (2012: 18%) per annum. The loan is rescheduled to be repaid on 5 August2013.

Subsequent to current year-end, the loan was fully repaid on 24 September 2013.

(iii) Other loan III

Other loan III relates to a long term facility amounting to RMB60,000,000 granted bya financial institution to a subsidiary of the Group in prior year to finance the subsidiary’sworking capital requirement. This loan is secured in return for the legal titles of certain partsof the plant in Suzhou City, PRC. The Group has the option to re-purchase these assets at abargain option of RMB1 if repayment schedule is met.






(b) Other loans (cont’d)

(iii) Other loan III (cont’d)

This facility has been fully drawn down and the balance outstanding at 30 June 2013 isRMB32,270,000 (2012: RMB42,600,000), net of transaction cost of RMB5,400,000 andprepaid final installment amounting RMB12,000,000. The loan is scheduled to be repaidannually by four installments in a year of RMB3,000,000 each over five years to 2017. Theloan incurred effective interest at 6.65 % (2012: 6.8%) per annum.

(iv) Other loan IV

Other loan IV relates to an unsecured short term facility amounting to RMB7,491,000 grantedby a third party to a subsidiary of the Group during the year to finance the subsidiary’s

working capital requirement.

The loan is scheduled to be fully repaid in August 2013. The loan incurred effective interestat 10% (2012: Nil) per annum.

Subsequent to current year-end, the loan was fully repaid on 20 August 2013.

(c) Carrying Amount and Fair Value Information

The fair value of the Group’s current bank borrowings approximate their carrying amounts. Thefollowing fair values of non-current borrowings and other loans are for information purposes only andare not recognised in the financial statements.

Group

2013 2012

RMB’000 RMB’000

Non-current borrowings

Carrying amounts 467,211 395,171

Fair values 469,851 402,603

The fair values of borrowings at the balance sheet date are based on expected future cash ows,

discounted using market rates for similar instruments at the balance sheet date.





25 Deferred Tax Liabilities

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset deferred taxassets against deferred tax liabilities and when the deferred taxes relates to the same fiscal authority. The

amounts, determined after appropriate offsetting, are shown as follows:

Deferred tax liabilities

Group

2013 2012

RMB’000 RMB’000

Deferred tax liabilities:

- to be settled after one year 25,111 14,097

The deferred tax liabilities relate to the temporary differences due to the service concession arrangementsand the movement is as follows:

Group

2013 2012

RMB’000 RMB’000

Balance at beginning of year 14,097 12,456

Charged to income statement (Note 10) 4,714 1,641

Acquisition of subsidiaries (Note 16) 6,300 –

Balance at end of year 25,111 14,097

26 Trade and Other Payables

Group Company

2013 2012 2013 2012

RMB’000 RMB’000 RMB’000 RMB’000

Trade payables - third parties 5,928 2,799 – –

Trade payables - former shareholderof a subsidiary 1,902 – – –

Due to a subsidiary – – 1,843 300

Due to former shareholder of asubsidiary 50,242 – – –

Bill payable 32,000 2,000 – –

Sundry creditors 56,050 86,113 747 275

Accrued expenses 128,220 50,324 7,003 2,286

Accrued interest on borrowings 82 82 – –

Other taxes payable 3,209 534 – –

277,633 141,852 9,593 2,861





26 Trade and Other Payables (cont’d)

Trade payables are non-interest bearing and are generally settled on 30 to 90 days terms.

The amounts due to a subsidiary and former shareholder of a subsidiary are non-trade in nature,unsecured, interest-free and repayable on demand.

Bill payables are secured by bank deposits (Note 21), interest-free and have a maturity of 6 months(2012: less than 6 months).

The sundry creditors are non-interest bearing, unsecured and repayable on demand. Sundry creditorsconsist of amounts payable for the construction work of plants and amounts payable for project fundsand corresponding interests amounting to RMB3,550,000 in relation to the legal proceedings incurred incurrent financial year (see Note 32(c)).

Accrued expenses mainly pertain to the accruals made for construction work of the plants for which

invoices have not been received as at year end.

27 Other Financial Liabilities

Group and Company

2013 2012

RMB’000 RMB’000

Financial Liabilities carried at fair value through profit or loss (“FVTPL”)

- Warrants (a) 4,061 8,919

- Contingent consideration payables (b) 38,830 –42,891 8,919

(a) Warrants

Group and Company

2013 2012

RMB’000 RMB’000

Financial Liabilities, warrants

As at beginning of year 8,919 17,419

Exercise of warrants (713) (2,836)

Net changes in fair value (4,145) (5,664)

As at end of year 4,061 8,919

It consists of the following 3 types of warrants:

Convertible bond warrant (“CB Warrants”) (i) 1,355 2,587

PWGL Warrants (ii) 958 2,242

GDHL Warrants (iii) 1,748 4,090

As at end of year 4,061 8,919





27 Other Financial Liabilities (cont’d)

(a) Warrants (cont’d)

(i) In prior years, the Company issued and defaulted on the convertible bonds. As part of thesettlement agreed with the convertible bondholders (“CB Holders”), 75,198,000 warrants(“CB Warrants”) were issued to the CB Holders. Each warrant can be exercised at an exerciseprice of S$0.025 for one ordinary share at par value of HK$0.10 each anytime. The exerciseperiod is 5 years, expiring on 26 April 2015.

(ii) In prior years, 31,631,598 warrants (“PWGL Warrants”) were issued to PWGL as part ofthe PWGL settlement. Each warrant can be exercised at an exercise price of S$0.04 for oneordinary share at par value of HK$0.10 each anytime. The exercise period is 3 years, expiringon 27 April 2014.

(iii) In prior years, 57,692,402 warrants (“GDHL Warrants”) were issued to GDHL as part of GDHL

subscription. Each warrant can be exercised at an exercise price of S$0.04 for one ordinaryshare at par value of HK$0.10 each anytime. The exercise period is 3 years, expiring on 27April 2014.

Fair value of warrants

The fair value of the warrants is estimated at both financial year-end dates, using the BinomialValuation model. The following table lists the inputs to the option pricing model:

CB

Warrants

PWGL

Warrants

GDHL

Warrants

2013Risk-free rate (% p.a.) 0.24% 0.22% 0.22%

Exercise price (S$) S$0.025 S$0.040 S$0.040

Underlying share price (S$) S$0.040 S$0.040 S$0.040

Years to maturity (years) 2 years 1 year 1 year

Dividend yield (% p.a.) – – –

Volatility (%) 39.0% 39.3% 39.3%

2012

Risk-free rate (% p.a.) 0.25% 0.18% 0.18%

Exercise price (S$) S$0.025 S$0.040 S$0.040

Underlying share price (S$) S$0.040 S$0.040 S$0.040

Years to maturity (years) 3 years 2 years 2 years

Dividend yield (% p.a.) – – –

Volatility (%) 67.8% 65.4% 65.4%

(b) Contingent Consideration Payable

Other financial liabilities include RMB38,830,000 representing the estimated fair value of thecontingent consideration payable relating to the acquisition of the Target Group (see Note 16).





28 Related Party Transactions

During the financial year, other than those disclosed elsewhere in the financial statements, the Group hadsignificant transactions with related parties on terms agreed between the parties as follows:

Compensation of directors and key management personnel

Group

2013 2012

RMB’000 RMB’000

Salaries, bonus and related benefits 10,484 4,630

Directors’ fee 1,135 1,491

Defined contribution plans 27 26

Termination benefits 394 329

12,040 6,476

Comprised amounts paid/payable to:

Directors of the Company 8,430 3,836

Other key management personnel 3,610 2,640

12,040 6,476

29 Commitments

(i) Future capital commitments

Group

2013 2012

RMB’000 RMB’000

Capital expenditure on purchase of property, plant andequipment and construction of plants

- committed but not provided for in the financial statements 87,262 4,264





29 Commitments (cont’d)

(ii) Operating lease commitments

At the balance sheet date, the Group had entered into several operating lease commitments foroffice premises and staff accommodation. These leases do not contain renewal options and therewere no restrictions placed upon the Group by entering into these leases. At the balance sheet date,the future minimum lease payables under these non-cancellable operating leases are as follows:

Group

2013 2012

RMB’000 RMB’000

Within 1 year 837 2,002

Between 1 to 5 years – 601

837 2,603

30 Segment Information

Operating segments are identified on the basis of internal reports about components of the Group thatare regularly reviewed by the chief operating decision maker for the purpose of resource allocation andperformance assessment.

Revenue reported below represents revenue generated from external customers and inter-segmentrevenue. Inter-segment pricing is determined on an arm’s length basis.

The accounting policies of the reportable segments are the same as the Group’s accounting policiesdisclosed in Note 3(u). Segment results, assets and liabilities include items directly attributable to asegment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainlycorporate assets and expense, interest-bearing borrowings and related expenses and income and deferredtaxes. No operating segments have been aggregated to form the following reportable operating segments.

Business segments

The Group’s main business segment for the current financial year is Built-Operate-Transfer (“BOT”)/Transfer-Operate-Transfer (“TOT”) water service fees and, construction projects and services.

Geographical segments

The Group operates predominantly in the PRC. All non-current assets are located in the PRC. Partof cash and bank balances amounting to approximately RMB667,000 and RMB1,869,000 as at30 June 2013 (2012: RMB1,402,000 and RMB1,594,000) are located at Singapore and Hong Kongrespectively.





30 Segment Information (cont’d)

Customer segments

No single individual customer contributed significantly to the Group’s revenue.

BOT/TOT

wastewater

treatment

Construction

projects and

services Total

RMB’000 RMB’000 RMB’000

Group

2013

Inter-segment revenue* – 41,508 41,508

Inter-segment costs* (41,508) – (41,508)

Inter-segment profit (41,508) 41,508 –

Revenue from external customers 367,958 1,173 369,131

Segment results 190,701 (29,721) 160,980

Unallocated income 26,109

Unallocated expense (34,402)

Finance income

- allocated 328 – 328

- unallocated 48

Finance costs

- allocated (43,789) – (43,789)

- unallocated (3,331)

Profit before income tax 105,943

Income tax (6,129) (349) (6,478)

Profit for the year 99,465

Other segment items

Additions to property, plant and equipment

- allocated 285 1,006 1,291

- unallocated 484

1,775

Additions to intangible asset- computer software 402

Additions to intangible assets 5,146 – 5,146

Depreciation

- allocated 923 45 968

- unallocated 721

1,689

Amortisation of intangible assets 11,140 – 11,140






Customer segments (cont’d)

BOT/TOT

wastewater

treatment

Construction

projects and

services Total

RMB’000 RMB’000 RMB’000

Group

2013 (cont’d)

Amortisation of land use rights 2,019 – 2,019

Reversal of allowance for impairment of:

Allocated:- intangible assets 20,000 – 20,000

Allowance for impairment loss of other receivables 484 – 484

Assets and Liabilities

Segment assets 2,510,137 131,760 2,641,897

Unallocated assets 56,426

Total assets 2,698,323

Segment liabilities 836,476 34,471 870,947Unallocated liabilities 117,221

Total liabilities 988,168







BOT/TOT

wastewater

treatment Total

RMB’000 RMB’000

Group

2012

Revenue from external customers 245,361 245,361

Inter-segment revenue – –

Segment results 151,939 151,939

Unallocated income 5,862

Unallocated expense (15,921)

Finance income 139

Finance costs (37,892) (37,892)

Profit before income tax 104,127

Income tax (1,484) (1,484)

Profit for the year 102,643

Other segment items

Additions to property, plant and equipment

- allocated 665 665

- unallocated 2,102

2,767

Additions to intangible asset-computer software 787

Additions to intangible assets 9,364 9,364

Depreciation

- allocated 1,062 1,062

- unallocated 394

1,456

Amortisation of intangible assets

- allocated 10,621 10,621

- unallocated –

10,621

Amortisation of land use rights

- allocated 1,963 1,963

- unallocated –

1,963







BOT/TOT

wastewater

treatment Total

RMB’000 RMB’000

Group

2012 (cont’d)

Reversal of allowance for impairment of:

Allocated:

- intangible assets 20,000 20,000

- financial receivables 52,402 52,402

72,402

Allowance for impairment loss of other receivables 3,883 3,883

Assets and Liabilities

Segment assets 2,249,800 2,249,800

Unallocated assets 15,606

Total assets 2,265,406

Segment liabilities 691,638 691,638

Unallocated liabilities 42,237

Total liabilities 733,875

31 Financial Risk Management

The Group’s and Company’s activities exposed it to a variety of financial risks such as market risk(including interest rate risk and currency risk), credit risk and liquidity risk. The Group’s and Company’soverall risk management strategy, which remain unchanged from prior year, seeks to minimise adverseeffects from the unpredictability of financial markets on the Group’s financial performance. The Groupand Company continually monitor the risk management process to ensure that an appropriate balance

between risk and control is achieved. Risk management policies and systems are reviewed regularly toreect changes in market conditions and the Group’s and Company’s activities.

The Board is responsible for setting the objectives and underlying principles of financial risk managementfor the Group and Company. The Board will review and agree on policies for managing each of these risksas summarised below.





31 Financial Risk Management (cont’d)

(a) Interest Rate Risk

Interest rate risk refers to the risk that the fair value or future cash ows of a financial instrumentwill uctuate because of changes in market interest rates. The Group’s and Company’s exposuresto interest rate risk relates primarily to the Group’s and Company’s interest-bearing assets andliabilities. The Group and Company do not enter into interest rate swaps to manage its interest raterisk. These exposures are managed partly by using natural hedges that arise from offsetting interestrate sensitive assets and liabilities.

The table below sets out the Group’s and Company’s exposure to interest rate risks. Included inthe table are the assets and liabilities at carrying amounts, categorised by the earlier of contractualrepricing or maturity dates.

Variable rates Fixed rates

Within

1 year

1 to 5

years

After

5 years

Within

1 year

1 to 5

years

After

5 years

Non–

interest

bearing Total


Group

2013

Assets

Cash and bank balances 102,111 – – 16,000 – – – 118,111

Trade and other receivables – – – – – – 85,052 85,052

Other receivables

- non-current – – – – – – 17,052 17,052

Financial receivables

- current – – – – – – 34,583 34,583


- non-current – – – – – – 1,972,006 1,972,006

Other financial assets – – – – – – 6,675 6,675

Total financial assets 102,111 – – 16,000 – – 2,115,368 2,233,479

Liabilities

Borrowings 163,285 421,469 25,472 12,000 20,270 – – 642,496

Trade and other payables(exclude other tax payable) – – – – – – 274,424 274,424

Other financial liabilities – – – – – – 42,891 42,891

Total financial liabilities 163,285 421,469 25,472 12,000 20,270 – 317,315 959,811






(a) Interest Rate Risk (cont’d)


Within

1 year

1 to 5

years

After

5 years

Within

1 year

1 to 5

years

After

5 years

Non–

interest

bearing Total


Group

2012

Assets

Cash and bank balances 81,844 – – 2,000 – – – 83,844

Trade and other receivables – – – – – – 58,542 58,542Financial receivables

- current – – – – – – 33,200 33,200


- non-current – – – – – – 1,817,500 1,817,500

Other financial assets – – – – – – 6,490 6,490

Total financial assets 81,844 – – 2,000 – – 1,915,732 1,999,576

Liabilities

Borrowings 161,836 283,443 81,128 12,000 30,600 – – 569,007

Trade and other payables – – – – – – 141,318 141,318


Total financial liabilities 161,836 283,443 81,128 12,000 30,600 – 150,237 719,244

Company

2013

Assets

Cash and bank balances 252 – – – – – – 252

Trade and other receivables – – – – – – 1,910,379 1,910,379

Total financial assets 252 – – – – – 1,910,379 1,910,631

Liabilities



Total financial liabilities – – – – – – 52,484 52,484






(a) Interest Rate Risk (cont’d)


Within

1 year

1 to 5

years

After

5 years

Within

1 year

1 to 5

years

After

5 years

Non–

interest

bearing Total


Company

2012

Assets

Cash and bank balances 987 – – – – – – 987

Trade and other receivables – – – – – – 1,803,454 1,803,454Total financial assets 987 – – – – – 1,803,454 1,804,441

Liabilities



Total financial liabilities – – – – – – 11,780 11,780

Sensitivity Analysis

A change of 100 basis points in interest rate for the Group’s variable borrowings rate would

(decrease)/increase the Group’s profit after tax by the amounts as shown below. This analysisassumes that all other variables, in particular foreign currency and tax rates, remain constant.

Group

Profit after tax

2013 2012

RMB’000 RMB’000

Floating rate instruments

- 100 basis point increase (4,577) (3,948)

- 100 basis point decrease 4,577 3,948

Interest rate risk for the Company is not significant and therefore no sensitivity analysis has beendisclosed in the financial statements.

(b) Foreign Currency Risk

Foreign currency risk refers to the risk that the fair value of future cash ows of a financialinstrument will uctuate because of changes in foreign exchange rates. The Group and Companymainly operate in the PRC and its functional currency is in Renminbi. The Group and Companyare exposed to foreign currency risk when transactions such as expenses and borrowings aredenominated in currencies other than Renminbi. The currencies giving rise to this risk are primarilySingapore dollar (S$) and Hong Kong dollar (HK$).






(b) Foreign Currency Risk (cont’d)

The Group and Company have not entered into any forward currency contracts or any hedginginstruments to manage the foreign currency risk. This exposure is managed as far as possible bynatural hedges of matching assets and liabilities.

The Group’s and Company’s foreign currency exposure based on the information provided to keymanagement is as follows:

Denominated in the

following currencies

Singapore dollar Hong Kong dollar

RMB’000 RMB’000

Group

2013

Financial assets

Cash and bank balances 667 1,869

Financial liabilities

Other financial liabilities 42,891 –

Trade and other payables 2,238 191

45,129 191

Net financial (liabilities)/assets (44,462) 1,678

2012

Financial assets

Cash and bank balances 2,559 436




10,534 151

Net financial (liabilities)/assets (7,975) 285








A change of 5% (2012: 5%) (taking into consideration both strengthening and weakening aspect)of the following currencies against RMB at the balance sheet date would (decrease)/increase theGroup’s profit after income tax by the amounts as shown below. This analysis assumes that all othervariables, in particular interest and tax rates, remain constant.

Group

Profit after tax

2013 2012

RMB’000 RMB’000

Group

S$ against RMB

- strengthened (1,667) (299)

- weakened 1,667 299

HK$ against RMB

- strengthened 63 11

- weakened (63) (11)

Denominated in the



RMB’000 RMB’000

Company

2013

Financial assets

Cash and bank balances 171 81




45,042 191

Net financial liabilities (44,871) (110)







Denominated in the



RMB’000 RMB’000

Company

2012

Financial assets

Cash and bank balances 907 79




10,509 142

Net financial liabilities (9,602) (63)


A change of 5% (2012: 5%) (taking into consideration both strengthening and weakening aspect) ofthe following currencies against RMB at the year end date would increase/(decrease) the Company’sloss after income tax by the amounts as shown below. This analysis assumes that all other variables,

in particular interest and tax rates, remain constant.

Company

Loss after tax

2013 2012

RMB’000 RMB’000

Company

S$ against RMB

- strengthened 1,683 360

- weakened (1,683) (360)

HK$ against RMB

- strengthened 4 2

- weakened (4) (2)






(c) Credit Risk

Credit risk refers to the risk that the customer or counterparty failed to discharge an obligation andresulted in a financial loss to the Group and Company.

As the Group and Company do not hold any collateral, the maximum exposure to credit risk is thecarrying amounts of the related financial assets presented on the statement of financial position.

The Group’s and Company’s credit risk is primarily attributable to its trade and other receivables.The Group and Company establish an allowance for impairment that represents its estimate ofincurred losses in respect of trade and other receivables. This allowance account in respect oftrade and other receivables is used to record impairment losses unless the Group and Companyare satisfied that no recovery of the amount owing is possible. At that point, the financial asset isconsidered irrecoverable and the amount charged to the allowance account is written off against the

carrying amount of the impaired financial asset.

Trade and other receivables balances are monitored on an ongoing basis and whether the trade andother receivables are recoverable are estimated by the Group’s and Company’s management basedon prior experience and the current economic environment.

Cash and fixed deposits are placed with banks and financial institutions which are regulated. Forother financial assets (including financial receivables), the Group and the Company minimise creditrisk by dealing exclusively with high credit rating counterparties.

Significant concentrations of credit risk

Concentrations of credit risk exist when changes in economic, industry or geographic factorssimilarly affect groups of counterparties whose aggregate credit exposure is significant in relationto the Group’s and Company’s total credit exposure. The Group’s and Company’s credit exposure isconcentrated mainly in the PRC.

Financial assets that are neither past due nor impaired

Trade and other receivables, other current assets and financial receivables of the Group that areneither past due nor impaired amounting to RMB298,878,000 (2012: RMB229,849,000) arecreditworthy companies with a good payment record with the Group. Trade and other receivablesof the Company that are neither past due nor impaired amounting to RMB1,910,379,000 (2012:RMB1,803,454,000) are due from subsidiaries within the Group. Bank deposits that are neither pastdue nor impaired are mainly deposits with banks with high credit ratings and no history of default.






(c) Credit Risk (cont’d)

Financial Assets that are not past due but impaired

The carrying amount of financial receivables individually determined to be impaired at the balancesheet date and the movement in the related allowance for impairment is as follows:

Group

2013 2012

RMB’000 RMB’000

Financial receivables-nominal amounts 1,791,089 1,791,089

Less: Allowance for impairment (118,739) (118,739)

1,672,350 1,672,350

Movement in allowance accounts:

As at beginning of the year 118,739 171,141

Charge for the year – 36,789

Written back during the year – (89,191)

As at end of the year 118,739 118,739

The financial receivables are tested for impairment annually or more frequently if there areindications that the financial receivables might be impaired as disclosed in Note 14.

Financial assets that are past due but not impaired

There is no other class of financial assets that is past due but not impaired except for tradereceivables.

The age analysis of trade receivables past due at the balance sheet date but not impaired is asfollows:

Group

2013 2012

RMB’000 RMB’000

Past due within 30 days 5,812 1,348

Past due 31 to 90 days 1,494 2,780

Past due over 90 days 18,095 15,895

25,401 20,023

Financial assets that are past due and impaired

Except for other receivables past due and impaired as disclosed in Note 19, there are no financialassets which are past due and/or impaired at the date of the statement of financial position.






(d) Liquidity Risk

Liquidity risk refers to the risk that the Group will not be able to meet its financial obligations asthey fall due.

The Group’s current financial liabilities mature within 1 year and the contractual undiscountedcash ows of these current financial liabilities approximate their carrying amounts. The table belowanalyses the maturity profile of the Group’s non-current financial liabilities based on contractualundiscounted cash ows.

Cash Flows

Carrying

amount

Contractual

cash lows

More than

1 to 2 years

Between

2 to 5 years

After

5 years

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Group

2013

Non-current borrowings 467,211 651,907 187,799 381,935 82,173

2012

Non-current borrowings 395,171 505,136 116,848 302,688 85,600

No analysis of the maturity profile of the Company has been disclosed in the financial statements asthere are no non-current financial liabilities outstanding as at the year end.

The contractual expiry by maturity of the financial guarantees given by a former subsidiary and athird party (see Note 24 (a)) amounting to RMB87,000,000 (2012: RMB108,400,000) is less thana year based on the allocation of the maximum amount of the financial guarantee contract to theearliest period in which the guarantee could be called on.

(e) Fair Values of Financial Assets and Liabilities

Fair value is defined as the amount at which the financial instruments could be exchanged in acurrent transaction between knowledgeable willing parties in an arm’s length transaction, other thanin a forced or liquidation sale. Fair values are obtained from discounted cash ow models and optionpricing models as appropriate.

The following methods and assumptions are used to estimate the fair values of each class offinancial instruments.

(i) Non-current borrowings

The fair value (Note 24(c)) is calculated based on discounted expected future principal andinterest cash ows. The discount rates used are based on market rates for similar instrumentsat the balance sheet date.






(e) Fair Values of Financial Assets and Liabilities (cont’d)

(ii) Financial instruments

FRS 107 requires disclosure of fair value measurements by level of the following fair valuemeasurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)(Level 2); and

(c) inputs for the asset or liability that are not based on observable market data

(unobservable inputs) (Level 3).

The following table presents the financial instruments measured at fair value at30 June 2013.

Level 1 Level 2 Level 3 Total

RMB’000 RMB’000 RMB’000 RMB’000

Group

2013

Liabilities

Financial liabilities- Warrants – 4,061 – 4,061

- Contingent consideration payable 38,830 – – 38,830

38,830 4,061 – 42,891

2012

Liabilities


- Warrants – 8,919 – 8,919






(e) Fair Values of Financial Assets and Liabilities (cont’d)

(ii) Financial instruments (cont’d)

Level 1 Level 2 Level 3 Total

RMB’000 RMB’000 RMB’000 RMB’000

Company

2013

Liabilities


- Warrants – 4,061 – 4,061

- Contingent consideration payable 38,830 – – 38,83038,830 4,061 – 42,891

2012

Liabilities


- Warrants – 8,919 – 8,919

There was no transfer between Level 1 and 2 during the financial year.

(iii) Other financial assets and financial liabilities

The fair values of financial assets and liabilities with a maturity of less than one year(including cash and cash equivalents, trade and other receivables, short-term borrowingsand trade and other payables) are close approximation of their carrying amounts due to therelatively short-term maturity of these financial instruments. Fair value of financial receivablesis disclosed in Note 14(d).

(f) Capital Risk

The Group’s and Company’s objectives when managing capital are to safeguard the Group’s andCompany’s ability to continue as a going concern and to maintain an optimal capital structure soas to maximise shareholders’ value. In order to maintain or achieve an optimal capital structure, theGroup and Company may adjust the amount of dividend payment, issue new shares or obtain newborrowings. There is no change in capital management policies during the year.

Management monitors capital based on a net debt against equity ratio. The Group’s and Company’sstrategies are to maintain a prudent balance between the advantage and exibility afforded by astrong capital position and the higher return on equity that are possible with greater leverage.

Consistently, the Group and Company monitor capital based on a net debt against equity ratio.The net debt against equity ratio is calculated by dividing net debt by total equity. Net debt iscalculated as total liabilities (as shown in the statement of financial position, excluding provision fortax and deferred tax liabilities) less cash and cash equivalents. Total equity comprises share capitalplus reserves.






(f) Capital Risk (cont’d)

Group Company

2013 2012 2013 2012

RMB’000 RMB’000 RMB’000 RMB’000

Net debt 860,909 637,934 52,232 10,793

Total equity 1,710,384 1,531,760 2,120,982 2,055,512

Net debt against equity ratio 0.50 0.42 0.02 0.01

The Group and Company are in compliance with all externally imposed capital requirements for thefinancial years ended 30 June 2013 and 30 June 2012.

As disclosed in Note 23, the Group’s subsidiaries in the PRC are required to contribute to andmaintain a non-distributable statutory reserve fund whose utilisation is subject to approval by therelevant PRC authorities. This externally imposed capital requirement has been complied with by therelevant subsidiaries for the financial year ended 30 June 2013 and 30 June 2012.

No dividends to shareholders of certain subsidiaries shall be declared or paid until full repayment ofcertain loans (Note 24). This externally imposed capital requirement has been complied with by therelevant subsidiaries for the financial year ended 30 June 2013 and 30 June 2012.

32 Subsequent Events

(a) On 18 July 2013, the Company has entered into a placement agreement (“Placement Agreement”)with Wang Yu Huei (the “Placee”), whereby the Placee has agreed to subscribe for 293,617,000new ordinary shares in the capital of the Company (“Placement Shares”) at the issue price ofS$0.05 per Placement Share, subject to and upon the terms of the Placement Agreement.

In accordance with the terms and conditions of the Placement Agreement, the proposed placementwas completed on 6 August 2013 and the Placement Shares were allotted and issued to the Placee.

(b) On 23 July 2013, the Company has established a S$300,000,000 multicurrency medium term noteprogramme (the “MTN” Programme). The Company has appointed a financial institution to act as thesole arranger and dealer of the MTN Programme.

Under the MTN Programme, the Company may, subject to compliance with all relevant laws,regulations and directives, from time to time issue notes in series or tranches in Singapore dollarsor in other currencies, in various amounts and tenors, and which may bear fixed, oating, variable orhybrid rates of interests as may be agreed between the Company and the relevant dealer(s) or maynot bear interest.

On 2 August 2013, the Company has issued an aggregate principle amount of S$50,000,000 7.5%Fixed Rate Notes (“Notes”) due 1 August 2015 under the MTN Programme. The Notes will bearinterest at a fixed rate of 7.5% per annum, payable semi-annually.





32 Subsequent Events (cont’d)

(c) During the financial year, Jiangsu Province Construction Group Co., Ltd commenced legalproceedings against Nanjing Jin Huan Water Development Co., Ltd, a wholly-owned subsidiary of the

Company. The dispute was in relation to the late payment by Nanjing Jin Huan Water DevelopmentCo., Ltd of project funds amounting to RMB3,419,000.

On 29 July 2013, the Intermediate People’s Court of Nanjing City ordered that Nanjing Jin HuanWater Development Co., Ltd pay the project funds and corresponding interests amounted toRMB3,550,000 to Jiangsu Province Construction Group Co., Ltd within year 2013 and 2014.

(d) On 19 September 2013, the Company increased its investments in the capital of its wholly-ownedsubsidiaries, Beijing Hankesen Environmental Technology Co., Ltd, HanKore International Pte. Ltd.,Xianyang Bai Sheng Shui Purifying Co., Ltd and Yangzhou HanKore Water Development Co., Ltd withtotal cost of investment of S$19,642,554 for general working capital purposes as well as otherbusiness opportunities as and when arise.

(e) On 19 September 2013, the Group entered into a USD/SGD cross currency swap agreement with afinancial institution with the effect date of the currency swap agreement commencing on 1 August2014. The currency swap agreement entitles the Group to receive US$40,176,778 and obliges topay S$50,000,000 at a fixed exchange rate of 1.2445 for the period ended 1 August 2015.



Statistics of ShareholdingsAs at 23 September 2013


Authorised share capital : HKD600,000,000

Issued and fully paid-up capital : HKD482,170,248

Class of shares : Ordinary shares of HKD0.10 each

Number of Shares : 4,821,702,477Voting rights : One vote per ordinary share

DISTRIBUTION OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGS NO. OF SHAREHOLDERS % NO. OF SHARES %

1 ~ 999 406 5.80 98,592 0.00

1,000 ~ 10,000 1,542 22.01 8,361,500 0.17

10,001 ~ 1,000,000 4,807 68.61 703,761,705 14.60

1,000,001 AND ABOVE 251 3.58 4,109,480,680 85.23

TOTAL 7,006 100.00 4,821,702,477 100.00

On the basis of the information available to the Company ,approximately 65.67% of the equity securities of theCompany are held in the hands of the public. This is in compliance with Rule 723 of the Listing Manual of theSGX-ST, which requires at least 10% of a listed issuer’s equity securities to be held by the public.

TWENTY LARGEST SHAREHOLDERS

NAME NO. OF SHARES %

1. GIANT DELIGHT HOLDINGS LIMITED 794,203,561 16.47

2. HSBC (SINGAPORE) NOMINEES PTE LTD 562,859,954 11.67

3. TOTAL SUMMIT TECHNOLOGY LIMITED 360,000,000 7.47

4. RAFFLES NOMINEES (PTE) LTD 253,393,707 5.26

5. ANCIENT JADE INTERNATIONAL HOLDINGS LIMITED 223,413,333 4.636. MAYBANK KIM ENG SECURITIES PTE LTD 173,676,734 3.60

7. OCBC SECURITIES PRIVATE LTD 167,029,809 3.46

8. CITIBANK NOMINEES SINGAPORE PTE LTD 103,631,396 2.15

9. BOUSTEAD SINGAPORE LIMITED 100,000,000 2.07

10. DBS NOMINEES PTE LTD 97,212,892 2.02

11. HUA YUAN INTERNATIONAL LIMITED 85,000,000 1.76

12. CHEONG SAE PENG 76,000,000 1.58

13. PHILLIP SECURITIES PTE LTD 74,884,420 1.55

14. UNITED OVERSEAS BANK NOMINEES PTE LTD 59,740,026 1.24

15. DB NOMINEES (S) PTE LTD 59,439,089 1.23

16. LEYAU YEW TECK 30,000,000 0.62

17. UOB KAY HIAN PRIVATE LIMITED 25,878,601 0.5418. DMG & PARTNERS SECURITIES PTE LTD 20,547,000 0.43

19. HAN SENG JUAN 20,000,000 0.41

20. HL BANK NOMINEES (SINGAPORE) PTE LTD 19,582,000 0.41

TOTAL 3,306,492,522 68.57

SUBSTANTIAL SHAREHOLDERS

NAME OF SUBSTANTIAL SHAREHOLDER DIRECT INTEREST DEEMED INTEREST

No. of shares held % No. of shares held %

Giant Delight Holdings Limited 794,203,561 16.47 – –

Wang Yu Huei 500,000,000 10.37 – –Total Summit Technology Limited 360,000,000 7.47 – –



Notice of Annual General Meeting


HANKORE ENVIRONMENT TECH GROUP LIMITED(Company Registration No.: 34074)

(Incorporated in Bermuda)

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of HanKore Environment Tech Group Limited willbe held at Ocean 12-13, Level 2, Pan Pacific Hotel, 7 Rafes Boulevard, Marina Square, Singapore 039595 onTuesday, 29 October 2013 at 9.30 am to transact the following businesses:-

AS ORDINARY BUSINESS

1. To receive and consider the Directors’ Report and Audited Financial Statements of the Company for thefinancial year ended 30 June 2013 and the Auditors’ Report thereon. (Resolution 1)

2. To approve the payment of Directors’ fees of S$223,000/- for the financial year ended 30 June 2013.

(2012 : S$218,240/-) (Resolution 2) 3. To re-elect the following Directors retiring pursuant to Bye-Laws 86(1) of the Company’s Bye-Laws, and

who, being eligible, will offer themselves for re-election:-

(a) Mr Lim Yu Neng, Paul (Resolution 3)

(b) Ms Cheng Fong Yee, Fonda (Resolution 4)

Mr Lim Yu Neng, Paul will upon re-election as Director of the Company, remain as Chairman of the AuditCommittee and a member of the Nominating Committee and will be considered independent for thepurposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

Ms Cheng Fong Yee, Fonda will upon re-election as Director of the Company, remain as Chairman of theRemuneration Committee and a member of the Audit Committee and will be considered independent forthe purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

4. To re-appoint Messrs Moore Stephens LLP as Auditors of the Company and to authorise the Directors tofix their remuneration. (Resolution 5)

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following ordinary resolutions with or without modifications:

5. Authority to allot and issue shares

(a) “That, pursuant to Company’s Bye-laws, and the listing rules of the Singapore Exchange SecuritiesTrading Limited, approval be and is hereby given to the Directors of the Company at any time tosuch persons and upon such terms and for such purposes as the Directors may in their absolutediscretion deem fit, to:

(i) issue shares in the capital of the Company whether by way of right, bonus or otherwise;

(ii) make or grant offers, agreements or options that might or would require shares to be issuedor other transferable rights to subscribe for or purchase shares (collectively, “Instruments”)including but not limited to the creation and issue of warrants, debentures or otherinstruments convertible into shares;

(iii) issue additional instruments arising from adjustments made to the number of Instrumentspreviously issued in the event of rights, bonus or capitalisation issues; and





(b) (notwithstanding the authority conferred by the shareholders may have ceased to be in force) issueshares in pursuance of any Instrument made or granted by the Directors while the authority was inforce.

provided always that:

(i) the aggregate number of shares to be issued pursuant to this resolution (including shares to beissued in pursuance of Instruments made or granted pursuant to this resolution) does not exceedfifty per cent. (50%) of the total number of issued shares excluding treasury shares of theCompany, of which the aggregate number of shares (including shares to be issued in pursuanceof Instruments made or granted pursuant to this resolution) to be issued other than on a pro ratabasis to existing shareholders of the Company does not exceed twenty per cent. (20%) of the totalnumber of issued shares excluding treasury shares of the Company, and for the purpose of thisresolution, the issued share capital shall be the Company’s total number of issued shares excludingtreasury shares at the time this resolution is passed, after adjusting for:

(a) new shares arising from the conversion or exercise of any convertible securities,

(b) new shares arising from exercising share options or vesting of share awards outstanding orsubsisting at the time this resolution is passed provided the options or awards were grantedin compliance with Part VIII of Chapter 8 of the Listing Manual of the Singapore ExchangeSecurities Trading Limited; and

(c) any subsequent bonus issue, consolidation or subdivision of the Company’s shares, and

(ii) such authority shall, unless revoked or varied by the Company at a general meeting, continue inforce until the conclusion of the next Annual General Meeting or the date by which the next AnnualGeneral Meeting of the Company is required by law to be held, whichever is the earlier.”

(See Explanatory Note i) (Resolution 6)

6. Authority to allot and issue shares under the HanKore Environment Tech Group Limited Scrip DividendScheme

That authority be and is hereby given to the Directors to allot and issue from time to time such number ofshares in the Company as may be required to be allotted and issued pursuant to the HanKore EnvironmentTech Group Limited Scrip Dividend Scheme.(See Explanatory Note ii) (Resolution 7)

7. Authority to grant options and issue shares under the HanKore Employee Share Option Scheme

“That, the Directors of the Company be and are hereby empowered to offer and grant options, and to

allot and issue or transfer from time to time such number of shares as may be required to be issued ortransferred pursuant to the exercise of options granted under the HanKore Employee Share Option Scheme(the “Scheme”) provided always that the aggregate number of shares in respect of which such optionsmay be granted and which may be issued pursuant to the Scheme shall not exceed fifteen per cent. (15%)of the total number of issued shares excluding treasury shares of the Company from time to time.”(See Explanatory Note iii) (Resolution 8)





8. To transact any other ordinary business which may be properly transacted at an Annual General Meeting.

BY ORDER OF THE BOARD

CHEN DAWEI, DAVIDExecutive Chairman

14 October 2013Singapore

Notes:

1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy in his

stead.

2. A proxy need not be a member of the Company.

3. If the appointor is a corporation, the proxy must be executed under seal or the hand of its duly authorised officer or

attorney.

4. The instrument appointing a proxy must be deposited at the office of the Company’s Singapore Share Transfer Agent,Boardroom Corporate & Advisory Services Pte Ltd at 50 Rafes Place, #32-01 Singapore Land Tower, Singapore 048623

not less than forty-eight (48) hours before the time appointed for the Annual General Meeting.

Explanatory Notes:-

i. The Ordinary Resolution 6 proposed in item 5 is to authorise the Directors of the Company from the date of the above

Meeting until the next Annual General Meeting to issue shares and convertible securities in the Company up to an amount

not exceeding in aggregate 50 percent of the total number of issued shares excluding treasury shares of the Company, of

which the total number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders

shall not exceed 20 percent of the total number of issued shares excluding treasury shares of the Company at the time

the resolution is passed, for such purposes as they consider would be in the interests of the Company. This authority will,

unless revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company.

ii. Pursuant to the Special General Meeting of the Company held on 28 October 2005, the shareholders of the Companyapproved the passing of the ordinary resolution relating to the “HanKore Environment Tech Group Limited Scrip Dividend

Scheme”. In the circular dated 11 October 2005, the Scrip Dividend Scheme provides members with the option to elect

to receive shares in lieu of the cash amount of any dividend declared on their holding of shares. The Ordinary Resolution

7 proposed in item 6, if passed, will empower the Directors of the Company to allot and issue shares in the Company

pursuant to the terms and conditions of the HanKore Environment Tech Group Limited Scrip Dividend Scheme.

iii. The Ordinary Resolution 8 proposed in item 7 above, if passed, will empower the Directors of the Company, to offer and

grant options and to allot and issue or transfer shares upon the exercise of such options in accordance with the HanKore

Employee Share Option Scheme not exceeding 15% of the total number of issued shares excluding treasury shares of the

Company from time to time.



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Documents

Hankore AR2013_fcHtpHaQF5KQ.compressed.pdf