(Extracted from Annual Report 2010)

FINANCIAL REVIEW

In FY2010, the Group registered lower revenue of RMB599.4 million as compared to RMB706.4 million in FY2009. This was mainly attributable to a decrease of RMB114.1 million arising from the disposal of Heilongjiang Asiapower Xinbao Heating & Power Co., Ltd. ("Xinbao") in FY2010, a decrease of RMB10.4 million in revenue from the sale of power meters from the Group's subsidiary, JAZ Technology Development (Shenzhen) Co. Ltd and a decrease of RMB5.5 million in revenue from Asia Power (Neijiang) Hydroelectricity Co., Ltd ("Neijiang") and Sichuan Anning River Energy Development Co., Ltd mainly due to the drought situation in the People's Republic of China ("PRC"). The decrease was partially offset by RMB22.9 million of revenue contribution from Kaixin.

Cost of sales, in tandem with the decrease in the Group's revenue, decreased by about 14.0% from RMB539.9 million in FY2009 to RMB464.3 million in FY2010.

As a result of the above, gross profit decreased by 18.8% from RMB166.4 million in FY2009 to RMB135.1 million in FY2010.

Other gains recorded in FY2010 comprised mainly of gain of RMB118.5 million on disposal of Xinbao.

Other operating income decreased from RMB18.4 million in FY2009 to RMB14.6 million in FY2010. The decrease was mainly attributable to a decrease of RMB1.6 million in interest income and a decrease of RMB3.5 million in foreign exchange gain. The decrease was partially offset by an increase of RMB0.5 million in government grant and subsidy, rental income of RMB0.3 million, and gain on disposal of property, plant & equipment.

Administrative expenses increased by approximately RMB31.1 million or 42.6% to RMB104.1 million in FY2010 compared to RMB73.0 million in FY2009. The increase was mainly due to an impairment loss of RMB10.3 million recognised on the Group's previously held equity interest of 20% in Fu Da Xin, RMB7.9 million of goodwill (arising from the acquisition of JAZ Technology Development (Shenzhen) Co., Ltd) being written off, provision of non-trade receivable RMB8.5 (arising from deposit made for a potential investment in a hydro power plant) and RMB4.6 million of administrative expenses recorded by Kaixin.

Other operating expenses decreased from RMB3.6 million in FY2009 to RMB0.5 million in FY2010, mainly due to decreased other operating expenses incurred by Xinbao.

In FY2010, the Group recorded share of profit of associates of RMB1.9 million as compared to share of profit of associates of RMB19.1 million in FY2009. This was mainly due to the cessation of subsidy incomes received by Changzhou Suyuan Electric Power Co., Ltd and Changzhou Huayuan Electric Power Co., Ltd in FY2009 and the change in Fu Da Xin from an associate of the Group to a subsidiary of the Group in FY2010.

Finance costs increased from RMB14.5 million in FY2009 to RMB17.7 million in FY2010. The increase was mainly due to finance costs incurred by Kaixin .

Income tax decreased from RMB21.4 million in FY2009 to RMB14.0 million in FY2010 mainly due to a decrease in the profitability, excluding one-off gain arising from the disposal of Xinbao, of the Group.

As a result of the above fluctuations, net profit attributable to shareholders of the Company increased significantly from RMB41.0 million in FY2009 to RMB98.1 million in FY2010.

SEGMENTAL REVIEW

POWER PLANTS

The Group saw a decline in performance from its power plants segment with revenue decreasing from RMB660.0 million in FY2009 to RMB548.6 million in FY2010. The decrease was mainly attributable to the disposal of Xinbao in FY2010. Operating profit from this segment registered a decline of 19.1%, or approximately RMB25.5 million, from RMB133.6 million in FY2009 to RMB108.1 million in FY2010. The Group's profitability from this segment is further affected by an increase in finance costs of RMB3.2 million and a decrease of RMB19.2 million from share of profits of associates.

POWER RELATED TECHNOLOGY

Revenue from the Group's power related technology business segment increased from RMB45.9 million in FY2009 to RMB50.2 million in FY2010. Operating profit for this segment fell significantly from RMB1.4 million in FY2009 to a loss of RMB2.4 million in FY2010. The Group's subsidiary, JAZ Technology Development (Shenzhen) Co., Ltd ("JAZ"), which is in the business of provision of power automation system and instruments has been badly hit by intensifying competition in the power automation system and instruments industry. JAZ has been operating under very tough and competitive market conditions with reducing demand and margins for its products.

INVESTMENT HOLDING AND OTHERS

Under this segment, the Group completed the acquisition of an additional effective equity interest of 52% stake in Xi'an Kaixin Enterprise Co., Ltd. (西安凱信實業發展有限公司) and its group of companies ("Kaixin"). Along with the completion of the acquisition, Fu Da Xin has ceased to be an associate of the Company and has become a 60% owned subsidiary of the Group.

For the period under review, the Group has completed the disposal of Xinbao and realized a gain of RMB118.5 million from the disposal. In FY2010, the Group has entered into a conditional sale and purchase agreement to dispose the entire stake of Asia Hydro Power Investment Pte. Ltd. to Regent Clean Energy Pte. Ltd. for a consideration of RMB48.6 million.

PROSPECTS AND STRATEGY

Along with the completion of the disposal of the Company's 51% equity interest in the registered capital of Xinbao (please refer to announcement 00078 of 14 December 2010), Xinbao has ceased to be a subsidiary of the Company. The disposal of the stake in Xinbao, being the main revenue generator of the Group, will have a negative impact on the profitability of the Group.

Following the completion of the acquisition of Kaixin in FY2010 and the expected completion of the proposed acquisition of an effective interest of 80% in three hydro power plants from 四川省洪雅禾森電力有限公司 ("Sichuan Hongya") in early FY2011 we expect the acquisitions to partially offset the negative impact on the profitability of the Group arising from the disposal of Xinbao.

Generally, the Group has seen increasing competition of renewable energy resources in the PRC. This has, inevitably, led to an increase in acquisition prices of renewable energy resources. Going forward, we expect the outlook for the Group to be challenging.