The Group’s revenue increased by 35% to S$192.8 million for the year ended 31 December 2007, compared to S$142.4 million for the previous year.

Municipal sales were higher by 96% to S$89.0 million for this financial year from S$45.3 million for the previous year mainly due to higher municipal revenue from China and the Middle East and North Africa (“MENA”).

Industrial sales were higher by 14% to S$102.3 million from S$90.1 million, mainly contributed by our strong China industrial sector.

China continued to be the main revenue driver, contributing 81% of total revenue for the year as compared to 74% in the previous year. MENA accounted for 12% of total revenue in this financial year as compared to 7% in the previous year.

The fundamentals of environmental and water industries remain favorable and the Group is expected to benefit from these strong industry fundamentals. The Group will continue to leverage on our proprietary membrane technologies and integrated environmental solutions to focus on our growth plan in target markets such as China, India and the MENA.

China remains to be a significant market for the Group. Our established track record, know-how and differentiated capabilities provide us with a strong platform to continue our growth in this key market. To date in China, we see a steady pipeline of 31 municipal projects which comprise a total of 39 water treatment plants in China. In addition, the Group has long-term operation and maintenance contracts which will generate recurring income for the next 25-30 years.

In the MENA region, the Group has achieved financial close for the seawater desalination plant project in Tlemcen, establishing our footprint in this region. The Engineering, Procurement and Construction (“EPC’) works estimated at US$213 million (approximately S$304 million) will be undertaken by wholly owned subsidiaries of the Group. The construction of the Project is expected to complete within 24 months from financial close.

The orders from the Industrial sector remain robust and provide steady revenue contribution to the Group. Our used-oil recycling projects in China, Saudi Arabia and Vietnam continue to make good progress.

Our technology and research and development activities will continue to play a significant role in our overall business strategy and innovation efforts.

The Group delivers another milestone through the launch of the Hyflux Water Trust (“HWT”). With HWT, the Group will be able to continuously enhance shareholder value through our growing pipeline and portfolio of water projects.

Raw materials and consumables increased by 36% to S$106.0 million from S$77.8 million in line with the sales volume.

Personnel expenses increased by 54% to S$30.7 million from S$20.0 million for the previous year as the Group continues to invest in human capital which is necessary to support the Group’s expansion plans and research and development activities.

In February 2007, the Group recorded a S$8.2 million gain on partial sale of its 50% joint venture, SingSpring Pte Ltd (“SingSpring”) which owns a seawater desalination plant. Subsequent to the divestment, the Group holds 30% interest in the desalination plant via SingSpring Trust. As a result, the investment is classified as investment in associates as at 31 December 2007.

The finance income decreased mainly due to the decrease in interest income earned. The fair value loss on derivative financial instruments arose mainly from the transfer of approximately S$3.2 million of the hedging reserve to the profit and loss account upon the divestment of SingSpring in February 2007. For the year ended 31 December 2007, the Group recognized a negative goodwill amounting to approximately S$2.6 million arising from acquisition of a business.

Foreign exchange gain in 2007 was mainly due to the translation of a loan facility denominated in US dollar as a result of the weakening US dollar.

The effective tax rate of the Group of approximately 5% was lower than the statutory tax rate due to tax exemptions on certain income for the year and tax incentives enjoyed by certain entities of the Group.

Overall, the net impact of the above resulted in profit after tax and minority interests for the Group of S$32.9 million for the financial year ended 31 December 2007.

The Group’s shareholders’ equity increased from S$199.6 million in 2006 to S$239.8 million in 2007. The increase was mainly attributable to the profits for the year. This was partly offset by a total dividend payout of S$7.0 million in 2007.

Non-current assets decreased from S$249.3 million as at 31 December 2006 to S$224.2 million as at 31 December 2007. This was mainly due to the divestment of the SingSpring desalination plant in February 2007 and the sale of the Group’s 13 plants in China to Hyflux Water Trust in December 2007. These have resulted in a decrease in financial and lease receivables of S$147.4 million. The decrease in financial and lease receivables was offset by an increase in investment in associates of S$93.1 million, mainly due to the Group’s new investment in Hyflux Water Trust in December 2007 representing 31.5% investment, as well as the reclassification of the Group’s investment in the SingSpring plant from a joint venture to an associate in February 2007. In addition, book value of property, plant and equipment increased by S$29.2 million mainly due to the expansion of overseas operations.

Non-current liabilities increased to S$196.3 million as at 31 December 2007 from S$119.5 million as at 31 December 2006. The increase was mainly due to the additional drawdown of bank loans during the financial year to support the Group’s expansion.

The Group’s cash position was S$121.0 million, up by S$65.2 million compared to 2006. In 2007, the Group generated cash from its operations of S$77.8 million mainly due to improvement in working capital.

Cash used in investing activities for this financial year was mainly on the acquisition of property, plant and equipment and investments in subsidiaries and associates.

The increase in cash generated from financing activities as compared to the previous year was due to the additional bank loan drawn down.