FAQ

1. What is the growth potential of the waste-to-energy market in China?

According to the Notice on the Construction Plan for The Nation's Safe Treatment Facilities for Domestic Waste presented in the 12th Five-Year Plan by the General Office of the State Council, which was promulgated on May 4, 2012, (http://www.gov.cn/zwgk/2012-05/04/content_2129302.htm), the total treatment capacity of the national domestic waste-incineration facilities will increase to more than 35% by 2015. The Eastern region will possess more than 48% capacity. (At end of 2010, the total capacity of the national domestic waste-incineration facilities was only 19.6%.)

2. What is the growth potential of China's waste water treatment market?

According to the Notice on the Construction Plan for the Nation's Urban Waste Water Treatment and Recycling Facilities presented in the 12th Five-Year Plan by the General Office of the State Council, which was promulgated on May 4, 2012, (http://www.gov.cn/zwgk/2012-05/04/content_2129670.htm), the waste water treatment rate in the PRC will further improve by 2015. By end of 2015, the waste water treatment rate should increase to 100% for municipalities, provincial capital cities and cities specifically designated in the state plan, 85% for other cities, 70% for counties and 30% for towns. (As of the end of 2010, the domestic waste water treatment rate was 77.5%.)

3. What are the business models for the Company's waste-to-energy and waste water treatment projects?

All of the Company's waste-to-energy plants are developed on a BOT basis, whereas its waste water treatment plants are developed either on a BOT or on a TOT basis. In both cases, the Company signs a 25-30 year concession right agreement with local governments, under which the Company is responsible for investment, construction, operation, and management of these projects based on a holistic turn-key approach.

4. What are the project cycles of the Company's waste-to-energy and waste water treatment plants respectively?

After the Company signs a concession right agreement with the local government, the project will enter a six-to-nine month preparatory stage. After the environmental impact assessment and the project registration are approved by the Authorities Concerned, the construction of the plant can commence. Normally, the construction period of a waste-to-energy plant is 18 months, whereas the construction period of a waste water treatment plant is 9 months. Upon completion of construction, the project commences operation and can generate stable cash flow during the rest of the concession right period.

5. What are the sources of revenue of the Company's waste-to-energy and waste water treatment projects respectively?

There are two sources of revenue for an operating waste-to-energy plant, namely, the on-grid electricity tariff and the waste processing fee. The national on-grid electricity tariff has been increased to RMB 0.65/kWh as of April 1, 2012. Waste processing fees, on the other hand, are paid by local governments. The only source of revenue for a waste water treatment plant is the waste water treatment fee, which is paid by the local government.

6. Can waste processing fees and waste water treatment fees be increased over time?

According to the price escalation clause of the concession right agreement, the fee may be adjusted upward based on CPI, labour costs and other cost factors every two or three years after the project becomes operational.

7. What are the tender evaluation criteria for waste-to-energy and waste water treatment projects in China?

In general, tender evaluation criteria include technical propositions and plant design standards, total investment, as well as financial capability, experience and track records of tendering enterprises in constructing and operating waste-to-energy and waste water treatment projects.

8. What are the defining characteristics of the Company's waste-to-energy technology and equipment?

The Company mainly deploys its self-developed grate furnaces that do not require the use of auxiliary fuel. Gasoline is used to ignite the waste at the beginning, and when the furnace temperature rises to 850 degrees Celsius or above, dioxins can be dissolved. Therefore, the flue gas emissions of all of the Company's waste-to-energy plants are in compliance with the EU 2000 standard, the most stringent flue gas emission standard in the world.

9. How are the Company's projects financed?

In principle, our projects are financed by one-third registered capital and two-thirds project loan.

10. What are the Company's main sources of funding?

The Company has three major sources of funding: (i) cash flow from its existing operating projects; (ii) loans from commercial banks in Hong Kong and China; and (iii) long-term loans with policy banks, such as the Asian Development Bank (ADB). In 2009 and 2012, the Company signed two long-term loan facilities with the ADB for a total of US$400 million, mainly to finance its waste-to-energy projects.

11. What is the Company's dividend policy?

Since 2005, the Company has consistently paid cash dividend twice every year, which demonstrates the Company's unwavering commitment to sharing the success and results of its development with its shareholders.