governance

726

expenses after the Group was listed on SGX in mid 2008;

Others

2,428

379

Write-off of Baixinyuan's overhead (mainly depreciation of production equipment) incurred in Q1 09 due to non-production during winter.

Total:

9,153

5,235

(d)

We note on Page 9 of the results announcement that the Group has an "outstanding secured confirmed order book of approximately RMB811.9 million, of which RMB503.2 million has been recognised as revenue". However, we note on Page 1 and 8 of the results announcement that there was "no revenue derived from the Group's principal activities in 1Q2009". Please reconcile the two statements.

The Group has orders amounting to approximately RMB811.9 million which were secured and work on these projects commenced in FY2OO8. Revenue from these orders amounting to RMB503.2 million has been recognised as revenue in FY2008 in accordance with the Group's revenue recognition policies. The remaining balance of the orders is to be completed in FY2O09. For reasons already explained in paragraph 8 of the announcement, no revenue has been earned and recognised from January FY2009 to March FY2OO9.

(e)

We note on Page 9 of the results announcement that "with the establishment of the concrete mix base completed on schedule in FY2008 and operations commenced in the last quarter of FY2008, sales of concrete products are expected to increase for FY2009". Please explain what are the implications on performance when sales of concrete products start.

The potential implications on performance arising from sales of concrete products are likely to be: 1) some cost savings and improved efficiency on supply chain due to internal production; 2) higher revenue and profit from sales to third parties if there is sufficient capacity to meet demand.