Aug 25, 2008

China Water Industry Group Acquires Eight Sewage Treatment and Water Supply Projects

Business scope extended to northern and western China to further strengthen profitability

China Water Industry Group, Ltd. recently announced that its wholly-owned subsidiary has entered into an agreement with an independent party about the acquisition of 100% issued share capital in Affluent Boom Enterprises, Ltd.

Affluent is an investment holdings company, and its subsidiaries are involved in sewage treatment and water supply businesses in China. The water service group held by Affluent is currently operating seven sewage treatment plants in Huizhou City, Sihui City, Huidong County, Boluo County of Guangdong Province and Baoji City of Shaanxi Province, and one water supply plant in Tangshan City of Hebei Province, which is partially under construction and will commence operation by next year. The aggregate sewage water treatment capacity reached 480,000 tons per day, and the aggregate water supply capacity reaches 180,000 tons per day.

The total consideration of the acquisition of Affluent is about $89,643,605 (HK$700,000,000).

Huizhou, Huidong, Boluo and Sihui in Guangdong are located at the Northeastern and Northwestern end of the Pearl River Delta. With rapid growth in population as well as economies, local governments in the area regarded sewage treatment projects and actively nourished corporations in the water industry.

Li Yu Gui, chairman of China Water Industry, said, ''Apart from the number of water service corporations, the water service group controlled by Affluent is equipped with strong team of experienced environmental protection professionals, National Grade A standard pollution treatment facilities, as well as ISO9001 environmental project design and sewage treatment operations quality control certification. This acquisition is a very important milestone for China Water Industry as this raised the Group's water supply and sewage treatment capacity to 2,480,000 tons per day and 580,000 tons per day respectively. If the above is added to the water supply capacity of 3,050,000 tons per day and sewage treatment capacity of 835,000 tons per day of projects with letter of intent signed in Shenyang City, Yunfu City, and Geermu City, the total water supply capacity and sewage treatment capacity of the Group will reach 5,500,000 tons per day and 1,415,000 tons per day respectively. The group is getting closer and closer to its goal of attaining water supply capacity of 10,000,000 tons per day and sewage treatment capacity of 2,000,000 tons per day. Furthermore, the Group has successfully expanded its water business network to western and northern PRC, and gradually became a nationwide influential water service group. We will actively pursuit and acquire more quality water service projects to strengthen the Group's profitability and bring better return to shareholders.''