Oct 10, 2006

Salcon Signs Zhejian Province Contract

Salcon Berhad has signed a contract to operate and manage the supply of treated water in bulk to the city of Haining, a city in China’s Zhejiang Province with a population of about 900,000 people.

Under the terms of the agreement, Salcon Zhejiang (HK) Pte Ltd, a wholly owned subsidiary of Salcon Berhad, holds 60% stake in a Joint Venture company, Haining Salcon Water Co. Ltd (HSW). HSW has been granted the right to supply treated water in bulk to the government owned Haining Water Supply Company. Haining Water Supply company retains the responsibility of downstream activities such as distribution, billing and collection.

Holding majority stake, Salcon will be responsible for the management and operations of the joint venture company.

Haining Salcon Water Co. Ltd will produce, operate and manage an existing water treatment plant with a design capacity of 60,000 m3/day (currently operating at 70,000m3/day) as well as construct a new water treatment plant of 300,000m3/day. The new treatment plant will be developed in 2 phases of 150,000 m3/day each with the first phase expected to be completed by end 2007. Currently, the construction progress of the 150,000 m3/day water treatment plant is at piling stage.

Salcon estimates that the 30-year contract that it has signed with the Haining government will represent cumulative revenue of over RM1.2 billion.

Salcon Berhad's Chief Operating Officer, How See Hock commented that the company saw this signing as a step into more agreements with Chinese local governments. The company will continue to focus and expand in the Chinese water supply and wastewater treatment market.