Dear Shareholders,

On behalf of the Board of Directors, it is our pleasure to present to you our Annual Report for the financial year ended 31 December 2009 (“FY09”).

Business Review
Despite the challenging operation environment in FY09, the Group managed to achieve some good progress: By entering into more direct sale projects, revenue from domestic wall hung boiler business in the People’s Republic of China (“PRC”) market increased by 11%, achieved RMB101 million in sales for the Group. In FY09 the Group set up a new subsidiary company – Zhongshan Superfit Thermal Facility Co., Ltd, which is in the business of manufacturing boiler parts and metal accessories, thus further expanding the Group’s presence in the industrial supply chain for the domestic wall hung boiler business.

Working capital and cash flow management of the Group has improved and assets structure has optimised and these are evidenced by an increase in the Group’s cash and cash-equivalent of RMB37.7 million, an improvement as compared to last year’s results thus setting a solid foundation for the Group’s business development in 2010.

Global economic crisis had a negative impact on the FY09 performance of the Group. The export sales of domestic wall-hung boiler, declined significantly by RMB77.3 million, only achieving RMB27.4 million. Due to under-utilisation of production capacity resulting from raw material being maintained at high level and severe market competition the Group’s energy business incurred losses in the last 2 years and as such, the prospects of the Group’s energy business has become uncertain. The management provided for an allowance of RMB19.6 million in FY09 for the impairment loss of property, plant and equipment relating to the energy business. In view of the unstable economic environment in FY09 and the industrial boiler business having a large customer base located throughout the PRC, the Group prudently provided RMB6.2 million as allowance for doubtful debts in FY09 for the industrial boiler business. The Group reported a loss in FY09.

Business Prospect
The Group will optimise opportunities to promote its core domestic wall hung boiler business, in the following three ways:

• With the completion of the second phase of the PRC West-East gas transmission project, utilization of natural gas as household fuel in families located along the project is expected to gain popularity, which in turn could open up a new market for the Group’s domestic wall hung boiler product which is fuelled by natural gas. The Group will invest more resources towards penetrating the PRC market by optimising its “SQUIRREL” brand name and also expanding its distribution network; all these being initiatives that are aimed at achieving a bigger market share for the Group.
• The Group has gradually set foot in the supply of raw-materials which are related to the domestic wall hung boiler business through the establishment of Shaoxing Aike Electric Co., Ltd and Zhongshan Superfit Thermal Facility Co., Ltd. The strategic investment of the Group is part of Group’s continued efforts in promoting business growth.
• Certain overseas markets for the Group’s domestic wall hung boiler business have commenced recovery from the global economic crisis. With the advantage of a quality product sold at competitive price, the Group intends to use these strengths to achieve progress in overseas market expansion.

The Group has plans to widen its scope of business from the current production of industrial boilers and equipment supply for liquefied natural gas (“LNG”) pipeline project to include technical services and after-sales maintenance services thereby possibly generating extra revenue. The Group will also continue to closely monitor and manage customers’ credit assessment, fund utilisation and cash flow.

The Group will prudently explore the development strategy of its energy business to minimize business risks and will update shareholders of any material developments accordingly.

Acknowledgement
We would like to take this opportunity to thank our shareholders, business partners, and staff for your enduring support, hard work and confidence. We look forward to your continued support.

Ng Fook Ai Victor                     Chang Houchun
Chairman                                  Chief Executive Officer