The Dongshen Water Supply Project (the "Water Project") is one of the core businesses of the Group. A subsidiary (approximately 89.1% owned by the Company) has 99% interest in the Water Project. The site of the Dongshen Water Supply Project is located near the Dongjiang coastline of the Guangdong Province and responsible for supply of natural water to Hong Kong, Shenzhen and Dongguan regions. The Water Project has the comprehensive function of water supply, flood prevention, irrigation and electric power generation. It also provides the Group with tremendous and steady cashflow.

Pursuant to the Concession Agreement, the Water Project has been granted the right to operate, maintain, develop and upgrade the project and to supply and sell unprocessed natural water to the users in Hong Kong, Shenzhen and Dongguan. The term of the concession is for 30 years commencing from 18 August 2000.

The Water Project has commenced operations since March 1965 for the purpose of addressing the water problems faced by Hong Kong. It is a large scale system that takes water from the intake point and transports it approximately 69 kilometers (or 42.9 miles) for supply to Hong Kong, Shenzhen and Dongguan. In order to improve the quality and reliability of water supply and to provide additional capacity to meet increased demand in the future, the project has undergone a series of renovation work in 2000 (the "Renovation Project"). The Renovation Project has upgraded the original water project facilities into a protected water supply system and increased transport capacity for the Water Project. Water supply channels and canals had been enclosed and covered in order to protect the water from pollutants carried through natural runoff into the waterway. The Renovation Project was completed in 2003 and the annual capacity of water supply of the Water Project is about 2.423 billion cubic metres.

The Water Project is the main source of water supply in Hong Kong.

Last revision date: January 2010