Faced with the deteriorating global warming problems, various governments and international organisations are increasingly committed to the development of energy-saving and environmental-friendly industry. The Chinese Government has actively launched a number of policies supporting the relevant industries in order to fulfil its target of reducing the country’s carbon emissions in 2020 to a level 40-50% below that in 2005. Environmental-friendly electric motor bikes have emerged as the principal mode of transportation in second- and third- tier cities in China in view of burgeoning urbanisation and stronger awareness of the need for environmental protection. According to Frost & Sullivan, as at 31 December 2009, there were more than 81 million electric bikes in China. With the inclusion of electric bikes in the Rural Home Appliances List by the Ministries of Finance and Commerce in a number of provinces including Shandong, Jiangsu and Hebei in March 2010, we believe the rapid increase in the number of electric bikes will drive the growth in demand for lead-acid motive batteries.

In response to market developments, Chaowei Power has endeavoured to boost its production technology and upgrade its production capacity, thereby steadily strengthening its competitive advantage. During the year under review, the new production facilities in Anhui Province has commenced trial production and the new production facilities in Henan and Zhejiang Provinces were operational. In line with the Group’s strategy to expand production capacity, construction of the new production facilities in Shandong Province has commenced in 2010 with completion expected in the second half of 2011.

Driven by factors such as steady increase in market demand and gradual expansion in its scale of operations, the Group recorded robust growth in product sales and attained new record in profit as demonstrated in its strong results: revenue at RMB3,224.8 million, a significant increase of 32.5% over 2009; gross profit and profit attributable to the owners of the Company increased by 20.4% and 32.8% to RMB847.7 million and RMB268.2 million respectively; gross margins maintained at a healthy level of 26.3%; and basic earnings per share increased by 14.8% to RMB0.31.

With Chaowei Power’s successful listing on the Main Board of the Stock Exchange of Hong Kong Limited on 7 July 2010, the Company has gained access to international capital markets, which has not only reinforced our corporate governance structure, enhanced our corporate and brand image, but has also further strengthened our leading position within the industry. The funds raised are beneficial to the Group in accelerating the upgrading of our production capacity and technical capability, thereby creating sound foundation for the Group to respond to all challenges and providing a powerful boost for our long-term development.

With favourable government policies and low penetration rate of electric bikes in rural areas, it is generally believed that the growth trend of electric bikes in the PRC would be sustainable. As lead-acid batteries are the main source of power for electric bikes in the PRC, industry forecasts estimate that the revenue of lead-acid motive batteries for electric bikes in the PRC will grow steadily at a compounded annual growth rate amounting to 24.1% between 2009 and 2011. Looking ahead, our management team have complete confidence in the prospects of the lead-acid motive battery market. The Group intends to continue our vigourous efforts in enhancing production capacity and technical standards, strengthening operating efficiency, providing customers with a satisfying product quality and maintaining our competitive advantages.

One of the emphases of the “Twelfth Five-Year Plan” of the Chinese government is the reduction of carbon emission. We believe that it will serve as an impetus to boost the popularity of electric vehicles as over 30% of China’s 7 billions-plus tonnes of carbon emissions came from cars. The Group plans to ride on this environmental-friendly bandwagon by actively strengthening our research and development capabilities and expanding the scope of our business, seeking opportunities for potential development in the forthcoming greener era.

Last but not least, on behalf of the Board, I would like to thank our staff for their dedicated service and contributions and extend my heartfelt gratitude to our shareholders and business partners for their continued support and trust. The Group intends to continue our concerted effort in monitoring the pulse of the market in order to capitalise on the enormous opportunities of the lead-acid motive battery market and advance our business development to new heights while bringing long- term lucrative returns to our shareholders.