Darco Water strengthens niche inTaiwan with 63% jump in 1H2008 net profit

· Order-book of S$578 million till date to propel growth for Darco

· Revenue in 1H2008 increased 51% on strong orders especially from Taiwan followed by Malaysia

· Engineered environmental systems segment posted fastest growth at 58%; will continue to be the key growth driver

Singapore – 14 August 2008 – Mainboard-listed Darco Water Technologies Limited (the "Company" or ”Darco” or the “Group”) is pleased to announce that its net profit in 1H2008 registered a year-on-year (yoy) 63% jump to S$3.4 million following a 51% yoy increase in revenue to S$51.1million.

1H2008 Financial Highlights & Review                        1h

                                                        1H2008         1H2007        Change

Revenue                                             51.1 m        33.9 m            +51%

Gross Profit                                         10.3 m         8.2 m           +26%

Net Profit (Attrib.)                                 2.8 m          1.9 m          +50%

Earnings per share(Singapore cents)  1.32              1.02           +29%

Gross profit in 1H2008 rose yoy by 26% with a gross profit margin (GPM) of 20%. GPM dropped by four percentage points in 1H2008 due to higher fuel, material and freight-related costs. Distribution expenses increased by 15% due to higher traveling and marketing costs incurred by the sales and management team to pursue potential new customers in Middle East and India. Administrative expenses increased 16% due to higher staff costs and structuring fees arising from convertible notes. Yet, in spite of increased costs, net profit attributable to shareholders rose in line with revenue by 50% to reach S$2.8 million.

1H2008 Business Review

Darco attributes its improvement in performance to strong orders derived mainly from Taiwan, followed by Malaysia. Geographically speaking, Taiwan lent a 67% yoy increase of revenue, contributing 59% of total revenue in 1H2008. Malaysia

market grew yoy by 54% and contributing 23% of total revenue. Darco has also started to see positive contributions from its Indonesian subsidiaries after several years of losses. The Group attributes this encouraging indication to improved economic outlook of Indonesia.Engineered environmental systems (“EE systems”) segment continues to be the strongest performing business segment for the Group as it sees a 58% yoy increase, forming about 90% of 1H2008 revenue. The growth is mainly due to higher orders received in the first half of FY2008 from its core customers in the electronic and semi-conductor sectors as well as from the municipal sector pertaining to the civil construction activity from Ker-Ya project in Taiwan. Going forward, the Group expects EE systems to continue its lead as key revenue contributing segment.

Water management Services (“WM Services”) segment also posted a slight yoy increase of 9%, forming about 9% of 1H2008 revenue. The modest growth was mainly contributed by Deqing BOT project in China.

“It is very clear that we have a long-running leadership position in Taiwan in the area of environmental engineering as we see a spike in contract orders from our repeat customers. Going forward, we will strengthen our presence in Taiwan further and replicate this success to other potential markets like Malaysia.”

Near-term Outlook

Darco maintains its optimism on its near-term outlook given encouraging influx of new orders. To date, order book stands at S$578 million with S$109 million to be delivered in FY2008. Earlier in 24 April 2008, the Group announced that project orders to be delivered in FY2008 were to be S$129 million. However, it has subsequently decided not to pursue one of the projects worth approximately S$20 million that involves civil works in Taiwan. The Group also believes that its vast experience in the industrial sectors and strong expertise in the area of environmental engineering will herald more orders in the short term ahead, particularly from traditional sectors like electronics and semi-conductor which remained relatively unperturbed by market conditions. On its newly penetrated solar-energy sector, Darco is equally confident on its prospect of gaining new orders on rising investments in manufacturing facilities from solar-energy and related sectors in South-East Asia.