During the six months ended September 30, 2011, Zhejiang Chisen had completed the relocation of production plant in Jingyi Road. Pursuant to the Compensation Agreement on Relocation and Acquisition entered into by Zhejiang Chisen and Administrative Committee of Changxing Economic Development Zone (“ACC”), ACC shall pay Zhejiang Chisen a compensation in the amount of RMB98,514,000 (US$15,278,000) for the loss on long-term land lease prepayment and buildings located in Jingyi Road. In May 2011, the Company wrote off the long-term land lease prepayment and buildings in Jingyi Road with net book value of approximately RMB14,354,000 (US$2,225,000) and therefore net compensation income of RMB84,160,000 (US$13,053,000) was recognised for the period. As of September 30, 2011, the compensation of US$9,498,000 has not been received and was recorded as current assets in the consolidated balance sheet.

As a result, the Company recorded an extraordinary gain of US$13,053,000 in the consolidated statements of operations and other comprehensive income for the six months ended September 30, 2011.

During the six months ended September 30, 2011, and without advance notice to the Company, the PRC Central Government tightened its environment protection policy which applies to all lead-acid battery manufacturers. Pursuant to the newly tightened policy, a 500 meters isolated area must be maintained between production facilities, including assembly facilities, and residential areas.

The Company’s Jing’er Road plant was mainly utilized for assembly activities and it cannot comply with the tightened policy. Management plans to gradually scale down the operation of Jing’er Road plant and estimates that it will relocate such production facilities to the plant in Xuyi County, Jiangsu Province prior to December 31, 2011. After evaluating the plant and machinery at Jing’er Road plant, some of them cannot fit into the plant in Jiangsu Xuyi. The Company decided to impair the value of plant and machinery as well as leasehold improvement of Jing’er Road plant down to its recoverable amount. The impairment loss was recorded as follows:

The management considered that this government behavior is very unusual and rare to happen, and thus the relevant impairment loss of plant and machinery was classified as an extraordinary item.