I present my report to the shareholders for the six months ended 31 December 2009.

Interim Results

For the six months ended 31 December 2009, the turnover of the Group rose 52% to HK$58,469,000 (2008: HK$38,449,000), and the gross profit for the period grew 20% to HK$41,757,000 (2008: HK$34,801,000) as compared to the previous corresponding period. These results were mainly attributable to the rental income of investment properties and proceeds of property sales of the Group.

In addition, the Group recorded other income in the sum of HK$11,629,000 (2008: HK$10,484,000) including, among others, the imputed interest income and final threemonth guaranteed rental income of investment properties in Shanghai as provided by the vendor in the period.

After all, the Company showed turnaround profit of HK$23,108,000 (2008: loss of HK$22,085,000) for the period attributable to its owners with earnings per share of HK$0.1055 (2008: loss per share of HK$0.1008), primarily due to the stablisation of the overall fair value of investment properties of the Group without further provision of depreciation made in the period under review.

Taken into account of other comprehensive income of exchange gain on translation to presentation currency, the total comprehensive income attributable to owners of the Company aggregated to HK$25,370,000 (2008: expense of HK$37,746,000).

Interim Dividend

The Directors have declared an interim dividend of 2 Hong Kong cents (2008: 2 Hong Kong cents) per share for the six months ended 31 December 2009 to all shareholders whose names appear on the register of members of the Company on 16 April 2010. The dividend warrants are expected to be despatched to those entitled on or about 4 May 2010.

Business Review

In the period under review, the Group improved results of its operating segments in terms of property rental and property sales in the mainland China, pursuant to the economy and property market in China emerged from economic recession after global financial turmoil.

The rental income of the Group generated from its investment properties in Shanghai and Beijing amounted to HK$36,104,000 (2008: HK$37,785,000), which contributed 61.8% to the aggregate turnover of the Group. The segment results of property rental surged to a profit of HK$27,773,000 (2008: loss of HK$16,512,000), of which HK$25,688,000 was arisen from investment properties in Shanghai with the balance from those in Beijing, and it was in that the overall fair value of investment properties of the Group became stable under resurgent market in the period.

In Shanghai, the pressure on fall in rental and rise in vacancy rate persisted in the face of abundant newly completed high-quality office buildings which offered competitive rental to attract tenants. And the Group endeavored to sustain high occupancy rate of its quality offices known as “Eton Place” situated in Pudong, with insignificantly reduced rental income in an aggregate of HK$25,330,000 (2008: HK$25,827,000), supported by the final three-month guaranteed income of HK$1,347,000 (2008: HK$4,947,000) as provided by the vendor in the period.

In Beijing, the substantial increase in supply of retail properties prior to and immediately after the Olympics, in conjunction with cooling market sentiment thereafter, resulted in rising vacancy rates and forcing lower rent. The “Uptown Mall” of the Group strived for high level of occupancy with mildly decreased rental turnover and rental concession, and the total rental income was HK$10,774,000 (2008: HK$11,958,000) in the period under review.

Moreover, the residential market in Beijing witnessed robust demand that accelerated the sales volume and price level of remaining unsold residential units of Chaoyang Garden developed by the Group. The Group accounted for net proceeds of property sales in the sum of HK$22,365,000 (2008: HK$664,000), which contributed 38.2% to the total turnover of the Group, while the segment results climbed to HK$7,152,000 (2008: loss of HK$1,381,000) as against the loss of the previous corresponding period.

As disclosed in the previous annual report of the Company, the Group lodged a petition for international arbitration in July 2009, claiming against the Chinese joint venture partner of Shenzhen Zhen Wah Harbour Enterprises Ltd. (“Zhen Wah”, which entitles to land use right of a piece of land located in Tung Kok Tau in Shenzhen), for its specific performance under a shareholders’ agreement that was previously awarded as legally valid and effective, which stipulated, among others, the increase of equity interests of the Group in Zhen Wah to 80%. The hearing was held on 4 September 2009. Meanwhile, the result of arbitration hearing is pending the grant of the arbitral award, which has been deferred to the end of March 2010.

Financial Review

Capital Structure

The financial position of the Group remains stable and liquid, and its financing and treasury policies are managed and controlled at the corporate level and prudent manner. The main objective is to utilise the group funding efficiently and to manage the financial risks effectively. As at 31 December 2009, the equity attributable to owners of the Company amounted to HK$1,451,672,000 (30 June 2009: HK$1,430,684,000) with net asset value per share of HK$6.63 (30 June 2009: HK$6.53). Total unsecured and secured bank borrowings of the Group amounted to HK$302,400,000 (30 June 2009: HK$325,500,000) as at 31 December 2009, which were in Hong Kong dollars and repayable within 3 years on floating rate basis. As at 31 December 2009, the gearing ratio of the Group was about 9.6% (30 June 2009: 12.7%) based on the net debt of the Group (after deducting bank balances and cash) to its equity attributable to owners of the Company. The Group maintains a conservative approach in treasury management by constantly monitoring its exposure to interest rate and foreign exchange. The use of financial instrument is strictly controlled by the Group. No significant exposure to foreign currency fluctuations affected the Group in the period under review. No financial instruments were used for hedging purpose in the period.

Financial Resources and Liquidity

In the period under review, sufficient cashflow was generated by rental income of investment properties in Shanghai and Beijing as well as sales proceeds of properties in Beijing. As at 31 December 2009, the Group’s bank balances and cash stood at HK$163,099,000 (30 June 2009: HK$144,445,000) denominated primarily in renminbi yuans and Hong Kong dollars. With sufficient cashflow in the period, the Group maintained un-utilised credit facilities of HK$15,000,000 (30 June 2009: HK$11,500,000) as working capital at floating interest rate as at 31 December 2009.

Pledge of Assets and Contingent Liabilities

As at 31 December 2009, the Group pledged its investment properties with a total carrying value of HK$1,001,386,000 (30 June 2009: HK$997,130,000) to financial institutions as security against general banking facilities granted to the Group, and also pledged certain of its bank deposits in the sum of HK$12,772,000 (30 June 2009: HK$12,303,000) to banks to secure home loans granted to the home buyers of property project of the Group. The Group has given guarantees in respect of the settlement of home loans provided by banks to the home buyers of a property project in Beijing. As at 31 December 2009, the Group had given guarantees in respect of such home loans of HK$165,387,000 (30 June 2009: HK$216,216,000). The Directors of the Company consider that the fair values of these financial guarantee contracts at their initial recognition and at the dates of statement of financial position are insignificant on the basis of the low loan ratio.

Prospects

Since the economic and property market ambience in China is resilient to economic slowdown, along with the opening of the World Expo 2010 in Shanghai this summer and improving household disposable income in Beijing, it is anticipated that a recovery in leasing demand will improve vacancy rates across office and commercial sectors gradually and the decline in rents will begin to subside.

Yet, the influx of newly completed office buildings, together with the previous low absorption of vacant office spaces in Pudong will incur active market for upgrading and relocating to these new office spaces offering lower rentals, which will constrain to a certain extent the pick-up rate and rental levels of the office units of the Group.

In Beijing, the ample supply of malls in particular in Chaoyang District will still impose downward pressure on the occupancy rate as well as rent levels of the mall of the Group. Meanwhile, it is anticipated that property sales will likely continue on an upward trend, boosted by recent soaring land prices and planned infrastructure improvements in the city over the next year.

Nevertheless, the Group will continue to be responsive to the volatile market via professional management, cost effectiveness as well as strategic market positioning. In addition, it will procure competitive leasing terms, appropriate tenant mix and brand portfolio as well as diversified theme operations to bolster the leasing and optimize the market niche of the mall, with striving rental and concession terms to retain tenants upon renewals and lure new tenants of the office units, so as to enhance the overall asset value and income of the Group.

The Group will endeavor to safeguard its best interests in the stake in Zhen Wah and continue to strive for better redevelopment plan and value of Tung Kok Tau in Shenzhen in alignment with the official rezoning and reclamation, city planning and construction of Shenzhen Metro in the region.

Appreciation

I would like to thank my fellow Directors and staff of the Group for their hard work and commitment, and bankers and shareholders of the Group for their continued support.

CHUA Domingo
Chairman

Hong Kong, 19 March 2010