Global financial markets were devastated by the financial crisis triggered by the sub-prime mortgage's problems and bankruptcy of Lehman Brothers over the last year. Being one of the newly developing markets, Vietnam was inescapable from being affected by the turmoil. Vietnam had been plagued by high inflation rate and widening trade deficit as a result of the overheated economy in the first half of 2008. The Vietnamese government immediately adopted tightening economic measures, including the control of money supply and raising the banks' lending rate to as high as 23% per annum and also, imposing control on the import of non-production related products. However, when the financial crisis hit, the government, fearing that the economy to be deteriorated too drastically, adjusted its policies by reducing the banks' lending rate to 9% per annum on January 2009, with the short term rate (less than one year) being reduced to as low as 6%. Meanwhile, the government also formulated measures to boost infrastructure projects so as to stimulate domestic consumption and to alleviate the effect brought by shrinking foreign investments and export. According to the government's estimate, the GNP growth of Vietnam will be around 6% in 2009.

Vietnam has abundant natural resources, rich farm and sea products and a young population with high consumption power. It is believed that Vietnam will be one of the fastest developing countries that recover from the global financial turmoil. The Group is optimistic to the long-term economic growth of Vietnam and thus will maintain its set principles on investing in Vietnam, but will adjust its pace of investing in according to the situation and development of the local economy.

For the year ended 31 December 2008, the Group recorded a turnover of HK$594,746,000, representing an increase of 12.4% as compared to HK$529,251,000 of last year. Turnover from the cement business was HK$451,994,000 representing a year-on-year increase of 12.5%, whereas turnover from the property investment was HK$134,012,000, representing an increase of 15.0% as compared to last year.

The consolidated net profit attributable to shareholders was HK$312,384,000 for the year, representing an increase of approximately 3.2% when compared to HK$302,640,000 of last year.

Cement Business

For the full year of 2008, the Group achieved 1,274,000 tonnes of total sales in cement and clinkers, representing only a slight increase as compared to last year. The disappointing sales were mainly attributed to the following two factors. First, as a result of the adoption of the government's tightening economic measures aiming to cool down the surging inflation rate in the second half of 2008, the infrastructure projects and thus demand of cement were adversely affected. Second, the raining season in 2008 came earlier and lasted especially long which thus affected the testing and trial production of the Group's new clinkers' production line of 3000 tonnes per day and therefore its commercial production had not been actualised as its original schedule in the 4th quarter of 2008.

In early 2008, the Group set up a joint venture to exploit its own limestone mine, instead of contracting to a third party contractor as did in the past years, which has helped reduce production cost. Besides, the Group has also completed its own cement bags manufacturing plant by the 4th quarter of 2008 and therefore from 2009 onwards, the Group can produce its own cement bags. It not only can reduce cost but also ensure the stable supply of cement bags. Moreover, the Group has also set up a joint venture company for logistics and transportation by the 4th quarter of 2008 and started to handle part of the cement plant's logistics business. The above limestone exploitation, cement bags production and transportation are all important parts of the production cost and thus closely related to the profitability of the cement plant. The Group expects the above measures can help boosting the cement plant's profits in 2009.

In 2009, the Vietnamese government adopted similar measures as other countries to rescue the economy from the financial crisis, including to boost domestic consumption and to accelerate infrastructure projects such as piers and highways. On the other hand, it has strictly controlled the import of clinkers into Vietnam. According to the estimate of the Ministry of Construction, the national demand of cement will reach 45 million tonnes in 2009, with a year-onyear growth rate of 11-15%.

Starting 2009, the Group's new clinkers production line of 3000 tonnes per day has been in normal commercial operation. The original plan for a clinkers' grinding plant in Long An Province in the suburb of Hochiminh City has been delayed due to problems in removal and relocation of local residence. Yet, the Group has already invested in another clinkers' grinding plant in Ninh Thuan Province, which is expected to commence operation by July this year. The cement plant will have to sell part of its clinkers in the first half of 2009, whereas in the second half, the sales of cement will increase after the commencement of the clinkers' grinding plant in Ninh Thuan Province. The Group is optimistic to the growth of sales and profits of the cement plant and expects to produce about 1.9 million tonnes of cement in 2009.

On the other hand, the Group has temporarily withhold its original plan of investing in another clinkers' production line of 5000 tonnes per day in this year, as a result of the occurrence of the financial crisis in October 2008. The Group will consider resuming the project when the global and local economic situations become more stable and clear.

Saigon Trade Centre and Property Investment

As a result of the dramatic deterioration of the global investment environment, Vietnam's foreign investments frenzy in the first half of 2008 was seen cooling down in a drastic pace. Foreign investors were more on a wait and see attitude. The leasing situation of the Group' Saigon Trade Center was thus being affected. The occupancy rate has dropped from 96% as at mid-2008 to 90% as at the year-end. Yet, for the full year of 2008, the total rental income still recorded a growth of 18% as compared to last year.

The occupancy rate is still under pressure in 2009, but is expected to stay above 85%. On the other hand, the rental rate for renewal leasing contracts still has room for upward adjustment, which therefore shall be able to compensate part of the decrease in the total rental income resulted from a drop in occupancy rate.

On the other hand, as most of the planned and under-constructed office buildings have either been delayed or suspended for development, the Saigon Trade Centre should be able to benefit from a longer term of view.

The rental income of the Group's other investment properties located in Hong Kong has been stable during the year, whereas the investment properties in the PRC recorded a drop in occupancy rate for the year of 2008.

Property Development

Last year, the property market in Vietnam was in frenzy and this year it was cooled down as a result of the financial crisis. The property market of Hochiminh City in Vietnam is still in its infancy stage, for which supply of property is very limited and thus its potential for long-term development is huge. Currently, it may be a good timing for the accumulation of land reserve.

In August 2008, the Group signed a cooperation agreement with Trans Asia Viet Corporation of Vietnam, to jointly develop a piece land for residential purpose in Binh Chanh District. Total gross floor areas to be developed are 558,000 sqm. Seeing the worsening of the market situation, the Group has successfully negotiated with the Vietnamese partner to reduce the total land cost from approximately HK$633 million to HK$507 million (the Group's share of 75% or approximately HK$380 million), representing a reduction of the GFA land cost from HK$1,135 to HK$908 per sqm.

Besides, the Group's another 85% owned residential project in Binh Thanh District, which has total gross floor areas of 110,000 sqm, is still in the process of the government's applications and procedures. The first phase of the development is expected to start within this year.

The Mongolia's economic situation and development is in a large extent being affected by the fluctuation of the demand and prices of global mineral resources. The Group's investment in a property project in Ulanbaatar, which comprises mainly villas' development, has been slowed down and its pace of development will be adjusted depending on the market conditions.

Traditional Chinese Medicine ("TCM") Business

The Group's TCM business has been focused mainly on anti-ageing products. Currently, its clinical studies in the Clinical Research Center of Hong Kong University and in the mainland China are still ongoing. For the year ended 31 December 2008, the operating loss of the TCM business before deducting minority interest was HK$5,371,000 (2007: HK$2,593,000).

Dividend

During the year, the Group recorded a continuing stable cash inflow from its normal operating business. And the Group is also required to retain cash for investment purpose. The board of directors recommended to distribute a final dividend of HK6 cents per shares to the shareholders and together with the interim dividend of HK4 cents per share already distributed, the total dividend for the full year of 2008 will be HK10 cents per share.