The year 2009 had been characterised by a rebound in the Chinese economy and a gradual improvement in market sentiment. In Mainland China, the State government's macro budget aiming at stimulating domestic demand began to drive consumption of construction materials, in particular cement, for various infrastructure projects. Following the resumption of market confidence, the property markets in major Mainland China cities steadily picked up in the second half of the year under review. Accelerated demand had led to an upsurge in cement prices. In Southern China, where the Group has a dominant presence, cement price further strengthened due to healthy demand from urbanisation and active private sector construction.

Benefiting from improved average selling prices of cement in the last quarter of 2009 and close to optimum utilisation of enlarged capacity, the Group resumed profitability during the year under review and posted a profit attributable to the owners of the Company approximately HK$120.3 million. The return to profitability was supported by a substantial growth in sales volume and revenue in 2009.

The Group's robust organic growth in the past few years had laid a comprehensive production and distribution platform for its establishment of a leading position in the Southern China market. Following the completion of facility development, the Group's management turned their attention to gearing up efficiency of its plants.

Our emphasis on strengthening operation efficiency was evidenced by the high utilisation rate of our major production base at Yingde, Guangdong. With all of the four production lines in operation for the full year, the Yingde plant became a major profit contributor to the Group's performance in 2009.

In light of the State's policy of restricting new capacity expansion, the Group maintained its expansion momentum through mergers and acquisition. This approach allowed the Group to expedite its development in scale of operation and extension of market reach.

We completed the acquisition of TCC (Gui Gang) from our parent company in late September 2009. Three months' results of TCC (Gui Gang) had been booked to the Group's accounts and had further strengthened its profitability. We expect TCC (Gui Gang)'s contributions to intensify in the current year, when the Gui Gang plant's full year results are consolidated into the Group's profit and loss accounts.

Right before book close in 2009, the Group announced a HK$3.8 billion acquisition of Upper Value Investments Limited ("Upper Value"). This is one of most significant takeovers in the Mainland China's cement industry in recent years, in terms of the size of the transaction and the number of facilities involved.

The transaction has been approved by our shareholders in February this year. When the transaction is completed, the acquired assets' performance is expected to be incorporated into the Group's results in 2010.

Upper Value has equity interests in 10 existing clinker and cement production lines, with 4 more under construction, which are due for completion in 2010 and 2011. Upper Value's extensive array of production lines span across Guangdong province, Yunnan province, Chongqing municipality and Sichuan province, Liaoning province and Guizhou province. The addition of over 17.5 million metric tonnes of attributable annual capacity and a significantly broadened geographical coverage will immediately elevated the Group's overall competitiveness and market position in an industry experiencing a structural transformation.

Under a State policy of escalated industry consolidation and expedited elimination of inefficient capacity, we believe there will be more opportunities for merger of corporations with strong synergies. This is expected to result in reduced segmentation within the industry, with the regional markets dominated by a few large-scale regional or national players.

Having secured a leading position in Southern China, in particular the Guangdong province, the Group strives to maximise the benefits of economies of scale and to maintain a stable gross profit margin, leveraging an enlarged scope of operation and a more diversified portfolio of production bases.

We are gradually realising our vision of becoming a top-notch cement conglomerate in the Mainland China market. Apart from growth in capacity, we are widening our market spread to the western, southwestern and northeastern regions of Mainland China.

Our existing facilities are expected to further enhance their profitability, through optimisation of their utilisation as well as synergetic effects among operations within the Group.

We are well aware of the importance of maintaining a reasonable rate of return from a significantly enlarged asset base. Securing a sizeable scale of operation and achieving favourable earning margins and healthy cash flow are of equal significance in our corporate road map. We will remain cautious in keeping a balance between reaching our strategic goal and rewarding our shareholders in the process of our rapid development.

Koo, Cheng-Yun, Leslie
Chairman

Hong Kong
22 March 2010