Chairman's Statement

Last year, the Group's successful launches of a number of property and hospitality projects further solidified its strength in the respective business sectors. However, as the global economy experienced its downturn, the Group's transportation division was met with considerable challenges. Mr. Stanley Ho Group Executive Chairman 2 April 2009

Profit attributable to shareholders of the Group for the year ended 31 December 2008 was HK$101 million (2007: HK$1,014 million). Basic earnings per share were HK 4.4 cents (2007: HK 45.7 cents).

The profit attributable to the equity holders of the Company for the year would be HK$196 million, a decrease of approximately 69% compared with last year of HK$641 million, after excluding the effect of revaluation deficit (net of deferred taxation) of HK$95 million (2007: gain of HK$82 million) on investment properties and excess of interest in fair value of net assets acquired over cost of acquisition of subsidiaries of HK$291 million in 2007.

Subject to approval by our shareholders at the Annual General Meeting on 26 May 2009, the Directors recommend a final dividend of HK 1.3 cents per share (2007: HK 7.0 cents per share) in respect of the year ended 31 December 2008. No interim dividend was declared during the year (2007: HK 7.0 cents per share). The total dividends for the year amounted to HK 1.3 cents (2007: HK 14.0 cents) per share.

2008 started strongly with encouraging visitor numbers and a thriving property market sustaining the dynamic momentum in preceding years. However, in common with the global economy, the situation began to turn around, resulting in a challenging year for the Group.

The shipping division was burdened by a multitude of factors including an abrupt surge in fuel prices, stiff competition, visa restrictions from the Mainland and global economic downturn. To weather such challenges, TurboJET strove to achieve higher cost efficiency through route rationalization, re-deployment of resources and proactive cost control initiatives including the addition of two new vessels of higher passenger capacity to reap improved return per journey through economies of scale. The Company also sought to increase income through product diversification by harnessing the luxury travel segment and introduced a newly-refurbished vessel to target charter groups and discerning individual travelers.

Under the strenuous operating environment, TurboJET maintained its quality service and clinched various commendation awards during the year. The successful hosting of the 33rd Interferry Conference in Hong Kong, the only international conference representing the global maritime community, also reinforced its preeminent role in ferry services within the region.

The Group continued to maintain its leadership position in the Macau property development sector and as owner of the largest premium land bank amongst Hong Kong based developers. As a result of the successful launch of Nova City Phase 3, substantial income has been realized in 2008 and further income is expected to be booked in 2009. One Central Residences also achieved phenomenal sales results, with its handover and booking of revenue expected to take place during the 3rd quarter of 2009. The luxury shopping centre of One Central is scheduled to be launched during the last quarter of 2009.

During the year, the Group acquired several land sites in Macau. In May 2008, the Group purchased a 20% stake from Sociedade de Turismo e Diversões de Macau, S.A.("STDM") in the Cotai site development and became the sole investor in the project.

Within the same month, the Group also acquired the development right of a site adjoining its Harbour Mile site. With unwavering confidence in the outlook of Macau's economy, the Group has plans to develop the two plots of land collectively into a flagship mixed-use development along one of the last premium sites on the lakefront of Nam Van.

Following the acquisition of 100% interest in the Nova City project in December 2007, the Group is in the process of designing the remaining phases, including a large-scale neighborhood mall serving residents' needs, subject to government's approval. These pipeline projects are expected to contribute significantly to the Group's future income.

In December 2008, the Group made various important announcements concerning its hospitality portfolio. The Group revealed its plan to develop the Jumeirah Macau Hotel in Cotai, bringing the ultra-luxury Dubai experience to Macau. At the same time, the Group entered Hong Kong's hospitality scene for the first time with the soft opening of the SkyCity Marriott Hotel near the Hong Kong International Airport and the AsiaWorld-Expo. In 2010, a brand new Mandarin Oriental hotel will be completed as part of the One Central development, and will join the Group's diversified interest in the hotel business.

In January 2009, the Group announced the disposal, subject to approval by its independent shareholders, of its 50% interest in the Mandarin Oriental Macau at an estimated consideration of HK$740 million and 50% of the site's future development potential if and when disposed or redeveloped by STDM. The Group also announced in January 2009 that it will repurchase 263,667,107 shares held by STDM and its subsidiary, at the price of HK$2.20 per share, which represents approximately 11.68% of the issued share capital if approved by its independent shareholders.

The Group's strategic investment in STDM continued to generate satisfactory dividends in 2008. As a result of prudent risk management, the Group remains financially sound despite of the global financial crisis. The Group holds bank balances and deposits of approximately HK$2.7 billion as of 31 December 2008.

Year 2008 has been a period of consolidation following years of phenomenal growth in Macau. The Group has taken the opportunity to reevaluate its business portfolio, streamline its operations, and establish a solid foundation to meet future expansion prospects. With the Group's share prices trading below its intrinsic value and growth potential, and to enhance return for its investors, the Group repurchased 105,338,000 shares on the Stock Exchange for an aggregate consideration, including transaction costs, of approximately HK$322 million in 2008.

With invaluable support from the management, our teams, business partners, and shareholders, the Group is able to conclude the year on a positive note in spite of economic turbulence around the world. I extend my appreciation for everyone's contribution and effort, and am confident that Shun Tak will emerge as one of the few leaders that will come out stronger upon the recovery of our economy.