To Our Shareholders,

For the six months ended 31 December 2007, the Group recorded a turnover of HK$13,055.7 million and profit attributable to shareholders amounted to HK$5,644.8 million, up 22% and 314% respectively. Contributions from recurrent operations such as property sales, rental, infrastructure, service and department store achieved satisfactory growth.

The Group’s department stores operation, New World Department Store China Limited (“NWDS”), is listed in Hong Kong in July 2007. The spin-off of NWDS increases the operational and financial transparency of the Group. It also allows NWDS to establish a higher profile as a separately listed entity with the ability to access the debt and equity capital markets to fund its future investments. Furthermore, it helps the Group achieve the valuation potential and at the same time the Group will continue to benefit from the business prospects and results of NWDS through its shareholding.

With the strong end-user demand, the property market in Hong Kong is rising up in 2007. The number of transactions in primary and secondary sales in 2007 was up 44% and 51% year-on-year respectively. With the favourable conditions of strong economic growth, low unemployment rate and negative interest rate, the Group expects the Hong Kong residential market will maintain its stable healthy growth in 2008.

As an international financial hub plus the strong financial activities happening in town, the office spaces in prime districts of Hong Kong are continuously under strong demand. Our office portfolio in Central and Tsim Sha Tsui is still having positive rental reversion in coming months. Meanwhile, the increasing tourist expenditure and rising number of visitors to Hong Kong have benefited both the Group’s rental portfolio and hotel operations.

The Group’s infrastructure and service arm, NWS Holdings Limited continued to expand its portfolio of large-scale infrastructure projects with enormous potential, including new roads and port in Mainland China. While the HKCEC Atrium Link Expansion is scheduled to be completed in the first quarter of 2009, Hip Hing Construction has teamed up with Gammon Construction and won the design and construction contract of the new government headquarters at Tamar.

The resilient economic growth and stable increase of average income per capita have cradled the stable growth of real estate market in Mainland China. The Group expects that the middle to high end residential property market still has significant growth potential since demand for such properties will continue to increase as a result of rapid development of the Mainland economy, the corresponding urbanization, income increase, and the improvement in living standard of the urban population.

The Group believes that its geographical diversification will alleviate the risks of having too much of its operation concentrated in one particular city or region in Mainland China. Under the backdrop of strong economic growth, the Central Government is expected to continuously release control measures to regulate the market development, alleviate distorted supply-demand imbalance and curb illicit practices. New World China Land, as a long-term and committed developer, is glad to see the market is having a healthy and stable development in the long run.

NWDS will continue to benefit from persistent rises GDP and consumption power because of its unique competitive strengths. NWDS have brand recognition and brand equities accumulated over 15 years in the market. NWDS enjoy economy of scale in operations arising from the extensive retail network and established a clear, consistently communicated vision of our own market positioning.

In last few months, the global financial market has been overcastted by US sub-prime turmoil. Alongside with the worry of global economic slowdown, the world is also affected the risks triggered by the inflation coming from the surging of commodity prices, especially from cruel oil. At the same time, Mainland China also comes across the negative effects from domestic inflation, macro-tightening measures and even the most recent snow storms. The Group will keep monitoring the risks affecting our operations and adjust our plans and executions for the best interests of the Group’s stakeholders.

Dr Cheng Kar-Shun, Henry
Managing Director
Hong Kong, 18 March 2008