“The past year was a challenging one for SOCAM and for many Hong Kong companies. However, the Group has planned well in advance a number of growth businesses targeted at the huge potential that the emerging markets in the Mainland are offering, and this strategic repositioning should ensure sustainable, long-term growth,” said Mr Vincent H.S. Lo, Chairman of SOCAM.

He added that market conditions in Hong Kong remained difficult in the past year as the territory underwent painful restructuring, and that the Government’s abrupt changes in housing policy and the subsequent slowdown in public housing construction in particular had put unprecedented strain on SOCAM's traditional revenue sources.

In order to achieve sustainable development, the Group is expanding its investment and businesses in the Chinese Mainland, specializing in the property development, construction materials and construction sectors.

In property development, SOCAM's acquisition of the development rights of Rui Hong Xin Cheng (RHXC) from the Shui On Group's private arm, Shui On Properties Limited (SOP), has helped it to immediately establish a strong foothold in the property market in Shanghai. RHXC is a 40-hectare residential development, the first phase of which will continue to be developed by SOP. SOCAM will leverage on SOP's 17 years of experience in the Shanghai property market, which is expected to continue to improve. The initial phase developed by SOCAM will include 13 residential blocks, an underground car park, a clubhouse and a shopping centre directly linked to a Metro station due for completion by the end of next year. Pre-sale for the first batch of approximately 800 units, targeted at the young, well-educated middle class, will start in the third quarter of 2003.

SOCAM is also building a sizeable cement group in the Mainland’s central and western provinces. Its joint venture, Chongqing TH Cement, is the largest high grade cement producer in the municipality. With the acquisition of 80% of Diwei Cement during the year, Chongqing TH Cement now has an annual capacity of 3.5 million tonnes. A preliminary agreement was signed in May to acquire Qujiang Cement, with a capacity of one million tonnes, in northern Sichuan. With this acquisition, Chongqing TH Cement will control three of the four largest cement producers in and around Chongqing and account for more than 80% of the local high grade cement market. In Guizhou province, the combined existing and planned capacity is expected to reach 1.5 million tonnes per annum by the end of the 2002-2003 financial year.

In Hong Kong, SOCAM has stepped up its effort in enhancing cost competitiveness through vigorous cost reduction exercises at all levels. While the Hong Kong Housing Authority remains the major client for its construction division, it continues to extend its scope of business and widen its source of contracts. For instance, it has recently won two new contracts from the Architectural Services Department (ASD), including a design-and-build contract for four schools and a construction contract for Phase 1C of the Science Park in Tai Po. Its subsidiary, Shui On Construction, has been included in the Works Bureau's List of Approved Specialist Contractors for Public Works under the category of 'Repair and Restoration of Historic Buildings'. This gives Shui On a strong advantage in bidding future projects since only those included in this list are eligible to submit tenders for projects related to repair and restoration of historic buildings in Hong Kong.

While demand and profit margin for concrete continue to fall in Hong Kong, SOCAM’s two batching plants in Guangzhou registered an 86% increase in output in the past year.

Shui On Construction and Materials Limited (SOCAM), a member of the Shui On Group, was listed on the Hong Kong Stock Exchange in 1997. Apart from SOCAM, the Shui On Group has a separate, non-listed property arm with investments in Shanghai, Hong Kong, Beijing, Guangzhou and New York in the United States.