The operating environment for the Group's property investment and development business remains tough during the period under review. Property market in Guangdong Province of Mainland China ("PRC")is still generally slack. The activities of the Group's property projects, which are mainly located in the Guangdong Province, continue at a low level during the period.

The Group's completed properties for sale-Ever Success Plaza, comprising of over 440 residential units standing on 3 levels of commercial arcades and car parks, is located at a convenient and prime location with a river view in Zhongshan, Guangdong Province. The competition of the property market in Zhongshan is keen. There are abundant supplies of properties with modern design. Due to the vacancy of the commercial arcades, the occupancy rate of the residential units continues to drop. The management has put much effort in marketing the properties and is still trying hard to improve the operation of the commercial arcades by looking for innovative trendy commodities which are attractive to the consumers in Zhongshan. The rental income earned by the Group during the period decreased by 15%. As at 30th September, 2009, 226 residential units remained to be sold, out of which 141 residential units were let out.

With regard to the investment in Cong Hua White Swan Bow Yuen Real Estate Development Limited ("Cong Hua Bow Yuen"), the chance for the extension of the joint venture period of Cong Hua Bow Yuen remains very remote. Full provision for impairment loss against the property held by Cong Hua Bow Yuen had been made in the financial statements of the Group in the prior years.

 

During the period under review, the turnover of Petro-king Group is HK$190.2 millions (2008: HK$89.1 millions). The turnover in current period increased by 113%. Petro-king Group has maintained very good relationship with its existing customers. It is engaged in complex oilfields services and the competition for high-end oil exploration technology is not very keen in China, therefore it is able to increase its business.

Our major customers have improved financial performance over last year and have increased their investments in overseas projects. Petro-king Group also expands its business presence worldwide along with its major customers which acquired a number of overseas oilfield projects. Petro-king Group has undertake the initial design work for several massive overseas projects. These projects output are well-accepted by our customers and will secure more jobs for Petro-king Group in the coming years.

 

The Group still holds a substantial amount of funds of approximately HK$0.8 billion which have been mainly placed as short term bank deposits with large financial institutions in Hong Kong.

There were no acquisitions of major subsidiaries or associates during the period under review.

During the period under review, the Group has charged trade receivables of certain customers of the Group not exceeding HK$42,619,000 to secure the credit facilities granted by a bank. There have been no other material change in the contingent liabilities and charge on assets of the Group since 31st March, 2009.

Outlook

Since the outbreak of the global financial crisis in the last quarter of 2008, the global economy is definitely adversely affected. We will monitor closely how and when it can be recovered. We believe China continues to play a key role in the future global economic recovery. The Group is confident to capitalize on these opportunities and will grasp every business opportunities available to build up its own distinctive strength and to explore new business in China.

The crude oil price has reverted upward in recent months and has surpassed USD70 per barrel and the trend is expected to continue. The economic revival plan starts to take effect in the leading economies in different regions, e.g. China and United States. We anticipate our PRC customers will maintain capital investment domestically and increase overseas investment to meet the huge net import consumption of China.

In addition, Petro-king Group has kicked-off several massive projects in overseas markets. These new projects will last for several years. These projects have completed initial design and will soon undergo production in the coming years. The multinational oil companies are still investing reasonably on exploitation and production of petroleum in which Petro-king Group has the expertise in the niche market. With their continual expansion of the business worldwide, these overseas customers will offer more business to Petro-king Group. We are cautiously optimistic about the future performance of Petro-king Group.

It is the Group's ongoing strategy to gain a foothold and develop in the natural resources sector by way of cautiously exploring different kinds of investment opportunities which will result in a steady growth in the Group's long term performance. On the other hand, there exists some underlying risk factors such as oil and commodity price volatility, interest rate movements, the impact of global financial crisis, the recovery progress of the global economy, the global human swine flu and natural disasters which cannot be ignored. The Group remains cautiously optimistic about the year ahead in respect of the business in natural resources sector and has the confidence to strengthen its competitiveness and to build value for our shareholders.