In 2010, Value Partners made a net profit of HK$653.2 million (basic earnings per share: HK40.1 cents), which is more than twice the 2009 figure of HK$318.8 million. We are pleased to propose a dividend for 2010 of HK16.0 cents per share. It was a tremendous year, not just for the financial results, but in other important respects as well. Notable points include:

	Excellent fund performance. As always, this is the key to our business model, and in 2010, we scored again. Taking our flagship Value Partners Classic Fund as an example, the fund’s net asset value reached an all-time high following a gain of 20.2% in 2010, well ahead of the Hang Seng and MSCI China indices’ gains of 8.6% and 4.6%, respectively, during the same period.
	Record level of fund sales. In 2010, our funds attracted a net inflow (subscriptions minus redemptions) of US$1.3 billion, the biggest such inflow in our 17-year history. Assets under management reached US$7.9 billion, overtaking the previous record of US$7.3 billion under management in 2007, before the global financial crisis. We are one of Asia’s largest fund management firms, and our market share is clearly expanding.
	Surging share price. Our remarkable growth was reflected in a 96.5% increase in Value Partners’ share price, which ended 2010 at HK$7.80, from HK$3.97 a year earlier.

	Capital base strengthened. Value Partners raised HK$775.3 million in fresh capital in October 2010, with an issue of 140 million new shares (8.7% of the company) at HK$5.68 per share.
	Healthy pace of new business development. We launched yet another innovative exchange-traded fund, the Value Gold ETF, which is the world’s first gold fund to store its bullion in Hong Kong. Value Partners now has two ETFs - Value China ETF (3046 HK) and the Value Gold ETF (3081 HK) launched in December 2009 and November 2010, respectively, both listed successfully on the Hong Kong Stock Exchange, and both managed through a joint venture with our strategic partner, Ping An of China. (In a separate development announced subsequent to the year end, Value Partners has signed an agreement to form a private equity fund management company in Yunnan, China. This is in the form of a 60% owned joint venture with a partner linked to the provincial government of Yunnan and the plan is to raise a renminbi-denominated private equity fund in 2011 for projects on the Chinese mainland.)
	Achievement recognition. In Hong Kong, Value Partners is considered an unusual story because there are few really successful local Hong Kong brands in commerce and industry. Instead, Hong Kong is better known for its landlords, shopkeepers and as a base for large multinational brands. In Value Partners’ case, however, there is a long and consistent history of winning performance awards and industry recognition, going as far back as 1994, a year after the company’s founding.

In 2010, Value Partners enjoyed remarkable success in winning a whole new collection of accolades. This is summarized in the accompanying "Chief Executive Officers' Report," and here we would provide just two highlights, as follows:

Value Partners' Chairman and Co-Chief Investment Officer, Cheah Cheng Hye, delivered the keynote address at the Graham & Dodd Breakfast in 2010 — a prestigious annual event held by the Heilbrunn Center for Graham & Dodd Investing of Columbia Business School in New York. This was the 20th Graham & Dodd breakfast and the first with an Asian speaker; Mr Cheah's speech was entitled "Value investing: Making it work in China and Asia."

Value Partners has been named as one of the three leading fund-management firms in Asia in the prestigious Thomson Extel Survey 2010, published recently. In the same survey, Value Partners’ staff were ranked among the best individual fund managers in Asia. George Yang, Eric Chow and Ada Lau - all fund managers from Value Partners - were ranked No 1, No 2 and No 3, respectively on a list of 25 names in the survey devoted to leading Buyside Individuals in the "General Equities/Strategy" category.

2011 is the first year of China's 12th five-year plan, during which strong initiatives will be taken to transform the country's economic model, from an export-led model to one that pushes domestic consumer spending and improvement of China's environment and living standards. The government in Beijing remains pro-business and pro-growth — but it is sensitive to any threat to stability. In this context, officials have put inflation at the top of their "worry list," and they are also keeping an anxious eye on global political and economic developments, for fear of any spillover effects on China.

Not surprisingly, we find the Chinese investment environment for 2011 quite challenging. For the serious, long-term investor, promising opportunities remain on offer, but these have to be carefully identified through bottom-up research. On the whole, the “China story” remains intact, with economic growth still pretty strong, projected at 9% for 2011, down just a bit from 2010's estimated 10%.

Our overall corporate objective is for Value Partners to be a "Temple of Value Investing" for the Asia-Pacific region. Progress has been strong, and further initiatives will be taken. We want to be a world class asset management institution, not only in terms of our Investment Team's proven ability and resources, but also in terms of the firm's overall branding, infrastructure and support systems. What we build need to endure over the long term.

Finally, we again express our deepest gratitude and appreciation to clients, employees and shareholders.

CHEAH Cheng Hye
Chairman & Co-Chief Investment Officer
10 March 2011