CEO Statement

For the financial year ended 31 Dec 2008, our Group revenue increased by 23% to $168.0 million and net profit decreased by 24% to $5.4 million.

The Group’s revenue from its core retail business in IT products and services has increased by 22% to $165.5 million in FY2008. This increase has been mainly attributed to better sales from stores opened in the previous year. There were no new retail outlets that were opened in Singapore under the Challenger branding except for Jurong Point and Sembawang Shopping Centre, both in December 2008. We opened our flagship 30,000 sq ft megastore in Malaysia at Mines Shopping Fair in July 2008.

We will open our biggest outlet of about 9,000 sq ft in the east at Tampines One by the end of Q1 2009. We will continue to seek locations at affordable rentals for new stores, both in Singapore and Malaysia.

In the past year, we have continued to enhance our loyalty programme for our members, resulting in a significant increase in our membership base to about 160,000 members. Our members are able to purchase selected products at attractive discounts and accumulate points for redemption of products and vouchers.

The electronic signage service business registered an increase in turnover of 75% to $1.4 million in FY2008 due to completion of more projects. We expect higher sales and profitability from this business in the current financial year.

In June 2008, we acquired 70% of Incall Systems Pte Ltd (“Incall”) who are in the business of operating call center, event management, direct marketing, database management and publishing of directories. In addition, Incall offers extended warranties for various electrical and IT products through its Star Shield Extended Warranty programme (“Star Shield”). It is the exclusive service provider for Star Shield sold at our retail stores.

In January 2009, we completed the purchase of a building in Ubi Link. This building will be used to house all the operations within our Group.

A final tax-exempt one-tier dividend of 1.2 cents per ordinary share has been proposed, subject to shareholders’ approval during the AGM to be held on 16 April 2009. We had declared and paid out an interim tax-exempt one-tier dividend of 1.2 cent per ordinary share in August 2008. This brings the total dividend to 2.4 cents per ordinary share for FY2008.

I would like to thank my fellow directors, management team and all employees for their hard work and commitment to the Company. In addition, I also appreciate the invaluable support rendered to us by our suppliers and business associates.