CEO's Statement

Dear Shareholders,

On behalf of the Board, I am pleased to present the Group's Annual Report for the financial year ended 31 December 2008.

FY 2008 has been a difficult year with the fallout from the global financial crisis which has a tremendous impact on the global economy as a whole. The Group's turnover for the year ended 31 December 2008 decreased by 30.4% from S$54.2 million to S$37.8 million in current year. The decrease in gross profit margin is partly due to the significant decline in dividend income received during the year.

The Group recorded a loss before tax of S$ 45.1 million as compared to the prior year where the Group recorded a profit before tax of S$48.3 million. The profit in FY 2007 was mainly due to a "one off" capital gain of about S$15 million from the sale of property, a "one off" capital gain from the divestment of the furniture business amounting to about S$25 million and dividend income of S$12 million from investment in quoted shares. The current year loss was mainly attributed to non-cash charges of S$44.9 million from the impairment charge on the quoted equity investments and S$0.45 million of impairment loss of property owned by one of the subsidiaries. However, it was mitigated by a "one off" gain of about S$5.2 million for land compensation from an overseas subsidiary.

During the current year, shareholders exercised 117,563,297 warrants for conversion into ordinary shares, resulting in an increase in share capital from S$35.2 million to S$44.6 million. However, an amount of S$10.5 million was paid as dividend during the year, resulting in reduction in cash and bank balances.

In our ongoing process in building the beauty business, the Group remains committed to strengthening our products branding and concepts, widening our range of beauty products and sourcing for products of the highest quality to broaden our customer appeal. The Group will also continue to grow its distribution business by looking for new agencies to represent and new brands to distribute. Notwithstanding the poor global economic conditions, we remain cautious in our investments and continue to explore new business opportunities to enhance the value to our shareholders.

Corporate social responsibility has not been neglected either especially in a year remembered for the many natural disasters that occurred around the world. Community development and charity efforts continue to be one of the Group's key priorities in the realization of the core value of giving and caring for the less fortunate. Of the many efforts, the major event which Novena Group coorganised, "Sichuan Earthquake Charity Show" telecast on 25 May 2008, raised a total of S$10,249,954 from the public. This fund is being used to build schools and to provide education assistance. In total, 7 primary and secondary schools were constructed which indirectly will benefit about 10,000 children every year. During the year, the Group contributed about S$175,500 in cash and in kind to various charity events and organizations. It is hoped that through our giving, we do our part to encourage a spirit of giving and to greater corporate social responsibility and all the more so in these economically and financially challenging times.

On behalf of the Board of Directors, I would like to express our gratitude for the dedication, hard work and contribution of each and every staff member. I would also like to express my heartfelt gratitude to all our loyal customers in supporting our brands and products in both the beauty and Fast Moving Consumer Goods divisions. Last but not least, my sincere thanks to all our business associates, the Board of Directors and our shareholders for their commitment and support which they have rendered. We look forward to your continuous and valuable support in the year ahead.

Thank you for your continuous support.

Toh Soon Huat (PBM)
Acting Chairman & CEO