Message by Chairman and Group Managing Director

With Sincere's standing in the burgeoning luxury watch industry, the financial year has once again proven to be a much-celebrated one. The Group saw a 12.9% surge in the total revenue to a record $359.2 million from $318.2 million the previous year.

The Group also clocked in an after tax profit of $25.4 million. The decrease from the previous year's $35.1 million was substantially due to the one-time gain of $10.6 million realised last year from the listing of the Group's subsidiary, Sincere Watch (Hong Kong) Limited on the Stock Exchange of Hong Kong. In view of this, this year's result was as equally robust and healthy as before.

There was growth in most business segments with Southeast Asia contributing a lion's share of 73% of total group revenue. Northeast Asia continued to do well and made up the remainder.

The Group's financial position remained strong and continued to be in a net cash position that saw increases in cash holdings with decreases in bank borrowings and trade payables. In particular, inventories were brought down significantly to S$174.5 million from S$224.3 million and S$198.7 million at the end of Q3/FY07 and FY06 respectively.

Rationalizing its operations, the Company transferred its 100% shareholding in its Taiwan subsidiary, Sincere Watch Co Ltd, to its 75% owned Hong Kong subsidiary during the year. This resulted in a one-off gain on dilution of interest in a subsidiary of S$465,000. The Group's North-East Asian operations were considerably strengthened with the completion of this exercise.

Earnings per share (EPS) for the year was 11.17 cents and its Net Asset Value (NAV) rose to 60.14 cents from 58.88 cents.

Rewarding Shareholders

During the year, the Company implemented the Sincere Watch Limited Scrip Dividend Scheme and declared an interim dividend of 9 cents per share less tax. The scrip dividend that was paid on 24 April 2007 enabled shareholders of the Company to utilize Section 44 balances for their tax franking purposes.

In addition, given the Group's robust performance, the Board has proposed a final dividend of 1 cent per share less tax together with a Special Dividend I of 0.2 cents per share less tax and a Special Dividend I I of 1.25 cents per share (tax exempt - one tier) for the year. Including the scrip dividend of 9 cents per share declared earlier, the total dividends for the year would amount to 11.45 cents per share. This is one of the highest dividends proposed for shareholders in the last 5 years.

New Stores

As part of the Group's on-going expansion plan to capture market share and take advantage of the rise in luxury demand, five major stores were opened during the year - a Sincere Fine Watches store in VivoCity, an Emotus Time Culture store and a Longines mono-brand store all in Singapore as well as a Franck Muller (FM) boutique in Ocean Terminal in Kowloon, Hong Kong and Macau. In addition, the existing FM boutique in Central, Hong Kong was extensively renovated and enlarged.

With all these new outlets, the Group has established a retail network of 36 owned boutiques and 41 dealers-operated retail outlets in the region - a formidable total of 77 point-of-sales worldwide.

Events Highlights

Sincere has set another benchmark in watch retailing with the launch of the "World Exclusive Collection" - a collaboration with 13 of the world's most-renowned watchmaking houses to create exclusive timepieces for Sincere. Supported by the Singapore Tourism Board, the $45-milliondollar collection is available only in Sincere Haute Horlogerie in the Hilton Shopping Gallery. The ability to work with these renowned watchmaking houses is testimony to Sincere's premier position in the industry.

In November 2006, Sincere staged a very successful "Conquest of Time" watch exhibition in Kuala Lumpur. The massive 25,000 square-foot event at the Kuala Lumpur Convention Centre was the largest watch exhibition in Malaysia. It showcased more than 20 of the top watchmaking brands and included an educational series of classes, guided tours and workshops presented by the Sincere Watch Academy.

Going Forward

The Group has major expansion plans for the new year.

It will be opening its first store in the Indian market in May 2007 with a Duty Free outlet at the Indira Gandhi International Airport in New Delhi. This marks a very important step for the Group as this maiden entry will set the foothold for its future plans in the Indian sub-continent.

In addition, another FM boutique at the Venetian in Macau will open by September 2007. Macau has recently overtaken Las Vegas in the gaming industry, and much is expected of the Franck Muller boutique there.

In China, the first FM boutique was established in Beijing and the Shanghai unit is scheduled to open before the end of 2007.

In Singapore, the first mono-brand Omega boutique at Raffles City Shopping Centre started operation in May 2007 and a FM flagship boutique at Delphi Orchard, Singapore, is slated to open by the end of the first quarter of this financial year. Further afield, the Group's largest multi-brand store will be launched at The Pavilion in Kuala Lumpur, Malaysia, in September.

The Group is optimistic that the expansion plans for the new year will bring tremendous benefits in the years to come.

The Sincere Watch Academy will continue to step up its activities in the new year.

Launched in 2006, the aim of the Sincere Watch Academy is to nurture the culture of horology and cultivate the appreciation of fine watchmaking among the public. It has since taken the role of the educator of horology with various horology talks and workshops.

With the public showing much interest and positive response in this new initiative, the academy will be situated in a new physical location mid 2007. The Sincere Watch Academy will serve to be a one-stop resource centre for watch collectors and budding enthusiasts alike.

Awards and Recognition

The Group is pleased to report that on top of its commercial success, the Sincere Haute Horlogerie won the "Best New Retail Concept" Award of the Year 2006 given by the Singapore Tourism Board - a testament to our dedication of pushing the boundary in the watch retailing landscape.

On the business front, Sincere was also ranked by global consulting group, LEK Consulting, as one of the top 10 performers in terms of Total Shareholder Return (TSR) across a one-, three-, five- and 10-year time period with an average return of 58.9% over five years.

A Note of Appreciation

We would like to thank all our customers, business associates, shareholders and employees for their unwavering support throughout the year, and making this another sterling year for us. We would also like to extend a warm welcome to our new board members, Mr. S.Chandra Das and Mr. Teng Chee Kiong, We look forward to achieving even greater success in this coming financial year.