Chairman's Statement

"Extracted from Annual Report 2009"

Dear Shareholders,

2009 is a memorable year - it marks the 85th Anniversary of POPULAR. Few businesses, particularly home-grown Chinese book trades, have lasted this long. POPULAR has the proven ability to adapt, transform and grow steadily. Contributions from many colleagues have made what POPULAR is today. God willing, POPULAR will continue its relentless quest for growth and diversification.

The unprecedented financial turmoil in the global economy shook local sentiments. It occasioned the slump in the property market. To factor the depressed valuations, POPULAR made a non-cash impairment provision of S$28.2 million to its property portfolio. This turned the Group's operating profit into a loss position of S$17.5 million. However, our core businesses in retail, distribution and publishing continued to generate profit. Our Group revenue rose to a historical high of S$450.3 million.

Notwithstanding the uncertainties, POPULAR received strong support from its shareholders in its Rights Issue in January 2009. It successfully raised gross proceeds of S$19.7 million. This is a clear demonstration of shareholders' confidence in POPULAR's venture into the property business. It enabled us to implement our strategy: "build first then sell" in our first project - One Robin, TOP on 12 June 2009. We have achieved 100% sales. Now Popular Land is finding a niche in building premium quality and design residences. We must become known for our quality products and the exclusivity of our projects.

Our focus in property development are: quality, exclusivity, pricing and salability. We look forward to the completion and sale of our second project at 18 Shelford. We are re-visiting the design of our third project at 8 Raja to ensure that the construction cost commensurates with market receptivity. At the end of the day, we want Popular Land to thrive, prosper and become yet another core business of POPULAR. It will enhance shareholders' value.

To stride through the turbulence, we shall continue to place risk management as our top priority while not forgetting business growth and profitability.

The key strategies for the growth of our retail business are "innovative ideas" and "exemplary service". POPULAR keeps a watchful eye on customer needs and endeavours to exceed customer expectation.

Our new stationery concept store "UrbanWrite" launched in April 2009 at Singapore's Tampines 1 shopping complex has made boring, conventional stationery something of the past. The word "Write" highlights the belief that everyone has a right to express himself in his own unique way. So the store focuses on writing materials such as notebooks, paper and pens which allow individuals to explore their own creative expressions. "UrbanWrite" stimulates customers to rethink their usual basics.

Our HARRIS had its proudest moment on 30 October 2008 when the Singapore Retailers Association (SRA), in conjunction with the Singapore Workforce Development Agency (WDA), conferred the most prestigious retail award - The Premium GEM in recognition and affirmation of HARRIS' outstanding service excellence.

It is an ongoing policy of POPULAR to constantly strengthen its bookshops in Singapore, Malaysia and Hong Kong. POPULAR identifies increased business potential in East Malaysia. For the financial year, there is a net increase of 12 outlets, bringing the total number of outlets to 129, thereby consolidating POPULAR's lead in book retailing.

In March 2009, an opportunity arose for POPULAR to enter the Myanmar market with the opening of an outlet under franchise. City Mart Holding Co., Ltd, POPULAR's Myanmar franchise partner, acknowledging the strength of the POPULAR brand, opened the first POPULAR in Yangon. The bookstore offers English books, educational materials, stationeries and multimedia products, all supplied by POPULAR. According to the franchise agreement, 10 outlets will open over a period of five years.

Riding on the success of BookFests in Singapore and Malaysia, we organized the first BookFest@HongKong in December 2008. This BookFest presented an enjoyable reading journey to the general public in Hong Kong and enhanced POPULAR's image and standing in Hong Kong. We are confident that BookFest@HongKong will follow the path of Singapore and Malaysia. One day it will become a recognized annual event.

The Hong Kong government announced a new Senior Secondary Syllabus (NSS) to be implemented in 2009. Though we had never undertaken publishing of secondary textbooks in Hong Kong, we read this as an opportunity. After two years of hard work, our newly formed secondary publishing team reaped the initial reward of having our Senior Secondary English and Mathematics textbooks approved by the Education and Manpower Bureau (EMB) of Hong Kong. These NSS textbooks will be rolled out in the academic year commencing September 2009.

We face a declining birth rate and a shrinking student population. However the fact remains that the need for supplementary exercises and assessment books still exist. Also, such publications continue to be profitable. Therefore, new products, in paper and digital formats, continue to enjoy sales in our established school network in Hong Kong as well as in our 129 POPULAR outlets in Singapore, Malaysia and Hong Kong. On average, the Group publishes 1,000 new titles per year.

No one can ignore the market in the People's Republic of China (PRC). To strengthen our business base in this sizeable market, we have applied to the PRC for the expansion of business scope of our PopularWorld (Beijing) Limited, a wholly-owned subsidiary of the Group to the business of distribution and sale of books, newspapers and magazines. Approval was granted in July 2008, just in time to allow us to officially launch a series of pre-primary textbooks. We have and are continuing to organize presentations in several major cities in China. So far 400 kindergartens spread over 11 cities have adopted our products. We work closely with regional distributors to conduct training sessions - to help explain the concept, to introduce the contents and to demonstrate the teaching of our textbooks. Progressively, we shall build up our distribution network in China. Then we will introduce more quality educational products to China by adapting the wealth of contents we have in store in Hong Kong.

Our general interest book publishing is flourishing. Seashore Publishing (M) Sdn Bhd was incorporated in Malaysia last year to publish bilingual cookbooks featuring local chefs and general titles to cater to the distinctive local palates of Singapore and Malaysia. In the coming year, Seashore will publish cookbooks in Malay to cater to the larger populace in Malaysia. Seashore will carve out a niche market.

With a new head and a new team, Popular e-learning has launched a new series of digital assessment Max Results!, covering all the core subjects (English, Maths, Science and Chinese) from Primary 1 to 6 and incorporating an auto marking feature with on-line access for additional practice. Its other successful products include Oral Tutor and Science Alive!, an interactive study guide for Primary Science.

In keeping with the fast expanding digital world and lifestyle changes, Popular e-learning launched three portals during the year - Education Community (EduCom), EduPop and a Youth Portal, a fun entertainment site. EduCom is an online portal providing education-related content and a directory for various educational services for parents, educators and lifelong learners. EduPop is developed to meet the e-learning and assessment needs of primary and secondary students. It offers curriculumbased contents from major educational publishers with auto-marking features and allows parents to track and monitor their children's performance, identifying areas of improvement.

The Media Development Authority of Singapore (MDA) awarded Popular e-learning a funding of S$2.36 million to cover the development and marketing of EduCom, EduPop and Youth Portal.

The Board has recommended a final dividend of 0.2 cents per ordinary share (exempt one tier dividend). The final dividend, if approved at the Annual General Meeting, will be paid to shareholders on 18 September 2009.

Together with an interim dividend of 0.5 cents per ordinary share, total payout for the Financial Year 2008/09 is 0.7 cents per share.

I am, as ever, grateful to the effort and dedication of all our POPULAR employees. They have helped POPULAR to sail through another extremely difficult year. To our Customers, Business Partners and Shareholders, we thank you for your unfailing support. To our Board of Directors, my sincere gratitude for your timely and constructive comments. Whatever the upheavals that may arise in the years ahead, our show will go on. Finally, let us together share the joyous 85th Anniversary of POPULAR.