Chairman's Statement

(Extracted from Annual Report 2008)

Dear Shareholders,
It has been an immensely rewarding year for Pokka Corporation (Singapore) Limited ("Pokka" or "the Group"), as our efforts to improve our beverage and restaurant businesses have achieved phenomenal returns for our shareholders in the financial year ended 31 January 2008 ("FY2008"). More importantly, the sterling set of results in FY2008 demonstrates that we are steering the Group on the right course to enhance long-term shareholder value.

Indeed, we believe FY2008 marks a new start for Pokka as we embarked on a cost-rationalisation program throughout the organisation to build a leaner and stronger business model. This program has already started to pay off in FY2008, as evident from the respectable expansion in the Group's profit margins, despite continued competitive and cost pressures in both the beverage and restaurant industries.

At the same time, we delivered our first double-digit growth in revenue in six years. This achievement was due to our concerted marketing initiatives, which lifted the Group's total revenue by 15.4% to a record S$167.9 million. The healthy top-line performance and cost rationalisation program in FY2008 have in turn propelled profit to equity holders of the Company by seven-fold to an all-time high of S$7.0 million.

Uncapping higher sales for the beverage business

One of the key highlights of the year was our award of the captainship for category management of non-alcoholic beverages. This was a major coup as it allows us to plan and arrange retail shelf-space in the outlets of major supermarkets and petrol chains in Singapore. Our fledging vending machine business also saw a doubling of sales in FY2008, which contributed to the healthy growth in our beverage sales from the local market.

This advancement in our market position in Singapore is no mean feat as the beverage markets here and around the world are without a doubt, characterised by competitive conditions. In spite of this challenge, we have pushed our reach to new frontiers and take pride in the global presence that we have established for our 'POKKA' brand of beverages today.

We continued to make inroads in our overseas beverage markets, which number more than 50 countries worldwide. The Group notched up strong sales growth in the Middle East and Europe regions during FY2008 on the back of higher brand visibility, broader product range and a stronger distribution network.

In fact, much of our success in strengthening our foothold in the local and overseas beverage markets stem from our philosophy and ability to create flavours that suit local tastes in different countries. Our research and development ("R&D") team in Singapore, supported by a food technologist from Japan, is the creative force behind Pokka's wide-ranging varieties of beverages.

Indeed, our strength in R&D is one of the key drivers for our beverage business as we aim to launch around two to three new beverage choices each year in our growth markets. In FY2008, we introduced a total of three new coffee products and one tea beverage in overseas markets, as well as the Pomegranate Tea, Pomegranate Juice Drink and three coffee flavours for the Singapore market.

At the core of our beverage business is our strong emphasis on maintaining a state-of-the-art beverage manufacturing facility. We make continual investments in the latest technologies to upgrade our efficiency, capacity and quality standards. In FY2007, we spent S$1.5 million in our factory in Singapore, which resulted in a 30% increase in the production capacity of our aseptic PET ("Polyethylene Terephathlate") line in FY2008. Our aseptic PET line was also upgraded in FY2008 to increase the level of automation which should yield future cost savings. As at end of FY2008, the Group has committed to invest another S$1.0 million to raise the capacity of our aseptic line by another 25% to address the growing demand for 'POKKA' beverages.

Restaurant business serves up a steady performance

Besides looking to develop our business in beverage manufacturing and sales, we are also planning to grow our restaurant business, which currently has operations in Hong Kong, Singapore and Macau. To this end, we invested S$1.7 million during FY2008 to enlarge our central kitchen in Hong Kong to support up to 30 restaurants, a 100% increase from 15 outlets previously. Our central kitchen concept not only ensures consistency in the quality of food, but also allows the Group to enjoy economies of scale.

Our restaurant business kept up its steady performance in FY2008, chalking up higher revenue and profit despite intense competitive conditions, fewer restaurants in operation compared to the previous financial year, and the dampening effect of currency translation caused by the weaker Hong Kong dollar against the Singapore dollar.

Among the notable developments for our Hong Kong restaurant operations was the re-launch of our renovated café at Shatin under a new brand - 'Pokka Café Grill Specialist' - as well as the opening of a new 'Pokka Café' outlet at Kowloon Bay. At the same time, we closed our non-profi table 'Pokka Café' at West Kowloon and the 'Mikichi' outlet. The 'Pokka Café Grill Specialist' struck a chord with consumers in Hong Kong as it achieved operating break-even in its first month of business. Thanks in part to our continuous efforts to improve cost management, the Group's restaurant business achieved a double-digit operating profi t margin in FY2008.

Our recipe for the future

Having attained a record financial performance in FY2008 does not mean we are going to rest on our laurels, especially not with the uncertainties presently surrounding the global economic outlook due to the sub-prime loan crisis in the USA. It is our intention to continue building on the present momentum of our beverage and restaurant businesses, and strengthening the Group's financial position to better withstand any adverse changes in consumer and business sentiments. Our efforts will remain focused on cost rationalisation, sustaining operational productivity and efficiency, as well as implementing effective marketing initiatives to improve sales and profi tability over the longer term.

We believe this focused and strategic direction of the Group, coupled with our entrenched market standing in the beverage and restaurant businesses, will provide us with a steadier footing to overcome the prevailing industry challenges typical of the beverage and restaurant sectors; in particular keen competition and rising operating costs such as raw materials, rental and staff salaries.

Specifically, the Group's strategy for our beverage division is to defend and expand our market share in Singapore and overseas markets. Locally, we will leverage on our premier 'POKKA' brand and wider sales channels to lift our market position in the beverage industry. Increasing awareness and acceptance of 'POKKA' beverages in overseas markets also give us confi dence in the potential of our beverage export business. We will continue to look for strategic distributors to pave our entry into new territories overseas.

As for our restaurant business, we will continue to focus on three core elements - attractive location, quality service and innovative food menus - while maintaining efficient operation and management of our restaurants and food outlets. Leveraging on our extensive 17 years of operating experience in the restaurant business, we will continue to seek promising locations in Hong Kong and Singapore to open new restaurants and food outlets.

At the same time, we will explore adding new and appealing brand concepts to capture a broader spectrum of the consumer market. Constant improvement in our service standards and food menus are imperative in maintaining and sharpening Pokka's competitiveness, as well as to stay relevant in the ever-changing consumer market.

Appreciation

To reward our shareholders, the Board of Directors is proposing a final dividend of 0.5 cents per share. Together with the special interim dividend of 1.7 cents per share paid on 17 October 2007, total dividends for FY2008 will amount to 2.2 cents per share.

On behalf of the Board, we would like to thank our management and staff for their dedication, commitment and hard work that has enabled Pokka to achieve a recordsetting year in FY2008. We would also like to express our sincere appreciation to our customers, suppliers and business associates around the globe for continuing to support the Group. Pokka will endeavour to scale greater heights by creating new flavours for the world.


Akifumi Ito
Chairman