Corporate Overview

Through 77 years of unrelenting effort, POPULAR has gained strengths including financial soundness, efficient operations and a powerful customer base. POPULAR is able to meet its future confidently by having the competitive edge and the winning formula.

POPULAR Group has been actively seeking new opportunities and has made a number of strategic acquisitions and investments in FY 2001. With the acquisition of Popular Book Company Limited and Harris Book Company Limited, the Group's retail chain has expanded to include Hong Kong. In Singapore, Popular Logistics Pte Ltd was incorporated to spearhead the Group's logistics development. The publishing side was further strengthened through the acquisition of 33% in a major textbook publisher, New Asia Publishing House Limited ("NA") by our wholly owned subsidiary, Educational Publishing House, Limited ("EPH") in Hong Kong.

POPULAR Group has developed a focused e-business strategy to complement its brick and mortar business and its integrated business model in publishing, content creation, education, retail and distribution and franchising. This is evidenced by the setting up of a joint venture company, Ednoland (HK) Limited, to enter the pre-school education market, a 51% investment in Vivamusic.com Pte Ltd which provides on-line music content and a 100% investment in eNet Digital Pacific Limited which operates an on-line music store. In fervent support of all the e-initiatives of the Group, a subsidiary, Guangzhou Cyber Progress Information Technology Limited, was set up in China to focus on technology development.

While exploring new business potential, we continued to develop and expand our key strengths in publishing, retail and distribution. In FY 2001, POPULAR Group's turnover rose 28% from S$215.5 million to S$275.6 million. The full year pre-tax profit increased to S$16.5 million from S$14.8 million, an improvement of 12%. Our ever-improving financial results is the best evidence of our relentless effort in forging ahead.

Publishing

Publishing is the key growth driver and leading profit contributor with Hong Kong putting in an exceptional performance. Profit before tax rose to S$13.0 million, representing an increase of 33% over FY 2000.

Its wholly owned subsidiary, EPH in Hong Kong continued to perform strongly. With the strategic 33% stake in NA, we will continue to have a stronghold and dominant market share in the Hong Kong textbook and supplementary book market.

Our publishing business in other countries, with a main focus on supplementary and general book publishing, also registered healthy growth. We foresee them to become significant contributors to the Group's future performance.

Retail and Distribution

To serve today’s highly sophisticated customer expectations, POPULAR aims to meet and to exceed rising standards. Behind its professionalism and operational excellence stand a team of caring and attentive staff. Turnover for retail and distribution increased by 29% in FY 2001 to S$222.4 million, accounting for 81% of the Group‘s total turnover. With the opening of 10 new outlets in Singapore and Malaysia during the year and the acquisition of 9 outlets in Hong Kong, the POPULAR Group has grown to a vast network of 68 bookstores, 51 CD-RAMA outlets and 25 franchise outlets, offering unrivalled convenience and choice to shoppers. We will continue to search for strategic locations to further strengthen our strong retail and distribution network which can also serve as fulfilment centres for our e-business.

Our strong brand equity and our commitment to service excellence have allowed us to build up a strong customer base. We currently have 430,000 Popular card members and 150,000 CD-RAMA card members. Our strong brand equity also demonstrates that we have been delivering products and services that are valued and appreciated by our customers.

Outlook

POPULAR has a history of stability and consistent growth in turnover and profit.

Throughout difficult times and under difficult conditions, we continue to win recognition and to pave the way for our future growth.

"POPULAR Holdings has evolved to become an integrated media group and currently is one of the largest and most extensive publishing, content creation, education and retail distribution groups in Asia", says TODAY on 27 June 2001. With the increasingly important role played by the Asia Pacific Region and China, we shall continue our strategy to be the bilingual publisher, distributor and retailer. We believe that our vast library of content, widespread distribution network and focused e-commerce strategy, will help us to scale new heights.

Across the region, we see signs of economic malaise brought on by weakness in USA, Europe and Japan. Against this backdrop, we are actively examining and entering new geographical markets, with emphasis on Taiwan and China. We shall seize the opportunity of current low market valuation, turn depressions into opportunities and continue to grow.

Bonus Issue

On 19 February 2001, the Board recommended a bonus issue, the first of its kind in POPULAR since its listing in 1997. We obtained the approval from the Singapore Exchange on 12 March 2001. The objectives of the bonus issue are to widen our capital base and to reward our loyal shareholders.

Dividends

An interim dividend of 4% per ordinary share less tax, amounting to S$894,000 was paid out on 13 February 2001. The Board has recommended a final dividend of 5%, amounting to S$1,698,750 for approval at the forthcoming Annual General Meeting. Despite the increase in the number of shares from 300,000,000 shares to 450,000,000 shares as a result of the bonus issue, the Board continues to recommend 5% for the final dividend. This is a conscious effort to reward our shareholders.

Acknowledgements

The continuous success of the POPULAR Group is a credit to our staff who are committed to a relentless pursuit to deliver extraordinary results. It is also a credit to the support and encouragement from our customers, business associates, strategic partners and shareholders. On behalf of my fellow directors, I would like to say a heartfelt "Thank You". May POPULAR's path continue to be bright and exciting!

Chou Cheng Ngok
Chairman