CORPORATE OVERVIEW

Popular stands for financial soundness, value creation and service excellence. Our investment today ensures our prosperity tomorrow. This year, we have added to the Group the following new members:

Town4kids Limited
Kinder Education Press Limited
Popular Yuchen Limited
Popular Book Co Ltd
Beijing Tsinghua Timefound &
Cisco System Technology Co., Ltd
Popular e-Learning (H.K.) Limited
Popular e-Learning (Beijing) Ltd.
Popular Digital Products (Shenzhen) Ltd.
Popular Kids Co Ltd
EduPlanner Pte. Ltd.
EduLand Pte. Ltd.
Popular Book Co Pty Ltd

FY2003 wrought havoc. Yet, Popular continued to grow. The Group's turnover grew by 4.5% from S$314m to S$328m while net profit improved by 7.1% to S$13.6m. Earnings per share reached 3.02 cents and net asset value increased by 8.1% to 25.35 cents.

The Retail and Distribution division registered an increase of 7.2% in turnover and 125.9% in operating profit. Popular Yuchen Limited, the Group’s new distribution arm in Taiwan, contributed substantially to the increase in turnover. The improvement in profit was due to better margins as the central clearing house concept began to take effect. In addition, tight control of operating costs, improved earnings from our Taiwan sourcing office and contribution from Popular Yuchen also contributed to the bottom line.

The Publishing division’s turnover and profit declined to S$58.6m and S$11.3m respectively. Both high production costs for new textbook titles with revenue to be realised only the next financial year, and start up costs for new subsidiaries in Taiwan and China lowered our publishing profit. The weaker exchange rate also affected the conversion of Hong Kong profits to Singapore dollars.

RETAIL AND DISTRIBUTION

Popular enjoys widespread brand recognition. With close to 90 directly owned Popular outlets and 270 strategic alliance book shops throughout Singapore, Malaysia, Hong Kong and Taiwan, we are able to influence the entire overseas Chinese book value chain. This prepares us to enter the China market. Popular is the ideal partner for Chinese companies ready to export their products. With all these fundamentals, we are ready to move Chinese books in, out and among all the overseas Chinese reading countries.

We are actively bringing English books to places like Taiwan and China. In five short months, we have set up English book corners in 80 bookshops in Taiwan. We are bringing in our own publications as well as others. Ultimately, we aim to be the main channel to move English books around East Asia. Popular aims to be the central book clearing house for both English and Chinese books in this region.

PUBLISHING

Popular continues to be the market leader in text and supplementary books in Hong Kong, Macau, Singapore, Malaysia and Canada. In exploring new horizons, we have made significant footprints in Taiwan and China.

We have set up a publishing company in Taiwan, Popular Kids Co Ltd. It has published 2 sets of English textbooks for the local kindergarten market. So far, we have received encouraging market response. We have also successfully extended the shelf life of our publications by re-channeling these books to Taiwan through the Group’s 80 English book corners in Taiwan.

In China, we have signed an agreement with a China publisher to publish and distribute 2.5 million sets of an integrated kindergarten textbook set in the coming 5 years. This set of books will be sold in over 30 Chinese cities and is also in the recommended book lists of several major provinces in China.

The above exemplifies the scalability of our content and the extensiveness of our network. We aim to be the leading bilingual publisher in this region.

E-LEARNING

Popular has set up an e-learning consortium of 13 strategic investments and an e-kindergarten consortium with Crestar. Our e-learning business has made considerable inroads to the China market. Through our subsidiary, Beijing Tsinghua TimeFound & Cisco System Technology Co., Ltd, we are able to establish city-wide school network for various cities to attain 5,000 schools in the network. We will subsequently roll out our products through these established channels.

Recently, Popular signed an agreement with an Asian country to provide IT masterplanning consultancy services. This not only increases our credibility, but also opens new channels for the adoption of our e-learning products. We will be forming a regional partnership with an IT MNC to further explore the Asian market. We will complement their hardware with our e-learning products. We believe strong partnership will enable us to expand further and quicker.

OUTLOOK

In FY2003, Popular continued to build on the strength of the past years and to record further improvements in profits. FY2004 should be another challenging year. Popular will exercise great vigilance in its business. We believe Popular’s strong fundamentals will put us in good stead.

Going forward, Popular will continue to enhance its e-learning business, manage its operating costs, identify new distribution markets for its publishing business and implement its central book clearing house concept.

Popular endeavours to sustain its positive performance, to capitalize on its strong financials, customer focus and good business mix to produce better profits.

DIVIDENDS

An interim dividend of 6% per ordinary share less tax, amounting to S$2.7 million was paid on 23 January 2003. The Board has recommended a final dividend of 5%, amounting to S$2.25 million for approval at the forthcoming Annual General Meeting. This is a full year dividend of 11% compared with 5% last year in line with our high dividend policy, which we believe is the best way to reward our loyal shareholders in the current economic situation.

ACKNOWLEDGEMENTS

Every year seems to be at least as stimulating and successful for Popular as the preceding one. FY2003 was no exception. Due credit and recognition must therefore be given to our staff for their unremitting efforts. In the sluggish economic environment, we thank our business associates, strategic partners and shareholders for their encouragement and for sharing Popular’s firm confidence in our future.

Chou Cheng Ngok
Chairman