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(extracted from annual report 2007)

Dear Valued Shareholders, Once again, I am pleased to report that our Group has recorded double digit growth in profit after tax for the fifth consecutive year. We registered RM81.13 million net profit attributable to shareholders; a 24% increase, on the back of a revenue of RM573.37 million.

This stellar performance underscores Mah Sing's unique business model of having a quick turnaround which enabled us to achieve 73% compounded annual growth rate from 2002 to 2007. The Group has also been included in the Kuala Lumpur Composite Index, as a reflection of our achievements and the interest investors have in us.

Dividends

The management believes in rewarding shareholders with handsome dividends whilst accomplishing strong expansion. In line with the Group's growth and good results, we remain committed to maintaining our dividend payout policy of at least 40% of profit after tax.

In this respect, I am pleased to announce that the Board has proposed a first and final gross dividend of 16% less income tax of 26 % for the financial year ended 31 December 2007. This represents a payout of 46% of net profit attributable to shareholders, subject to approval by shareholders at the forthcoming Annual General Meeting.

   

Corporate Highlights

Acquisition of development land

The Group continued to successfully acquire prime land with favourable payment terms, adding to the Group's good track record of replenishing land to build our development pipeline. With fast project turnaround and strong take-up for our launched projects, this is a crucial part of our business strategy. Unlike traditional developers, the Group does not hold large tracts of land; rather, we are focused on extracting the best value from the land we have.

In 2007, the Group acquired 4 pieces of land which gives us a Gross Development Value (GDV) of approximately RM2 billion. This is more than double our RM600 million to RM800 million annual land acquisition target in terms of GDV. This is because we not only wish to expand our geographical reach to the North and cement our position in the South and the Klang Valley, we are also upbeat about the lands that we acquired as they fit in very well into our quick turnaround business model. These lands are located in very strategic locations with easy accessibility and a ready catchment. To complement these prime locations, we have planned products that take into account the needs, desires and aspirations of buyers. Market research and buyers' feedback were crafted into the planning of the products.

However, we did not proceed with one of the land due to non-compliance of conditions precedent by the vendor and in January 2008 the vendor agreed to refund the deposit to the Group. This was a 64-acres of land in Puchong which was originally slated for a Perdana series township development – Duta Perdana. With delay in kick-starting the project, Duta Perdana does not fit into the Group's business model of having a quick turn-around. Hence, the Group made a strategic decision to focus on the other pieces of prime land in the Group's stable.

There is plenty to keep the Group busy.

The Group's venture into commercial developments since 2006 has borne fruit, as interest from foreign investors and institutions continue to be strong for investment-grade offices. The Group sold its Grade A offices at benchmark prices to institutional investors in 2007.

The Icon Jalan Tun Razak, a 20- storey Grade A office was acquired in October 2006. The West Wing was sold to Koperasi Permodalan Felda Berhad for RM174.4 million, whilst the East Wing was sold to Kuwait Finance House and Autron Corporation Limited for RM255 million in July and November 2007 respectively. In just 13 months, The Icon Jalan Tun Razak reaped RM429.4 million for the Group, fitting perfectly into our business model of having a quick turnaround.

The en-bloc sale of The Icon Mont' Kiara to Kuwait Finance House and Autron Corporation Limited for RM305 million in November 2007 was a coup for the Group, as the land was acquired only in February 2007. Cradled within the vibrant residential and commercial hotspot of Mont' Kiara and Sri Hartamas, this is a 27-storey office Grade A office, inclusive of a 4-storey retail podium.

At this time of writing, we have already completed 3 out of 4 conditions precedent to complete the en-bloc sale of the East Wing of The Icon Jalan Tun Razak. The Foreign Investment Committee and State Approvals have been obtained, and Due Diligence completed. An administrative detail namely the procurement of a bank guarantee is pending completion. At the same time, Foreign Investment Committee and State Approvals for the Icon Mont' Kiara sale have been obtained.

To further ride upon the continued commercial upswing, the Group purchased one of the last few pieces of freehold land in Kuala Lumpur. The 5-acre freehold land, located at the Southern Gateway to Kuala Lumpur via Jalan Tun Razak/ Jalan Sungai Besi, is diagonally opposite the Group's corporate headquarters. Besides 3 blocks to be opened for sale on a strata basis, Southgate Commercial Centre will have 2 blocks for potential en-bloc sales. The launch in end March 2008 saw good response of about 50% take up.

2007 also saw the Group enter Penang in a big way, with a RM1.356 billion integrated project in Batu Maung, located just minutes away from the upcoming Second Penang Bridge. The 87-acres of prime freehold land have been carved into 3 parcels; 2 medium to high end residential (Residence@ Southbay and Legenda@Southbay) and 1 commercial parcel (Southbay City). The project is set to be an international destination that will change the face of the island over 5 to 7 years.

Hot on the heels of these acquisitions, the Group purchased a 60-acre piece of land in Skudai, Johor Bahru to replenish our landbank there. This will be developed into Sri Pulai Perdana 2, a new project in our lifestyle township Perdana series to continue our success and tap on the spillover demand from the matured Sri Pulai Perdana township.

Corporate Exercise

During the year, the Group completed corporate exercises involving a Private Placement, Rights Issue, Share Split and Bonus Issue. The proceeds of RM221.8 million are mainly used to fund the working capital of the Group's development projects.

The enlarged share base better reflects the Group's scale of operations which now spans 14 projects in Klang Valley, Penang Island and Johor. It also enhances the liquidity of the Group's shares which have attracted strong institutional and retail interest. Amongst the international and local institutional investors who have become our shareholders include Capital Group International Inc., European Investors Inc., FMR Corp & Fidelity International Ltd., Koperasi Permodalan Felda Berhad, Permodalan Nasional Berhad and the Employees Provident Fund.

Furthermore, the exercise enabled the Group to be in a net cash position as at 31 December 2007, putting it in a good position to gear up to an optimal 0.5 times to capitalise on business opportunities.

Awards and Achievements

In recognition of our achievements, the Group continued to win several international and domestic awards including Best Development Malaysia (for Damansara Legenda) in the International Property Awards 2007 in Association with CNBC. This is the world's largest property competition and is organised by a distinguished organisation with an in-depth knowledge and passion for the global real-estate market. In 2008, the Group was again honoured with Best Property Malaysia (for Kemuning Residence) in the Asia Pacific Property Awards 2008 in Association with CNBC.

We were listed in Forbes Asia's Best Under a Billion Award for the third consecutive year. Only 9 Malaysian companies were chosen from more than 20,000 listed companies in Asia this year, and only Mah Sing has been in this list for 3 years running. The Group was also named by The Edge for Top 30, Top Property Developers Awards and Top 100 Companies with Best Returns over 5 years for the second consecutive year. 2008 also saw the Group included in the Kuala Lumpur Composite Index.

Corporate Social

Resp onsibility (CSR) Over 7 years of building homes and business premises for Malaysians, we have grown, and understand complex details on the impact of developments on its surroundings. Learning and improvising through the years, we have developed innovative techniques, created award winning concepts and architectural designs to build our homes and business premises in co-existence with the surrounding environment and community. We understand and value sustainable development. We measure our corporate responsibility efforts not just by the input but by the outcomes: the difference we make to the community, the environment, our business networks and our workforce.

Our commitment in taking CSR through all aspects of our business has led us to set up Mah Sing Foundation in year 2005 to carry out the Group's CSR focuses, activities and projects. Through Mah Sing Foundation, the Group has made numerous contributions to various worthy causes.

Year 2007 was an eventful year for us with more than RM600,000 rendered in aid. Activities and aid were extended in the areas of assistance to schools, environmental awareness and education, medical assistance, supporting sports for health, crisis relief and charity for the needy. Mah Sing Foundation actively extended assistance and organised activities consistently throughout the year. In total 14 schools, NGOs and volunteer bodies benefited from Mah Sing Foundation last year.

Human Capital

The Group's employees continue to be our most valuable assets, and an annual get-together was organised in appreciation of their hard work which has contributed to last year's sterling performance.

It was also an ideal opportunity to set out the aspirations and directions for us to move on to the next level, where mind set and work attitudes would create a high level of positivity and commitment to the company.

As a result-oriented Group, each and every staff is measured by key results areas. The whole is bigger than the sum, and by being focussed, we shall put the Group on a fast tract to realise its full potential.

We have instilled a positive work culture where everyone genuinely cares about their work, about their company and about their colleague. There is a good, energetic vibe in which you can be productive and enjoy your work. Committed staff that perform can look forward to a great career path in Mah Sing.

Future prospects

For 2008, the Group has a bullish outlook for the growth market segments namely the medium to high-end residential as well as commercial (Grade A offices and commercial-retail).

Real demand for Grade A offices and mid-to-high end, well located residences with good branding is still intact, reflecting the actual imbalances in demand and supply. Reflecting this sentiment, location, development profile of the area and track record of the developer would be key to the success of real estate properties this year.

The deep under-supply of Grade A offices, especially in the Golden Triangle, is reflected by tenancies in excess of 90% and record levels in rental rates. New office supply may not meet demand over the next three years and rents are likely to continue to rise. The service sector is growing at 9.7% a year, and 200,000 new graduates emerge annually to find employment. The driving forces for the office market are the robust growth of the services sector and a growing demand for prime office space by companies in the oil and gas sector, financial institutions and information technology companies.

In this respect, the Group will be in a good position to capitalise on this upswing, with 4 investment grade developments in the Klang Valley and Penang Island.

According to the 2007 Property Market Report by the National Property Information Centre (NAPIC), the residential segment of the property market is also moving up, reflecting a buoyant property market. This is evidenced by the number of unsold houses in Malaysia falling for the first time since 2002. For 2007, the property market recorded transactions worth RM77.14 billion, with the residential sub-sector remaining the most dominant with 64.5% of the total volume and 47.3% of the total transaction value.

The Group is in a good position to partake in this vibrant market by offering high quality residential properties with good concepts in prime locations, at the right price.

The Group expects another year of good sales, with a conducive environment driven by Malaysia's sustainable employment prospects and an increase in disposable household income through various measures, including EPF withdrawals to service housing loans, steady increments in wages in the private sector and civil servants' pay rise. This is augmented with a supportive financial environment that is characterised by low and stable interest rates as well as ample liquidity in the banking system. Pump-priming from the 9th Malaysia Plan and various government relaxations and incentives to boost property investment are other factors that would contribute to another good year for branded developers with the right products in the right locations.

Appreciation

We endeavour to ensure that whatever the Group does will be for the benefit of all our stakeholders including the community. Towards the fulfilment of this objective, the Board of Directors has to thank the top management and all the employees who deliver the Group's vision.

Thus, on behalf of the Board of Directors, I would like to record our sincere appreciation to those who have contributed to our success; the human capital of the Group, consultants, our value chain suppliers, the Government and the local authorities, our shareholders and most of all our customers.

Jen. (R) Tan Sri Yaacob Bin Mat Zain
Chairman

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