Dear Shareholders,

On behalf of the Board, I am pleased to report that FY2008 was another record breaking year. Group revenue increased by 93.9% from $174.1 million in FY2007 to $337.6 million, with net profit for the year up by 38.1% from $24.6 million to $33.9 million. Excluding the write back in FY2007 of impairment in respect of an investment property and leasehold property, the increase in net profit was a more spectacular 203.2%. Gearing has improved from 0.65 times as at the end of FY2007 to 0.56 times as at end FY2008. The Group's net worth also increased by 36.0% from $108.6 million as at the end of FY2007 to $147.7 million as at the end of FY2008.

FY2008 was remarkable for the Group, with successive contract wins for various prestigious projects. We started with our first two contract wins for the Marina Bay SandsTM Integrated Resort's Plunge-in Columns and Hotel Tower in November 2007, and proceeded to win five more projects, namely South Podium, SkyPark, ArtScience Museum, North Podium and View Corridors & Canopies. In March 2008, we were awarded a contract for the new Passenger Terminal Building for the Delhi International Airport, and in December 2008, we secured an $88 million contract for the Civic, Cultural, Retail & Entertainment Hub at Vista Xchange, One- North. These were followed closely by our success in winning the Group's single largest contract to-date, the Marina Coastal Expressway ("MCE") Contract 485, valued at $185.5 million, as well as MCE Contract 487, valued at approximately $53 million. As at 31 December 2008, the Group's order book stood at an unprecedented $504 million.

Our key projects for FY2008, namely Dubai Metro, Delhi International Airport and Marina Bay SandsTM Integrated Resort progressed well. Our contracts for the Dubai Metro and Delhi International Airport are slated for completion in April 2009. Most of our projects at the Marina Bay SandsTM Integrated Resort will be completed by either mid-2009 or December 2009, with the SkyPark targeted for substantial completion by end 2009 and the ArtScience Museum to be completed by first half 2010.

In FY2007, the Group decided to expand its fabrication capacity to cater to the upswing in the construction and infrastructural developments in Singapore, India and the Middle-east. We purchased a piece of freehold industrial land at the Southern Industrial & Logistics Cluster, Nusajaya, Johor and constructed a new fabrication plant. The new plant, sitting on 109,095 sqm of land with a covered factory of 28,530 sqm, became operational in September 2008, effectively doubling our capacity to 78,000 tonnes of steel fabrication per year.

"Our financial position has strengthened. Order book at the end of FY2008 is an unprecedented $504 million. With our new fabrication plant in Malaysia, we have doubled our capacity for steel fabrication to 78,000MT per year. We have also increased management bench strength through the recruitment of Project Directors and Project Managers. With these achievements, Yongnam has emerged stronger."

In addition to strengthening our hardware through the new fabrication plant and purchase of new equipment, the Group also beefed up its management bench strength, recruiting qualified and experienced Project Directors and Project Managers. The skills and experience of the new staff come in timely as the Group continues with its pursuit of higher productivity through improved efficiency and effectiveness in executing our projects and operations.

Notwithstanding the current world-wide financial meltdown and recessionary pressures, the Board is cautiously optimistic about the outlook for Yongnam. The Singapore Government has announced an investment plan of $50 billion over the next 10 to 12 years to improve our transport network, and this includes doubling the rail network to 278km by 2020, a 21 km North-south Expressway, as well as the Marina Coastal Expressway for which contracts have been tendered and awarded. Other infrastructural projects such as the Sports Hub and MRT Downtown Line, and other commercial developments are expected to come on stream soon. Middleeast and India continue to present opportunities. Although the present economic conditions have affected many commercial developments in these two regions, government spending on infrastructural development does not seem to be substantially affected. While the Group intends to focus on the domestic infrastructural developments, it will continue to leverage on its established track record as exemplified by the Dubai Metro and Delhi International Airport projects, seek out suitable projects in the Middle-east and India.

Although the Group has not been adversely affected by the financial meltdown, it is still indirectly impacted as banks adopt a more conservative approach amid increased borrowing costs. The Group will continue to work with its existing bankers, as well as expand its current network of banking support, when seeking financing arrangements for new projects.

I would like to thank the Board for their invaluable contributions, as well as our employees' dedication and hard work. Equally important is the support given by our customers, bankers and suppliers. And to thank our shareholders for their confidence in the Group, the Board has recommended a first and final dividend of 0.4 cent per share for FY2008.

With continued dedication and support from all our stakeholders, I am confident that Yongnam would ride through the financial meltdown and continue to perform well in FY2009.