Extracted from Annual Report 2007

On behalf of the Board of Directors, I am pleased to present the Annual Report and Operational Review of Auric Pacific Group Limited (“APGL”) for the year ended 31 December 2007.

GROUP RESULTS

2007 was an especially good year for APGL given the buoyant property market and booming economy in Singapore. Group turnover rose to $274.2 million, an increase of 28.7% on the previous year, while profit before tax increased by 188.7%, registering $64.8 million for the year ended 31 December 2007.

The Group’s strategic investment of earlier years into prime real estate and its strategic business diversification of more recent years into department store and other retail businesses bode well for the Group.

A major contributor to the strong profit results has been the unrealized gain in valuation from two investment properties owned by the Group, namely One Phillip Street (“OPS”) and a residential unit at 130 Tanjong Rhu (“PB”). The excess values as at 31 December were $45.4 million and $2.7 million respectively.

In terms of revenue, food operations contributed an increase of $38.4 million while investment activities and rental income contributed increases of $21.9 million and $1.2 million respectively.

Net realized gain from the disposal of investment securities increased by $12.3 million. Unrealized gain from the fair valuation investment securities was $0.7 million compared to $16.7 million in the previous year

Profit contributions from Robinson and Company, Limited (“Robinsons”) and Food Junction Holdings Limited (“FJ”) totalled $11.1 million, of which $10.1 million was contributed by Robinsons, while $1 million came from FJ. This amounted to a $1.8 million net aggregate increase over last year, although the contribution made by FJ was $0.4 million lower.

Results from food operations, both manufacturing and distribution, exceeded expectations, ending the year with a profit of $3.3 million compared with $1.1 million in 2006. Higher sales coupled with lower operating expenses more than compensated for the reduction in gross margins.

The Group’s net profits after tax attributable to shareholders rose 147.3% to $48.8 million. Earnings per share increased 147.4% to 38.86 cents from 15.71 cents a year earlier.

Net Asset Value per share was up 116% to 2.10 cents from 1.81 cents last year.

FOOD OPERATIONS

Wholesale Distribution

Turnover in the Group’s wholesale and distribution business increased 18% to $187.5 million in 2007. Net profit before tax increased by $0.1 million to $2.9 million, but this was net of the $2.8 million operating losses incurred by the distribution and drug store businesses in China.

China remains a challenge for a newcomer. The Group’s distribution and drug store businesses were strategic initiatives undertaken to gain a foothold in the burgeoning Chinese healthcare and retail market. However, it has taken much longer than expected to penetrate the market.

Business in Singapore picked up. Growth from existing agencies contributed to an increase of $14 million in group revenue. New agencies secured during the year included Fonterra, Lodi and Hardy Wine.

The Malaysian operations did well. It now accounts for 31% of the Group’s turnover in wholesale and distribution business. The new meat business and other new agencies have helped to boost overall sales in Malaysia by 26%.

Manufacturing & House Brands

Turnover in the Group’s manufacturing and marketing of house brands increased 32% to $47.2 million in 2007.

Sunshine Bakeries delivered better results. Despite working against continuing stiff market competition and rising commodity and energy prices, Sunshine Bakeries was able to record a reduced loss of $ 0.7 million compared to the loss of $1.1 million in the previous year. Ability to price higher for bread helped. A major increase in sales volume for buns contributed. Generally, better deployment of resources and cost efficiency initiatives have helped to improve competitiveness. Continuing efforts will be made at Sunshine Bakeries to further streamline operations to promote greater efficiency. Steps are being taken to making advertising and sales promotion more effective.

The turnover in the other house brands grew 12.8% in 2007. The main labels are Gourmet Delicatessen, SCS Butter, Sunshine Frozen and Buttercup Spreadable. The SCS promotion over the festive seasons, price increase for some items and the increase in exports sales to Brunei and Philippines contributed to the increased turnover.

PROPERTY INVESTMENT

The rental income from One Phillip Street increased from $1.1 million in 2006 to $2.2 million in 2007.

However, rental income for the Group as a whole decreased by $16.2 million compared to the previous year. This largely reflects a reduction in rental income flows following the divestment in March 2007 of the Group’s 50.89% effective interest in the Jakarta shopping complex which had been held under a related PT Duta Wisata Loka (“DWL”).

During the year, the value of investment properties increased by $48.1 million to $91.3 million reflecting the unrealized gains of $45.4 million and $2.7 million recorded for the OPS and PB properties.

INVESTMENT ACTIVITIES

The book value of the Group’s investments in FJ and Robinsons stood at $22.2 million and $190.3 million respectively. These values are derived after taking into account dividends received and profit contributions for the year 2007 and for FJ it also took into account an impairment of $1.9 million made after professional valuation.

Short term investments fell to $18.9 million compared to $30.6 million in 2006. The reduction was mainly due to the disposal of shares in China Energy Limited. The sale resulted in a realized gain of $12.7 million for the Group.

The Group made an investment in a Chinese company, Heng Yue Holdings Limited, by way of subscribing for secured redeemable convertible bonds of RMB75 million (approximately $14.5 million) maturing in 2012 and yielding an interest of 4% per annum.

In pursuit of the Group’s strategy to strengthen its position in the retail food sector and achieve a wider regional coverage for its food distribution business, the Group has acquired the entire share capital of Edmontor Investments Pte Ltd, the holding company of Delifrance Asia Limited, its subsidiaries and associated companies (“Delifrance Asia Group”). The acquisition took place in December 2007 for a consideration of $16.2 million.

The Delifrance Asia Group operates the Delifrance chain of bakeries, cafes and bistros across many countries in Asia. The Delifrance Asia Group is currently one of the largest “Fast Casual” and “Casual” dining restaurant chains in Asia, with annual sales of $130 million through a network of 230 proprietary and franchised outlets in Asia.

At end 2007, the total external borrowings of the Group stood at $209.8 million compared to $125.9 million a year ago. The additional borrowings included $58.1 million of loans that came with the acquisition of the Delifrance Asia Group. On industry comparison, the Group’s overall gearing ratio of 0.79 sits within the average band.

PROSPECTS

Economic growth is expected to moderate as the fallout from the US sub-prime mortgage crisis filters through and dampens global economic growth. The resultant market sentiment may soften the property market outlook. On the food industry, continuing high commodity and energy prices will exert pressures on margins. All signs point to the need for a more measuredpace approach in every aspect of the Group’s businesses. The continuing efforts to achieve further operational cost efficiencies and cross business synergies within the Group will be consistent with this approach.

DIVIDEND

The Board is proposing a final dividend of 5.0 cents per ordinary share (one-tier tax exempt) in addition to the interim dividend of 2.0 cents per ordinary share paid last year. The final dividend shall be paid on 23 May 2008.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors, I express heartfelt gratitude to our shareholders, customers, principals, union and business associates for their valued and continuing support.

I thank my fellow Directors for their dedication, wise counsel and invaluable guidance. Last but not least, I extend our appreciation to the Management and Staff for their hard work, contributions and commitment during the year. Together we can look forward to another eventful and successful year.

Albert Cheok
Chairman