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Extracted from Annual Report 2007

Operation Overview And Financial Performance

The year under review saw encouraging financial performance despite operational and market challenges such as sharp increase of global fuel cost, escalating raw materials costs, tight rubberwood supply and continued appreciation of the Malaysian Ringgit against the United States Dollar. Within such challenging business conditions, the Group still manages to achieve revenue of RM150.6 million for the year compared to RM115.9 million during previous year, representing a commendable increase of 30%. There is a decrease of 20% in profit before tax from RM15.2 million in previous year to RM12.7 million during the year which was mainly attributable to the above economic and global uncertainties. However, the Group remains optimistic and confident of the future performance due to the popularity of its products in its primary market, Europe and America, as well as in Asia Pacific, Middle East and Africa and the Group's steadfast commitment to product quality, reliability of supply and innovative designs in its manufacturing operations.

Corporate And Business Development

During the year, the Group has completed the rights issue of up to 151,800,000 new ordinary shares of RM0.50 each in DPS ("rights share(s)") on the basis of one (1) rights share for every one (1) existing ordinary share of RM0.50 each held in DPS ("DPS share(s)" or "share(s)") together with up to 75,900,000 free detachable warrants ("warrant(s)") on the basis of one (1) free warrant for every two (2) rights shares subscribed.

With effect of 9.00 a.m., Monday, 14 January 2008, 132,000,000 Rights Shares and 66,000,000 Warrants were listed and quoted on the Main Board of Bursa Malaysia Securities Berhad.

This financial year marks the cultivation of dragonfruit trees via a wholly-owned subsidiary of the Group, Diamond Terrace Sdn Bhd. In addition, on 15 August 2007 Toko Industries Sdn Bhd has been acquired and now, a wholly-owned subsidiary of Shantawood Manufacturing Sdn Bhd. Toko Industries Sdn Bhd will be used as a vehicle to acquire agriculture land to carryout business under agro-based industries. The cultivation and plantation of approved food production project will qualify both the company and investing company income tax exemption incentives.

The aforesaid expansion and diversification has further strengthens DPS's growth.

Dividend

In exercising financial prudence, it is the Group's intention to strike a balance between dividend payouts and the setting aside of funds for future business expansions which will subsequently enhance value for shareholders.

The Board has recommended the final gross dividend of 1 sen per share (tax-exempt), subject to the shareholders' approval at the forthcoming Annual General Meeting.

Prospect

In general, looking at the GDP growths of the countries which from the bulk of our sale destinations namely, Malaysia, Europe, Asia Pacific, Middle East and Africa, with exception of U.S.A, which is reported to have a marginally lower growth, all the other countries are reported to have increased or stable GDP growths in this coming year. Thus, we are expecting the resulting increase in demand of our furniture due to the respectable GDP growths in the countries we trade would be more than sufficient to off-set the effects of the escalating of raw material costs, appreciation of Ringgit Malaysia and the hike in oil price. The Group remains optimistic and confident of the long-term prospects of the international furniture business.

The Group is of the opinion that the present market conditions are conducive towards its plans of moving up the value chain by penetrating higher-end markets with enhanced modern designs and materials in tandem with its current growth in business volume. The Group will continuously strives to differentiate its products through progressive designs, on time deliveries, fine workmanship, tight cost control and valuefor- money products. The Group will continue to participate in more international furniture exhibitions and fair with the objective to penetrate into new markets. With the focus on production process improvements, prudent inventory management, larger customer base with good sales terms and better value mix per shipment of products, we anticipate better performance and margins enhancement in the coming years.

Having experienced higher than normal rubberwood prices in the previous year, the Group shall continue its efforts to identify and venture into upstream activities; in particular rubber tree plantations. This move will contribute towards cushioning the impact of fluctuations in the supply and cost of raw materials and generating new income streams for the Group.

The Group will keep to its strategy of actively looking at enhancing its overall capital structure with a view to prepare it as a springboard for future expansion and diversification. The Group has been dynamically exploring new business opportunities in upstream, intermediate and downstream activities, relating to its core business. The Group sees the coming year as an exciting year ahead, as the strategies that it laid out are being put into place.

Corporate affairs which were materialized subsequent to financial year end:

Corporate Governance

The Group remains committed to achieving and maintaining good standards of corporate governance. The Board views good corporate governance as an important element to safeguarding shareholders' interest.

Hence, the Board believes strongly that the Group needs to adhere to the standards set by the Malaysian Code on Corporate Governance and where possible even surpassing these standards.

Appreciation

I would like to take this opportunity to thank everyone within the DPS Group. Your effective execution of the Group's strategies through sheer hard work, dedication and commitment to team work in a demanding and challenging business environment have certainly contributed much to the success of the Group.

I also would like to express my earnest gratitude to all our valued shareholders, customers, suppliers and contractors, business partners and associates, authorities and members of the investing community, for their invaluable support, contribution and confidence in the Group.

As to the other Board members, thank you very much for your effort, professional advices and contribution in making this Board more effective and efficient.

DATUK (DR) SOW CHIN CHUAN
Executive Chairman & Managing Director