"What a year 2009 has been. The world economy seemed to be in free fall, deteriorating credit markets, collapse of major financial institutions in the US and disappearing market confidence and demand. Clearly, a year most people want to forget.

However, as the newly appointed Acting CEO, I want to assure you that things are beginning to look up.

Our primary focus is to generate healthy cash flows from our operating activities in our forest concessions, our chip mill and construction businesses and driving out significant value from all three of these businesses.

The opportunity to tap into these resources rich businesses is tremendous. The world economy and Asia in particular is beginning to see good signs for growth once again and we are preparing UFS to grab these opportunities.

The global economic downturn earlier during the year lowered drastically the demand for paper and consequentially pulp prices fell to around US$350 - a level that has not been seen in decades. As a result, a significant number of pulp and paper facilities around the world shut down their operations and consequently slowed our chip business at PT MAL.

We have used this slowdown to our advantage to make significant operational and throughput improvements at PT MAL, in readiness and will come out stronger as demand and prices are now beginning to pick up. We have recently signed several domestic and export contracts for our wood chips which will increase our capacity utilization to the highest levels we have seen in the three year history of the chip mill.

PT HRB, our 268,000 hectare Acacia Mangium plantation is beginning to be monetized with good demand for both our sawn and pulp logs. We are also looking at strategic options in partnership with timber merchants to convert the logs and add value before the logs are exported out. Several contracts are under negotiation for annual supply of pulp logs to pulp mills in Indonesia.

Our vast plantations of fast growing trees with excellent wood quality for the production of pulp continues to position us well among the future winners in the pulp and paper industry. PT HRB will continue to plant Acacia Mangium trees on harvested areas and on available areas within the concession. In addition to the planting activities within its concession, PT HRB has been working with the local communities under its People's Forest Scheme ("Hutan Rakyat") to expand forest plantations outside its concession boundaries. We work together with land owners at the surrounding area, to grow trees in their land.

In summary, 2009 began, with high uncertainty and significant challenges. Going forward, our focus will be on further improving our fundamentals. This means operational efficiency improvements, driving out higher margins, continued integration of our forestry and woodchips operations, replanting and continuous maintenance activities. Needless to say but we remain bullish.

PT MBBM, was our desire to build a state-of-art pulp mill to be a fully integrated fiber company. However, fiscal prudence dictates we watch the market closely before we embark on such a capital intensive initiative.

The picture is bright for our construction business in Singapore. Poh Lian Construction Pte Ltd ("PLC"), a wholly-owned subsidiary of Unifiber has been awarded a building contract from Sophia Residence Development Pte Ltd, a member of the GuocoLand Group, for the construction of a high-end condominium project comprising 5 blocks of high-rise residential buildings with a total of 272 units, basement car parks and modern recreation facilities along Sophia Road located in the city.

The contract sum of the project is S$115.84 million and the construction period is 30 months from site handover. The project is earmarked to attain the Platinum Green Mark and the award represents the continuous stream of high-end condominium projects won by PLC after Ardmore II, The Solitaire, The Trillium and the Meadows @ Peirce.

We believe that our construction business is fundamentally strong to take advantage of the current market and expand its footprints into international markets by diversifying our exposure from Singapore property market. Our focus will be to look at markets that offer attractive growth and healthy profit margins. The foundation has been laid in 2009 and the Group is hopeful to be able to secure overseas projects. The key is obviously how we manage our risk vis-à-vis the likely continued adverse market situation. We believe partnerships with prominent players in new markets will help us manage such risks.

On behalf of the management, I would like to extend our appreciation to all our stakeholders for their continued support and we look forward to increasing shareholder value by driving higher growth and profitability in all of our business units."

Hoshi Dorab Deboo
ACTING CHIEF EXECUTIVE OFFICER