Extracted from Annual Report 2008

Dear Shareholders,

On behalf of the Board, here I present the results of Nippecraft Limited ("Nippecraft" or the "Group") for the financial year ended 31 December 2008.

The Group sustained its revenue of S$78.1 million, as compared to the like-to-like revenue of S$78.0 million in 2007 (as of the full revenue S$214.5 million in 2007 including an office paper contract of S$136.5 million from North America), contributing a gross profit of S$27.0 million or 34.5% for FY2008. This was achieved against the backdrop of the higher raw material costs as well as the significant weakening of the key revenue currencies - Australian dollar and Sterling Pound.

Net earning before tax, however, lowers to S$4.0 million for FY2008 while the result in 2007 was S$7.5 million. The decline was mainly owing to the exchange loss of S$1.95 million from the key revenue currency weakening as a contrast to the gain of S$1.1 million in FY2007. On a positive note, our balance sheet remains healthy with strong cash and cash equivalents of S$17.9 million as of 31 December 2008.

Segmental and Geographical Review

Excluding the North America office paper contract, the sourcing segment grew by 30% to S$10.1 million in FY2008 as compared to S$7.5 million in FY2007. The integrated segment shrank slightly by 1% to S$67.9 million in 2008. The decline was impacted by the translation of Australian dollars and Sterling Pounds, otherwise the integrated business would have growth as well.

The turnover from Australia continued to grow by 8% to S$35.9 million and significant increases for other Asia Pacific markets by 396% to S$6.6 million. We will focus more towards exploring new opportunities in this Asia Pacific region.

Global economy remains pessimistic and various uncertainties stagnant the progress of sales revenue and profit margin in the North America region. The Group will pursue new business initiatives, forging new alliances, reinforcing our core competency and expanding our geographic footprint in other key markets.

Growth Strategy and Initiatives

Our extended brands - Fountain of Knowledge and H+O continued to gain recognition while Collins Leadership launched it first ECO displayer into the US market in tandem with the green consciousness. Going forward, the Group aims to launch extended brands quarterly to capture and broaden our market shares in addition to our traditional "Dated" segment.

As consumer spending might slow down further in 2009, the Group plans to re-focus on the enterprise gift and promotional segments by expanding into the Asia Pacific region, and to increase our integrated services to break the seasonality of year-end diary business.

Appreciation

I would like to take this opportunity to extend my appreciation to our clients, loyal consumers, directors and business associates. I also wish to thank our shareholders for their unceasing support. I would also like to applaud our management and staffs for their unquestionable achievement and hard work in 2008.

Anticipating a tough year ahead in 2009!

Linda Suryasari Wijaya Limantara
Chairlady
26 March 2009