Dear Valued Shareholders,

For the year 2008, WCT Group registered a consolidated revenue of RM3.8 billion while recording operating and net profits of RM182 million and RM102 million respectively.

The Engineering and Construction Division continued to be the main thrust of the Group’s business activities. It contributed RM3.5 billion or 92% to the Group’s consolidated revenue. In terms of operating profits, it achieved RM82 million or 45% of the total operating profits of the Group.

Meanwhile, the Group’s Property Division also fared commendably with revenue of RM221 million or 5.8% of the Group’s consolidated revenue. Operating profit was RM97 million or 53% of the Group’s total operating profits.

In most part of 2008, global construction faced a challenging period of rising prices for key materials and supply constraints amids stronger demands from fast growing economies in China and India. Towards the end of the year, although cost of construction materials decreased substantially, contraction of GDP growth in the world economy and concerns over the global financial system has limited infrastructure spending in markets we operate in.

Despite a volatile year, WCT successfully secured new construction contracts in the Middle East and Malaysia totalling RM3.2 billion with WCT’s portion amounting to RM2.1 billion. We continued to secure the confidence of ALDAR Properties PJSC with the award of additional works at the Abu Dhabi F1 Circuit and the landing of the high profile Yas Marina Royal Yacht Club contract, which will host the royals of UAE during the inaugural Formula One race in November 2009. In Malaysia, the AEON Shopping Mall Melaka is the third of such contract awarded by AEON after Bukit Tinggi in Selangor and Bukit Indah in Iskandar Johor.

Additional Works at the Abu Dhabi F1 Circuit      Abu Dhabi, U.A.E.                                    2,000
AEON Shopping Mall Melaka                              Melaka, Malaysia                                         288
Yas Marina Royal Yacht Club                             Abu Dhabi, U.A.E.                                       235
The Paradigm @ Petaling Jaya                           Selangor, Malaysia                                      792

Construction activities in Malaysia are expected to expand for the rest of the year after the recent stimulus packages announced by the Government. The commitment towards greater transparency and efficiency by the Government will elevate the opportunities offered to competent contractors like WCT. As one of the nation’s most prominent builders, WCT will remain focused on the domestic market and will continue to contribute towards the development of Malaysia.

In the Gulf, the lower national budget surpluses due to weaker oil revenue will not deter the prospect of the region. WCT has been in the Gulf for 7 years with our first project being the prestigious Bahrain International Circuit. WCT’s track record in the region will be further enhanced once we deliver the RM3.3 Billion Abu Dhabi F1 Circuit later part of the year. The ability to deliver a world class project in a timely manner is key to building a solid foundation in order to be successful in securing more projects in the future. Besides the Gulf States, we are poised to enter the construction market of Vietnam once we receive the necessary approvals.

PROPERTY

In 2008, the retail market witnessed high inflation, political uncertainties and global issues which adversely affected consumer and retail sentiments. The large supply of retail space which came on stream last year led to a fiercely competitive retail market. The rising unemployment will hurt retail spending and domestic consumption. Nevertheless, the longer term outlook for retail is still good with well-positioned retail centres in prime locations continuing to perform well.

The office sector performed favourably in 2008 with occupancy rate at 84%. The weak business sentiments compounded by the large supply of office space expected to come on stream in 2009 and 2010 will create downward pressure on prices.

On the demand side, the property market started the past year on a positive note supported mainly by strong foreign buying which sent property prices and rentals to new highs. This trend tapered off in the fourth quarter when sentiments turned negative in the face of the global financial and economic crises.

Housing developers, on the other hand, had to withhold new launches as the run-away costs of all key construction materials made it extremely difficult to set the prices for their properties. The softening market will see developers rolling out innovative packages to attract homebuyers.

The Group’s land acquisition will continue to focus in Klang Valley’s growth corridor with good infrastructure. Development will concentrate on properties in the middle and upper ranges. The Group recognizes the current soft property market is an opportune time to source for development land at more realistic prices.

Demand for our properties in the three townships remained stable in 2008, registering sales totaling RM119 million. This demand stability is due to Klang Valley’s favourable demographics and the strong catalyst provided by the presence of the Bukit Tinggi Shopping Centre and various facilities and amenities. The recent completion of the BBT office towers, the retail boulevard and the on-going construction of the Hotel will further complement the existing amenities in this township

With most of the residential segments of the townships of Bandar Bukit Tinggi I and II having been developed, the remaining land is mainly zoned for commercial purposes.The Group is currently focusing its township development on Bandar Parklands.

d’Banyan Residency, with the sea, golf course and mountains forming a scenic backdrop, represents the Group’s foray into the high end residential development in Kota Kinabalu, Sabah. It was officially launched in September 2008, with two opulent show units opened for public viewing. Innovative packages with attractive incentives are being offered to both local and foreign buyers. Sales registered to date amounting to RM60 million draws comfort despite the softer property market.

The Group aims to transform the larger Bukit Tinggi township into a lively community with a good mix of social and commercial activities. Quality amenities with modern designs have been built to cater to the changing lifestyles and expectations.

The skyline of the southern part of Klang city took on a new look with the completion of the BBT One Office Towers and the Boulevard which added further vibrancy to thetownship. The office towers were built to meet the requirements of companies and organizations and provide them, especially shipping companies, financial institutions and government agencies, with a modern corporate office environment complete with security.

The low-rise retail Boulevard is in response to the increasing popularity of al fresco casual dining and street mall shopping.

The business class hotel which we are developing in Bandar Bukit Tinggi is currently under construction. When completed in late 2010, it will have 250 rooms and a ballroom with a seating capacity for 1,000 people, offering residents in this part of the Klang Valley a comfortable and convenient banquet venue. Guests of the hotel will also enjoy complementing facilities such as the business centre, the lobby lounge cum café, meeting and seminar rooms, swimming pool, gym and ample car parks.

The Paradigm is an integrated mixed development sitting on 12.9 acres along the LDP Expressway in Kelana Jaya, Petaling Jaya. When completed, it will have a shopping mall, four (4) blocks of prime offices and a basement car park. We have obtained the planning approvals and the development order for the project. Piling and basement works are in progress.

Upon shareholders’ approval on 9 April 2009, the Employees Provident Fund Board (“EPF”) became a strategic partner in the development of the Paradigm Project. As announced on 29 September 2008, the Group entered into the following arrangements with EPF last year to raise funds to part-finance the Project:-

(i) Proposed Disposal to EPF of 48 million ordinary shares of RM1.00 each in Jelas Puri Sdn Bhd (“JPSB”) representing 30% of the enlarged issued and paid-up share capital of JPSB for a total cash consideration of RM87.36 million. JPSB is the project owner and an indirect wholly-owned subsidiary of WCT.

(ii) Proposed Issuance by JPSB, and to be subscribed in full by EPF, of up to RM390 million nominal value 5-year 6% p.a. redeemable secured loan stocks (“RSLS”) at 100% nominal value.

Since EPF is a major shareholder of WCT, shareholders’ approval was duly sought and obtained for the related party transaction in compliance with the Listing Requirements.

Last year, Vietnam’s property market was also hit by the current world financial and economic turmoil. Property prices, particularly for high-end products, fell in the second half of 2008. For this year, it is expected to consolidate further with demand remaining firm for medium cost housing, grade A offices and modern shopping malls.

The Group’s 67% subsidiary, BSC-WCT Company Limited, holds the Investment Certificate for the Platinum Plaza which was awarded by the People’s Committee of Ho Chi Minh City in January 2008. It sits on 9.0 hectares or approximately 22.2 acres of land located in the District of Binh Chanh in Ho Chi Minh City. It fronts the Nguyen Van Linh Road, a brand new 10 lane East West Highway, which allows direct access to the north and south via the existing Highway 1A.

The proposed development comprises a shopping mall, 2 office towers, a 4-star hotel, a SOHO block and car park. The total gross floor area is about 450,000 square metres or 4.8 million square feet. The shopping mall is expected to be the largest in Vietnam when completed. The project will be developed in 3 phases over a 4-year period after the land has been resettled.

The design of the shopping mall under Phase 1 is on-going while land compensation and resettlement are the main activities in 2009. WCT Engineering Vietnam Company Limited, a wholly-owned subsidiary, will be fully involved in the construction of the Platinum Plaza development when the land is fully resettled and compensated.

The Group’s first investment property, Bukit Tinggi Shopping Centre with a net lettable area of 1.0 million sq ft and 5,000 car parks opened on 24 November 2007. The shopping centre is leased to AEON Jusco for an initial term of 10 years with an option to renew the lease for another 3 terms of 5 years each with lease rental reviewable every 3 years. It provides a steady recurring income base to the Group.

The shopping mall and the car parks at The Paradigm@ Petaling Jaya are under construction and expected to be completed by June 2011 and will add to our recurring income base. In addition, a business hotel within the Bukit Tinggi township is also under development. In Ho Chi Minh City, Vietnam, the Group has also planned to retain part of the office and the shopping mall at the Platinum Plaza mixedcommercial development.

To brace ourselves for the economic slowdown, the Group will continue to adopt strict financial discipline and conservative approach in doing business. We will continue to be selective and concentrate on projects that fits our profile and strengths. A softening business environment also calls for great care in our cost control and cash flow management.

WCT will continue to explore construction opportunities overseas, particularly in the Gulf States, while maintaining our base in Malaysia. The Group will also seek out other related business opportunities in the global market to improve our operational and financial performance.

With the continued support of all stakeholders, my team and I are confident that the Group is able to weather the current downturn and prevail on an even stronger foothold.

Taing Kim Hwa
Managing Director
28 April 2009