Chairman & Chief Executive Officer’s Report

The year 2010 was one of the most challenging for our business, as Jamaica continued to grapple with a deep and prolonged recession.

The housing and construction sectors continued to be impacted, and our overall revenues declined by 3.6% as investors delayed major projects, contractors delayed construction of housing, and consumers delayed purchasing of home improvement products. However, our farm and garden supply business remained stable, as the expansion of the agricultural sector continued despite a combination of drought and flooding. Similarly, we saw growth in our retail hardware business in the second half of the year.

Our results were also significantly improved by the revaluation of the Jamaican dollar and lower interest costs, subsequent to the JDX in the first quarter.

The net profit attributable to stockholders was $19 million as compared to a net loss of $226 million recorded in 2009. The earnings per share for the year were $0.24 compared to ($2.79) for 2009.

In response to the difficult economic conditions in 2010, we focused on cost reductions and customer service improvements. This resulted in the reduction of long term debt and overdraft, and improved product availability at our wholesale and retail stores. These actions, in combination with the refurbishing of most of our stores, led to improved results in the second half
of the year.

The focus for 2011 will be remain on the vital few actions that will ensure a sustainably profitable business going forward. These actions are to continuously reduce our costs, improve our supply chain management, improve our customer service, improve our internal controls, and grow our farm supplies business. These actions have been wholly integrated into our Balanced Scorecard (BSC) and strategic plan for 2011 to 2015.

We wish to express our gratitude to the management and staff for their hard work and commitment during 2010. We also thank our customers, suppliers, and other stakeholders for your continued loyalty and support.