Chairman & Chief Executive Officer’s Report

The financial results for the year ended 31st December 2008 showed revenues of $6,788 million, a marginal increase of $40 million or 2% compared to 2007. The net loss attributable to stockholders was $259.9 million as compared to net profit of $133.5 million recorded in 2007. The earnings per share for the year were ($3.21) compared to $1.65 for 2007.

The financial results were quite disappointing as the retail and wholesale divisions of the business suffered the effects of the general downturn in the economy and the decline in the construction industry which started in the third quarter of the year and continued through to year end. The agricultural division however held its strong market position and produced good results.

Results were also significantly impacted by the devaluation of the Jamaican dollar in the latter part of the year, an increase in interest rates and high inventory levels.

In anticipation of an extended period of difficult economic condition, management has commenced a process of restructuring the business driven by cost rationalization at all levels. During the last quarter of the year the Agro Grace operation in Ocho Rios was consolidated within the local Rapid True Value store to benefit from the synergies of a wider and more diversified product offering to the consumer. In addition, the Rapid True Value branch in Savannah-La-Mar was closed due to its continued marginal performance.

We implemented a staff rationalization programme in December 2008 which resulted in the separation of 88 of our employees and contract staff. We wish to advise that at the board meeting of the company held on March 2, 2009 Mr. Douglas Orane stepped down as Chairman and Director of the company. At the same meeting, Mr. Erwin Burton, a Director of the company since September 2003 was appointed the new Chairman and Mr. Courtney Campbell was appointed a director of the company.
The focus for 2009 will be the turnaround of the financial performance of the company. This will be achieved through the implementation of category management to drive revenues and to improve inventory management along with further cost rationalization and improvements in our internal efficiencies.

We continue to make significant investment in staff training and development in order to ensure the delivery of excellent customer service to our customers.

Rapid True Value
Revenue generated by the Retail Division declined by 2% relative to the prior year against the background of a significant decline in construction and home improvement activity.
Revenue gains generated in the first and second quarters of 4% and 13% respectively were eroded in the second half of the year as the economic challenges impacted traffic and ultimately, transaction counts throughout the chain.

Notwithstanding, the economic challenges, the business made significant investments in preparing associates to better serve customers through the introduction of mandatory Product Knowledge training, new Service Standards and the installation of Project Centre desks in selected stores.

A new roofing line was introduced to the market in August 2008. The AllMet line of stone-coated metal roofing panels is doing well and has complemented the current range of roofing materials.
Marketing initiatives undertaken during 2008 were focused around stimulating consumer interest in completing simple projects around the home and included features such as staining concrete driveways and adding a Deck to your home.

WholeSale and Projects Division
The Wholesale and Special Projects Division showed a marginal decrease in revenues of 2% compared to 2007. The division which achieved remarkable growth in 2007 failed to significantly improve the performance in 2008 due primarily to the postponement of construction of major hotel projects.
The division added new product lines to its complement in order to diversify the range and improve on gross margins. The reseller market continues to be very competitive with new market entrants and aggressive price points on commodity products.

AgroGrace Division
The Agro Grace Division had an excellent year with revenues surpassing prior year by 20%. All product categories performed at a consistently high level throughout the year, however, overall sales were negatively impacted by high fertilizer prices and to a lesser extent, animal feeds. Hurricane Gustav also negatively impacted the business as it destroyed the banana industry and damaged greenhouse structures.

The vegetable sector continues to be the main contributor to revenues, particularly in the delivery of vegetable seeds. We maintained a high level of activity in the field in terms of testing, demonstrations and development of new products and the training of various farming groups. Agro Grace continues to hold a very strong position in the market due to the product range, availability and excellent customer service.

Management and Staff
The Directors wish to express gratitude to all employees for their hard work and commitment during 2008. The Board also wishes to thank our customers, suppliers, and other stakeholders for their continued loyalty and support.