Chairman's Statement

Extracted from Annual Report 2007

Dear Shareholders,

Introduction
It is a pleasure to bring you my inaugural annual report for Middle East Development Singapore Ltd (MEDS) since M E Development LLC (MED) acquired a major stake in January this year. These past months have been transformational for our company. Our vision is to be a leading developer of property and infrastructural projects in the Middle East, China and Singapore. Meanwhile, we have taken strategic steps into the project management business, whilst enhancing our existing waterproofing business by leveraging on these new opportunities.

Through such property and infrastructural developments, we aim to provide and meet people’s lifestyle and work aspirations in a greener environment.

In April, we took our maiden step in this direction - with the signing of construction management agreements for six high-end developments in Dubai and Bahrain to be developed by our controlling shareholder, MED, which specializes in the development of property and infrastructural projects as well as integrated townships in the Middle East.

Financial Results
The result for the financial year under review is basically attributable to our existing waterproofing business only as the Project Management business is still awaiting shareholders’ approval.

I am pleased to report that Hitchins, our waterproofing division, has broken even. However, the Group registered a small net loss because of the initial start-up costs of our new business and the setting up of a new Corporate Office. For the financial year ended June 30 2007, the Group loss was about S$0.3 million, an increase of 63.3% over that of the previous year while revenue improved by 0.9% to S$11.8 million.

The Group is now in a stronger financial position following the proceeds from the new share issue of S$13.6 million. This came from the strategic investment exercise involving the subscription of new shares by its current controlling shareholder, new investors and a one-for-two rights issue. As a result, cash reserves rose from S$0.9 million to S$13.2 million. The improved balance sheet position will enable the group to take advantage of future growth opportunities.

The basic loss per share of the Group fell from 0.18 cents in FY2006 to 0.16 cents in FY2007. The Group’s net tangible asset per share improved from 4.46 cents to 4.66 cents.

Project Management Business
The recent project and construction management agreements for five of MED projects in Dubai - and one in Bahrain (which are considered Interested Person Transactions) are now pending shareholders’ approval at an EGM to be convened on October 26, 2007.

Upon approval, the agreements will signal the start of our new business in property management. The five property development projects in Dubai are The Arabian Crowne and Windsor Tower in Dubailand and the Red Residence, Kensington Royale and Sports Plaza in Dubai Sports City. In Bahrain, it is the Diamond Plaza.

The Group would earn a management fee of about S$31.3 million over a period of 24 to 36 months.

The six projects are premium, luxury developments that cater for well-heeled locals and foreigners. They will serve to establish the Group’s reputation as a project manager of high-end, luxury developments and provide a foothold in a fast-growing market in the Middle East.

Future Growth Prospects
Real estate developments and project and construction management services will be the key drivers fuelling the growth for the future and we will look out for investment opportunities that are synergistic and strategic to our core business.

In the Middle East, our controlling shareholder is pursuing the development of integrated townships in Yemen, Djibouti and Syria. We will seek to leverage on these opportunities.

We will also explore property developments in China and Singapore.

We seek to position our waterproofing business to capitalize on the opportunities available in the Middle East in addition to the existing markets in Asia. This division is also in the process of commercializing an eco friendly nano-titanium dioxide based photo-catalytic self-cleaning coating for use in buildings.

The Singapore Government’s accelerated efforts to keep buildings environmentally friendly offer opportunities for our Roof Garden System and we will explore export markets for this product too.

Industry Outlook
The industry outlook for our core markets in Asia and the Middle East is encouraging. In Singapore, for example, the Building and Construction Authority has recently upped its construction demand forecast for 2007, from between S$17 billion and S$19 billion to between S$19 billion and S$22 billion.

In the Middle East, particularly in Dubai, prospects are rosy, given the strong foreign demand for property and expected economic growth of 11% according to the Dubai Strategic Plan 2015. As for the booming China economy, the World Bank expects it to grow by 11.3% in 2007.

Given the optimistic outlook in the various markets where we operate, I am confident that the year ahead will be an exciting and fruitful one for our company. Also, I would like to take this opportunity to thank all our business associates, shareholders, staff and my fellow directors for their contribution and support toward the success of our company.

Yours Faithfully,
Dr. Oussama Al-Dimashki
Executive Chairman and CEO