DEAR SHAREHOLDERS,

It gives me great pleasure to welcome you all and present herewith the results of Dubai Refreshments (PSC), hereafter referred to as “DRC”, for the year 2007. 2007 was the year which has taken DRC closer to achieving its core strategic long term objectives.

We are moving forward towards diversifying our portfolio in terms of new products and packages

with geographical expansion also on the cards. The ever increasing cost scenario particularly of

raw materials and the constraints in terms of line and warehousing capacity continuously test our

ability to counter these challenges. So far, we have encountered all these challenges with the best of our efforts and capabilities. For the future, more focused long term strategies are to be made to sustain the growth and increase our profitability. It is pertinent to mention that we are working vigorously on those strategies and in the year in question, we have certainly taken a few initial steps which I shall mention later in the report.

Now for current year, sales volume growth showed an increase of 13% over the previous year. In

total, we delivered 29.3 million cases as compared to 25.9 million cases in 2006. We are also again ahead of our plan by 1.1 million cases which is a great testament to the high quality efforts put in by our sales team. The team is duly supported by all the departments of the Company which have utilized all their potential in making this achievement possible. In terms of profitability, we achieved the figures of AED 21 million, which is double than our original plan of AED 10 Million. The figure includes non operating income of AED 8 Million giving operating profit of around AED 13 Million. In terms of operating profit our plan was AED 14.4 Million for the year which indicates that we are behind the plan by AED 1.4 Million. The decrease in operating profit is mainly attributable to the fact that because of capacity constraints, we had to convert the huge number of our volumes from outside the company at a higher cost. This has led to decrease in margins and a consequent decrease in our operating profit. Furthermore, increase in the prices of diesel and in turn, some of the core raw material prices have put additional pressure on  margins.

In spite of all these adverse factors we have surpassed and more than doubled our overall profit target through increase in investment and other non operating income. As far as market share is concerned, we are constantly building up on our base of 70% share achieved in 2005. This year also, it was maintained at above 70% in December 07.

At the quality front, DRC has been nominated for the Gold prize of Pepsi Cola International Quality Excellence Award (QEA) which clearly shows the highest quality of standards we are maintaining. In order to resolve the capacity constraints and moving forward on long term perspective, DRC has invested in new lines and equipments. The new can line has been acquired from one of the best filling line manufacturers KHS. The line is able to produce 90,000 cans per hour which is the highest capacity in the region. The new line can produce cans in every size (i.e 150, 250, 300 and 355 ml) as well can produce multipacks in addition to the normal full cases. Further, DRC has acquired new blower machine which has increased the efficiency of the PET line by 50%. All these investments shall go a long way in achieving our objective of meeting the desired growth level at the optimum cost and shall save the money spent on outside conversions. Furthermore, in order to be more focused towards strategic management and long term planning, the company this year has taken various extra measures. We have restructured the company with the formation of Corporate section which shall look after solely the strategic management and expansion plans for the future. In addition to this, an investment committee has been formed to look after the prospects and feasibilities of specific projects and expansion plans from every aspect.

These were obviously the necessary steps to remain competitive and to take an extra edge in a dynamic and changing market environment. Moving forward from here, Company is investing heavily in the new infrastructure development and new operational site to resolve the space constraints and storage problems. The “Greenfield project” is in the offing for which land has been acquired in Techno Park with an area of 100,000 sq meters. This area shall be covering the space for warehouses and production lines along with the space for all the offices. We are steadily improving and increasing our product portfolio with the introduction of new packages and products. This year we launched the package of PET 500 ml and other new products like Aquafina sparkling water and non carbonated beverages are about to be launched in year 2008. This diversification shall certainly provide an advantage in terms of increased margins and focusing on high contribution products.

On the marketing front, we maintained the excellent relationship between Government of Dubai and Dubai Refreshments with an ongoing partnership in number of segments like Dubai Shopping Festival, Dubai Summer Surprises, Global Village and Modhesh Fun City. Further, participation in major key concerts in the region with excellent support to the sports events also has continued in the previous year. With the name of Pepsi Sports Fiesta, we have proudly created an event in which schools and interested participants play and compete in various sports like Basketball,Football, and Cricket.

In the end, I would like to express our gratitude and appreciation to His Highness Sheikh Mohammed Bin Rashid Al Maktoum Vice President, Prime Minister of U.A.E and Ruler of Dubai and His Highness Sheikh Hamdan bin Rashid Al Maktoum, UAE Minister of Finance & Industry for his continuous support to our Company. Further, we would like to congratulate Sheikh Hamdan Bin Mohammad Al Maktoum and Sheikh Maktoum Bin Mohammad Al Maktoum on their appointment as Crown Prince and Deputy Ruler of Dubai respectively and hope that the appointments shall prove to be a stepping stone for further development of emirates of Dubai.

In conclusion, I would like to thank all the employees of the Company for their continuous efforts and dedication for the betterment of the Company. I would further like to thank all our suppliers, customers and shareholders for supporting us and making all the above achievements possible. This, as we all know, is the critical period in the life of our Company as we are looking forward to new vistas and avenues to excel in the market. Diversification and expansion are the key words which best describe the current phase of DRC. I am very much hopeful that at this critical juncture, all our people shall put in their best efforts to achieve our objectives for the future and take our Company to the pinnacle of success.