On behalf of the Board of Directors, it is my pleasure to present the Annual Report and Audited Financial Statements of Lion Forest Industries Berhad for the financial year ended 30 June 2009.

Financial Performance

The year under review witnessed the global economy entering its most severe recession following the financial meltdown in the United States. Amidst massive job cuts and fears of a protracted and deep recession, global demand for goods and services plummeted to an unprecedented level. Industrial production, commodity prices and merchandise trade saw massive decline towards the end of 2008 as private consumption evaporated in the major economies. On the domestic front, the local economy was also not spared the effects of the global economic turmoil. However, as with most Asian economies, quick counter measures undertaken by the Government have to a large extent mitigated the negative impact of the sharp and drastic drop in global demand. During the year, the Group completed the acquisition of Silverstone Corporation Berhad ("SCB") whose main subsidiary is involved in the manufacturing and distribution of Silverstone tyres. After incorporating the results of SCB for seven (7) months, the Group recorded a higher turnover of RM598.0 million as against the previous year’s turnover of RM392.8 million. Profit before taxation was RM170.4 million as against a loss before taxation of RM8.4 million due largely to a one-off gain arising from the acquisition of SCB.

Corporate Developments

On 28 November 2008, the Company completed the acquisition of ordinary shares and redeemable cumulative convertible preference shares in SCB via a conditional take-over offer following the issue and allotment of 19,931,861 new LFIB Shares to the accepting holders. Consequent thereupon, SCB became an 84.16% owned subsidiary of the Company. On 11 September 2009, the Company announced that the Federal Court had on the same date dismissed Sabah Forest Industries Sdn Bhd’s ("SFI") appeal with costs ("Judgement") and further ruled that the case be transferred to the High Court of Kota Kinabalu for assessment of damages payable by SFI. Following therefrom, SFI had instructed its solicitors to submit an application for review of the Judgement under Rule 137 of the Rules to the Federal Court 1995. Full details of the above are set out on pages 104 to 105 of this Annual Report.

Corporate Social Responsibility

We recognise the importance of Corporate Social Responsibility ("CSR") as an integral part of business and incorporating a CSR framework into our business plan to enhance stakeholder confi dence, accountability and transparency. CSR is an important component of good business practice aimed at improving society and the environment.

Society

In carrying out its business activities, the Group is mindful of its responsibilities as a corporate citizen, in contributing to society while enhancing the bottom-line and shareholders’ value. The Group is focused on assisting the community through education and medical care via the two Foundations established by the Lion Group of Companies of which the Group is a member. The Lion-Parkson Foundation disburses funds for education and charitable needs; and every year, awards scholarships and interest-free education loans to undergraduates in the local universities. The Lion Group Medical Assistance Fund provides financial assistance to needy Malaysians who require medical treatment including surgery, purchase of equipment and medication. The Fund also sponsors community health programmes such as medical camps and the purchase of dialysis machines for Dialysis Centres providing subsidised treatment to the less fortunate. The Group also supports the community by contributing to fundraising and donation drives and responding to the plight of disaster victims locally and elsewhere.

Environment

In keeping abreast with technology and industry developments, the Group seeks to uphold environmental concerns through strict compliance of its operations with the environmental laws and regulations governing the industries in which it operates. The Group subscribes to the safety, health and environment regulations with a systematic approach reinforced by constant training and monitoring to ensure the safety and well-being of our employees.

Prospects

Moving forward, the business landscape is expected to remain challenging as major economies begin to gradually emerge from the devastating effect of the economic recession. Our tyre operations in China are expected to continue to expand on its market presence whilst the local building materials and petroleum products operations are envisaged to post a satisfactory performance.

Acknowledgement

On behalf of the Board of Directors, I wish to express our deepest appreciation to our shareholders, financiers, business associates and the various governmental and regulatory authorities for their continued support and confidence in the Group. Last but not least, I would like to thank my fellow Directors for their invaluable support and advice throughout the year.

TAN SRI WILLIAM H.J. CHENG Chairman