CEO's message

Dear Shareholders,

On behalf of Transcu Group Limited ("Transcu" or "the Group"), I am pleased to present the Group's inaugural annual report as a listed company for the financial year ended 31 March 2009 ("FY2009").

FY2009 has been an eventful and memorable year for Transcu Group Limited as we entered Singapore's equity market with a reverse takeover of Eng Wah Organization Limited and successfully listed on SGX Mainboard on 27 February 2009. With that, we also achieved the distinction to be the first Japanese Life Science company to be listed in Singapore.

Transcu's Businesses

We have three main business segments, namely pharmaceutical, cosmetic and environmental ("Green Technology") businesses. The primary focus is on our pharmaceutical business which includes the development and commercialisation of our own unique Transdermal Drug Delivery System ("T-DDS"). This method of drug administration is pain-free and non-invasive, and can be customised for a wide variety of pharmaceutical and cosmeceutical applications.

To date, we have signed exclusive regional sales licensing agreements in several rapidly growing Asian countries and partnered with established pharmaceutical companies by licensing our T-DDS technology to them for the development and sales of transcutaneous administration products that incorporate their own propriety drugs. This has led pharmaceutical companies in Japan and other countries worldwide to begin recognising us and our technologies.

Our cosmetic business is made up of two skincare lines, Electore (for women) and giulianoFujiwara Electore (for men), and the products are currently sold in Japan and Taiwan. We intend to accelerate sales through enhanced marketing activities coupled with introduction of new product offerings. We also intend to expand beyond Japan and have been in active discussions with potential partners in Europe and Asia.

During the year under review, we also expanded our business scope to go into the Green Technology business to invest, research, manufacture, market as well as manage the related intellectual property of environmental improving technologies such as fuel saving technologies using nanoemulsion fuel technologies and renewable energy related technologies using Bio-Gasification and Bio-Gas to Liquid technology.

Our strategy is to capitalise on these multiple revenue platforms to sustain the Group's business growth from short to long-term perspectives. While our pharmaceutical business requires longer gestation period of five to eight years, our Green Technology and cosmetic businesses will aid in generating medium and short-term revenues respectively for the Group. The development of our three principal business streams will stay in line with our overall vision and mission, as we remain true to our R&D and technology focus.

Financials

Our revenue fell significantly due to the lack of licensing revenue in FY2009. However, negotiations with prospective licensees are active and on-going. The revenue from our cosmetic business improved significantly as we continue our conscientious branding and advertising efforts.

Overall, expenses increased as we increased the expenditure and investment in R&D pipelines, marketing and business development activities for both pharmaceutical and cosmetic businesses. We also strengthened our management and team of professionals to support our business initiatives, at the same time implemented several cost cutting measures across the Group to better manage our cost structure more efficiently. We wish to assure our shareholders that we will continue to regularly review our cost structure and implement appropriate cost management measures when necessary.

The Road Ahead

We have made several prudent and well thought-out plans to support our businesses in view of the current global economic climate that continues to pose uncertainties and challenges to our businesses in the coming financial year.

Our R&D and technology business model is capital intensive and hence, the proposed issuance of up to S$80 million of 1% unsecured equity linked redeemable convertible notes ("convertible notes") was necessary to finance our expansion plans. The issuance of the convertible notes was approved at our Extraordinary General Meeting held on 28 May 2009 and I would like to thank our shareholders for their faith and support in us.

As announced recently, I have also offered a S$10 million personal loan to the Group as an alternate source of financing. This decision was made after considering the current equity market sentiment as well as to help the Group lower its cost of capital. We have hence postponed the issuance of convertible notes to a later date.

Moving forward, we will continue to expand our presence geographically through collaborations with potential partners by licensing our proprietary T-DDS to develop new and innovative transcutaneous administration products. We will also focus on the expansion of sales of cosmetics through enhanced marketing activities and introduction of new products in and outside of Japan. We will also strengthen our effort in the development and commercialisation of Green Technology both in Japan and Asia. Additionally, we will continue to look out for potential strategic acquisitions and investments that would provide synergy and contribute to the strategic objectives of the Group.

In Appreciation

I firmly believe in the potential of the Group and capability of our management, researchers and staff and I hope our efforts will contribute to strengthen our shareholders' confidence in us. Hence, we are appreciative of the continued support and patience from our shareholders while Transcu strives to see results. Your support gave us the utmost encouragement and we will continue to strive to achieve better performances in the years to come.

We also wish to record our thanks to our illustrious Board for their invaluable advice, expertise and experience. In conclusion, on behalf of the Group, I would like to extend our deep appreciation to our customers and business partners for their continued support and to our staff and associates for their hard work and contributions to Transcu.

Akihiko Matsumura
Chief Executive Officer