Delfi Limited

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Extracted from Annual Report 2010

Dear fellow shareholders,

When I wrote to you last year I explained that we at Petra Foods were optimistic about the year to come and that we felt that we would be able to maintain the growth momentum which we had built up.

I am very pleased to report to you that in 2010 Petra Foods achieved record revenues of US$1.6 billion and record earnings of US$44.5 million representing increases of 25.8% and 80.6% from 2009. Our business model is to nurture the two Divisions which make up Petra Foods - our Branded Consumer business and our Cocoa Ingredients business. Together these Divisions constitute our "twin-engines of growth", and I am pleased to report that in 2010 both Divisions achieved solid growth and excellent results.

Delivering growth

Since our listing as a public company in 2004 we have been committed to follow a strategy of growth, and we are gratified that our twin-engines of growth have given us a sturdy platform for long term growth. These twin businesses are complementary and each in its own way contributes to the strength and success of Petra Foods. Both businesses play a role in the Cocoa Value Chain. Each Division is a leader in its chosen market: the Branded Consumer Division dominates the Indonesian chocolate confectionery market and now is a significant player in the ASEAN regional market; and the Cocoa Ingredients Division has now grown to be a global organization. We are the world's fourth largest grinder of cocoa beans. And we are the third largest supplier of cocoa ingredients in the world.

Growth momentum

We are optimistic that the growth momentum which we have built up will allow us to continue to achieve satisfactory growth in the year to come. Since our listing as a public company in 2004 we have achieved CAGR growth rates of 26.4% in Sales, 18.1% in EBITDA, and 15.9% in Net Profit. All aspects of our business have grown significantly during this time. In both of our Divisions we have acquired factories, added to our product ranges, increased production capacity, and entered new markets. And we have expanded our ingredients business into Latin America and into Europe. This expansion in our business has been driven by our management team and we have every expectation that they will be able to bring our business to the next level of performance.

Part of this confidence is because of the growth momentum we have built up. The Cocoa Ingredients Division now has operations in 11 countries on four continents. The installed capacity to grind cocoa beans has expanded to 370,000 mt/year, and the completion of the investment programme in Europe allows us to serve customers in the European market - the largest market for cocoa ingredients in the world. In 2010 the Division increased its sales volumes by 7.3% and we plan to further increase our bean grinding capacity during 2011.

The Branded Consumer Division is firmly rooted in the Indonesian chocolate confectionery market - the largest market for chocolate confectionery in the ASEAN region - as well as being an important supplier in the ASEAN region. We have a firm position founded on a strong portfolio of consumer products and world-class manufacturing facilities. Overall, the revenues of the Branded Consumer Division expanded by 22.4% in 2010 compared to 2009.

Sustaining fundamentals

As we look to the future we continue to be optimistic because of where Petra Foods has positioned our two Divisions. The Cocoa Ingredients Division is now a major player in the global food industry where consolidation and outsourcing are significant realities. Because the major customers are world-class food companies with high standards and exacting requirements, these trends favour suppliers like ourselves who have powerful technical capabilities and who have strong manufacturing systems and discipline. And the Branded Consumer Division has focused its business on the ASEAN region where demand for chocolate confectionery has grown steadily in recent years.

Cocoa Value Chain

Within their chosen markets, each of our Divisions has considerable depth and reach because of the range of products and services they can offer and because of the geographic coverage they enjoy. Together they cover much of the Cocoa Value Chain which stretches from the farm gate to the final consumer. While we have been active for some time now in the procurement of cocoa beans in origin countries, this year we have extended our activities by helping to set up the PACTS organization (Processors Alliance for Cocoa Traceability and Sustainability). This organization is creating a win-win situation by improving the livelihood of cocoa farmers in origin countries while assuring a flow of high quality, traceable and sustainable cocoa to processors such as our Cocoa Ingredients Division. This is one of the ways we can act to safeguard the interests of our customers and consumers while also helping to safeguard the resources of the Earth.

Concern for the future

As I write this letter the outcome of the tragic situation in the Ivory Coast is far from clear but we are hopeful that a peaceful resolution of the problems will become evident. We will continue to do all that we can to make cocoa an important source of income for all cocoa farmers and their communities and we hope that increasing incomes and prosperity will help to stabilize the countries where cocoa is grown.

We are watching developments with interest but we continue to source cocoa beans from many countries and through the international trade as part of our policy to mitigate risk in our business.

Strengthening our company

During 2010 we increased the share capital of the company by 14.8% when we issued 78.9 million new shares. We were very pleased that all of the new shares were immediately taken up as this represents a strong testimony of the investors confidence in the future of the Company. The new capital raised (about US$60 million) will be used to fund strategic growth opportunities and to increase our financial resources for Petra Foods' current operations.

Appreciation

In closing I would like to record my sincere appreciation of the efforts and the support of all of the stakeholders in our business. Our team of dedicated employees and managers are tireless in their efforts to allow us to grow our businesses; our suppliers who support our efforts to constantly improve on quality, reliability and food safety issues; our customers and partners who share our vision for quality and consistency in all of our products and services; and you our shareholders who support us with your confidence in our chosen strategies.


Pedro Mata
Chairman
24th March 2011