Investor Relations

CEO's Statement

Extracted from Annual Report 2007

I am happy to report that in the year ending 31 December 2007, despite the challenges we faced in an uncertain business environment, our core Electronics & Precision Engineering customer segment saw another year of healthy growth in business turnover. The Group also achieved a good utilization rate of our production facilities, which were expanded recently to meet increasing demand, especially from this customer segment.

Throughout the year, we maintained our commitment to our two strategic thrusts: to develop new capabilities and new products so we can penetrate new markets, and to increase our focus on higher value-added manufacturing of precision quality extrusion products, which offer better margins. The results we achieved in the Electronics & Precision Engineering segment this year were an endorsement of these strategies, with turnover increasing to S$ 58.3 million, the highest we have achieved so far. On top of that, we attracted new customers from the electronics, defence and consumer product industries this year.

This year, total business turnover for the Group came in at S$ 68.1 million, slightly lower than that achieved last year. This was due to the lower contribution in business turnover from the Construction & Infrastructure customer segment.

We are closely monitoring our commitments in terms of delivery and price to this segment. Throughout the year, prices for aluminium extrusions have remained soft due to the infl ux of cheaper products from regional competitors like China and Malaysia.

Notwithstanding the lower turnover, the segment results registered a signifi cant improvement, as the Group managed to secure better overall margins in the orders it undertook from this segment during the year.

Moving into the new year, we continue to expect a healthy level of customer contracts in our order book. The Group remains committed to expand our capabilities and to widen the range of products and services we offer to our customers. Following the successful commissioning of our fourth extrusion production line in 2006, the Board of Directors has approved the installation of another new extrusion line in our Singapore facility in the second half of 2008. This new production line will replace an existing extrusion line which is reaching the end of its life cycle. The new production line will also allow us to manufacture a wider range of products, including some new higher margin products for customers within the Electronics & Precision Engineering segment.

Looking forward, 2008 will present its own unique set of challenges. Apart from the lingering high energy and commodity prices, the recent economic downturn in the USA has led to a further weakening of the US Dollar, which is a signifi cant issue for local companies with exports denoted in this currency.

Nevertheless we continue to remain positive about the year ahead. The Group is well positioned to tap on new opportunities presented by the promising Electronics & Precision Engineering (E&P) customer segment. With globalisation and the outsourcing trend of western companies continuing to drive business opportunities to Asia, AEI is well positioned to benefi t from this wave. As a world class supplier of high precision aluminium extrusions and fi nished components, and with our commitment to innovation, excellence and added value in our business partnerships and customer relationships, we believe the outlook is promising.

I would like to express my appreciation to all our customers, shareholders and board members for all their generous support, and I look forward to our continued partnership in the years ahead.