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2007 Full Year Financial Statement

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Balance Sheet

Review Of Performance

Revenue

Group revenue for FY2007 decreased 6.8% to $68.12 million, compared with $73.13 million for FY2006. Group revenue decreased as a result of the decrease in customers' orders from the Construction & Infiastntcture segment.

Revenue from the Electronics & Precision Engineering segment increased by 1.6% to $58.33 million compared with $57.40 million for FY2006. Revenue fiom the Construction & lnfrastxucture segment decreased by 37.8% to $9.78 million, compared with $15.73 million for FY2006.

Profit

Profit attributable to equity holders for FY2007 decreased by 17.7% to $4.48 million, compared with $5.44 million in FY2006. This is due largely to:

  1. the sustained increase in raw material costs in FY2007, in particular aluminium LME prices had fluctuated between US$2,316 per metric ton and US$2,953 per metric ton (FY2006: aluminium LME prices had fluctuated between WS$2,270 per metric ton and US$3,275 per metric ton). We were not able to pass on the full extent: of the increase in raw material cost to customers due to increasing competitive nature of the business and, this has affected our profit margin.

  2. exchange losses due to the weakening of the United States dollar against Singapore dollar.

  3. higher operating costs such as utilities and salaries.

    4. These were offset by:

  4. lower tax expense.

Balance Sheet and Cashflow

Net current assets

Net current: assets increased by $1 1.48 million mainly due to:

  1. decrease in Group's trade payables from $7.18 million to $4.36 million,
  2. increase in cash balance fi-om the issue of new ordinary shares.
  3. the group has extended a convertible loan of $4.04 million to Hoi Po Metal Manufactory Company Limited (Hoi Po) as per our announcement dated 20 June 2007.
Cashflow

The Group generated a net cash of $10.1 1 million fiom operating activities in FY2007, an increase of $6.65 million from $3.46 million in FY2006. This is mainly due to the Group's continued focus on working capital management

Net cash of $5.09 million was used in investing activities in FY2007, up fiom $2.11 million in FY2006. This was mainly due to $4.04 million convertible loan granted to Hoi Po. The convertible loan was hded f?om the Group's internaI resources.

Net cash of $5.67 million was generated from financing activities in FY2007, an increase of $9.14 million from FY2006. The increase was mainly due to proceeds from the issuance of ordinary shares which amounted to $7.07 million.

Cash and cash equivalent stood at $28.47 million as at end of 31 December 2007, an increase of $10.69 million fi-om $17.78 million as at end of 3 1 December 2006.

Commentary On Current Year Prospects

Barring risk of any slowdown in global demand resulting from any further negative development in world market conditions, ongoing customer orders are expected to remain healthy in 2008. Going fornard, the Group also expects to continue to face some price pressure fiom its Electronics & Precision Engineering segment.

The LME Aluminium price continues to remain at high levels throughout 2007 and into year 2008. Ongoing volatility in LME Aluminium price could potentiaIly lead to margin erosion for the Group. Conversely, any significant downward movement in the LME Aluminium price may also prompt the customers to put pressure on the Group to reduce selling prices. Any continuing weakness in the United States dollar against Singapore dollar may also have a negative bearing on the bottom line of the Group, as majority of its exports are denominated in United States dollar.

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