Extracted from Annual Report 2007

The Group’s sales for the financial year ended 30 September 2007 declined 17% to $320 million from $383.4 million in FY2006. This was primarily due to the slow down in the FPC division sales especially the Personal Communications and Wireless Portables, Display and Imaging and Data Storage segments. FPC division sales declined from $333.7 million in FY2006 to $258.3 million in FY2007 due primarily to fewer high volume programs, reduced orders from major customers, price compression for volume models and the further weakening of the US$ which had a negative impact on the US$ denominated sales. However, the Group’s diversification into two new segments, Automotive and IC packaging has shown results in FY2007. The FPC division, largely driven by the telecommunication sector, accounted for 81% of the Group’s sales, while the balance came from the PCB division.

The FPC division posted lower gross profits in FY2007 arising from lower capacity utilisation of our FPC manufacturing facilities and rising prices of precious metals. The decline in gross margin was also partially impacted by selling price erosion as well as inventory provision made for certain programs due to slow-down in demand by a major customer.

The PCB division delivered encouraging results in FY2007; sales grew by 24% from $49.7 million in FY2006 to $61.7 million in FY2007 because of higher demand from existing customers and orders secured from new customers. Performance improved with a higher contribution from our niche in high layer count and thick copper PCB for application in the power supply industry. However, higher sales did not result in an increase in divisional gross profit for the full year because of an appreciable rise in raw material cost and outsourcing expenses from capacity constraints. To further streamline the PCB operations, the Group’s two manufacturing PCB sites in Hunan, China will be consolidated in FY2008.

In line with lower sales, the Group’s distribution expenses decreased by $0.5 million from $10.4 million in FY2006 to $9.9 million in FY2007. Freight cost and provision for warranty declined $1.6 million compared to previous year. However, it was offset by higher provision for doubtful debts and staff cost. The Group’s administrative expenses increased $1.0 million from $12.0 million in FY2006 to $13.0 million in FY2007. The increase was attributed mainly to higher staff cost by $1.3 million as payments were made to employees in lieu of the historical employee share options that were not granted during the offer period. The continued weakening of the US$ saw higher foreign exchange losses by $0.5 million. These increases were offset by lower stock option expenses of $0.6 million as the outstanding options were fully vested in May 2007.

Other operating income increased by $1.7 million from $5.7 million in FY2006 to $7.4 million in FY2007 primarily due to the gain recognised from the sale of quoted investment in SIIX Corporation (“SIIX”). Interest income from fixed deposits also increased by $0.5 million but was offset by lower rework expenses recovered from suppliers in the current year. Other operating expenses decreased by $1.3 million from $4.2 million in FY2006 to $2.9 million in FY2007 as higher charges were incurred for product returns in FY2006.

The Group’s tax rate increased from 13.9% in FY2006 to 14.3% in FY2007 as tax-free contribution from our China FPC facility was lower in the current year. The Group’s tax rate was also lower last year as its Singapore subsidiary enjoyed a concessionary tax rate on qualifying income above a certain tax base. Overall, the Group achieved a profit after tax attributable to shareholders of $8.0 million for FY2007 compared to $29.3 million for FY2006.

As a result of lower profits reported, the Group operating cash flow declined from $44.7 million in FY2006 to $18.0 million in FY2007. The Group invested in factory facilities and machinery equipment amounting to $9.0 million to upgrade its production equipment and process technologies and to further improve manufacturing yield. Sale of quoted investment in SIIX netted $4.9 million. Despite significant cash outflow for bank loan repayment and dividend to shareholders amounting to $23.4 million, the Group’s cash balance still remained at a healthy level of $61.9 million.