Financials

Proforma Third Quarter Financial Statement And Dividend Announcement for the Period Ended 30/09/2008

Balance Sheet

Review of Performance

The Group's revenue for the quarter ended 30 September 2008 ("3Q08") declined 45% to $132.0 million from $239.9 million in 2Q07 mainly due to continued weakness in a major customer's handset-related orders as well as continued efforts to enhance product mix by phasing out lower-margin businesses.

In line with the lower revenue, gross profit declined 45% to $23.4 million from $42.6 million in 3Q07. The Group was able to maintain its gross profit margin at 17.7% compared to 17.8% in 3Q07 as it was able to negotiate for higher selling prices for several new wireless accessories programs. This enabled the Group to mitigate the effects of higher labour costs as a result of higher minimum wage requirements in Brazil and China.

The Group successfully reduced its distribution, administrative and other operating expenses by 27%, 11% and 22% respectively compared to 3Q07 owing to cost savings as a result of consolidating its regional operations in a new facility in Malaysia.

Inventory level rose by $8 million to $179.6 million as at 30 September 2008 from $171.1 million as at 31 December 2007 to fulfill increased orders from a major customer in China due to higher end-user demand during the Chinese Olympic.

Trade receivables declined in line with lower sales and increased efforts to retrieve payment from trade debtors.

Trade payables and accruals declined significantly to $106.4 million as at 30 September 2008 from $178.7 million as at 31 December 2007 as proceeds from the Company's rights issue were used to pay down suppliers and lower credit purchases.

Bank borrowings decreased to $318.5 million as at 30 September 2008 from $367.1 million as at 31 December 2007 as the Group continued to repay its borrowings with cash from operations.

Commentary On Current Year Prospects

In the face of a global credit crunch, the macroeconomic environment is expected to remain challenging, with no clear signs of recovery, over the short to medium term. As such, the Group will continue to focus on strengthening its balance sheet, cost reduction, better inventory control and improving its production management as well as procurement efficiency.

The Group remains focused in pursuing its long-term objective of becoming a global provider of Original Design Manufacturer (" ODM") and Electronics Manufacturing Services (EMS). It will continue to develop new businesses for its growing ODM portfolio through strategic partnerships with key industry players to gain access to new industries and markets.

In 3Q08, the Group partnered a European partner to mass produce Energy Saving Light Bulbs (CFL) for the European and American markets. It has also entered into a joint venture with an Indian partner, SEMINDIA, to produce a wide range of networking products for the fast-growing broadband and consumer markets in India. These new businesses are expected to post incremental revenue contribution from the start of FY2009.

The Group has also strengthened its manufacturing capabilities with the formation of a new business unit to focus on mechanical contract manufacturing ("MCM") services. This will enhance its competitiveness in an environment whereby OEM customers are increasingly demanding for more integrated solutions from EMS providers to reduce outsourcing costs.

Together with the above initiatives, the Group will also continue to adopt a proactive approach in monitoring and managing risks, which will help it to navigate through the immediate uncertainty in the global economic environment.

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