First Quarter Financial Statement And Dividend Announcement

Consolidated Statement Of Comprehensive Income For The Quarters Ended 31 March 2009 And 31 March 2008

Review Of Performance

1. The Group ended 1Q09 with revenue of US$72.7 million compared with US$124.6 million in 1Q08. Gross profit stood at US$5.5 million in 1Q09, a decrease of 33.1% from US$8.2 million in 1Q08 as the Group faced an increasingly challenging business environment from the global economic slowdown. Gross margin increased to 7.6% in 1Q09 from 6.6% in 1Q08 mainly due to higher margin from design-in business. Total operating expenses – comprising sales and distribution costs, general and administrative expenses, other expenses and finance costs – stood at US$7.2 million in 1Q09, a decline from US$8.2 million in 1Q08. The decrease is a result of the Group's continued focus on cost containment measures and streamlining of its business. Overall, the Group reported a net loss after tax of US$1.5 million.
2. On the Group's balance sheet, as a result of ongoing focus on rationalising and managing inventory, stock balance was reduced to US$36.0 million in 1Q09 from US$46.3 million in 4Q08. Trade debtors' balance decreased to US$38.0 million in 1Q09 from US$43.6 million in 4Q08 due to tighter credit control. Trade creditors' balance increased to US$41.0 million from US$34.8 million. The Group also reduced its interest bearing loans and borrowings by US$17.8 million from US$27.9 million in 4Q08 to US$10.1 million in 1Q09. Due to improved cash flow management, the Group reported net cash position of US$6.4 million in 1Q09 compared with net borrowing position of US$14.3 million in 4Q08. Cash flow from operating activities in 1Q09 improved to US$20.7 million from a negative operating cash position of US$16.3 million in 1Q08, due to close monitoring and control of credit to customers and stock levels which led to decline in trade debtors' and stock balances. The Group recorded a cash and cash equivalent balance of US$16.4 million in 1Q09, an increase of US$3.4 million from US$13.0 million in 1Q08.

Commentary

The economic climate in some of the markets the Group operates in is expected to remain challenging due to the financial crisis. The Group will continue to focus on cost savings and containment measures, tighten credit control on customers, inventory rationalisation, streamlining its businesses and strengthening its cash reserves through prudent working capital management. The Group will also continue to pursue higher value business opportunities with its total solutions offerings, and remains confident of its longer term prospects.

Balance Sheet