Financials

Full Year Financial Statements

Statement Of Profit And Loss For The Full Year Ended December 31,2006

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Review of Performance

Overview
The Group's revenue decreased by 4.7% or US$1.11 million from US$23.86 million to US$22.74 million. Although revenue from Europe declined by US$622,000, Europe continued to be the major revenue contributor, accounting for 30.3%. North American witnessed a decline of US$1.43 million. The Group's continued success in the Japan market led to an encouraging US$1.25 million or 25.3% revenue growth to US$6.21 million.

Gross Profit Margin

The Group recorded a gross profit margin of 20.6% for FY 2006 versus 22.3% for FY 2005. The margin contraction was mainly due to the continued pricing pressure from customers and increase manufacturing costs in China.

Selling and distribution costs decreased by 21.8% to US$1.09 million in FY 2006 was due mainly to lower freight charges. Administrative expenses decreased by 14.2% to US$3.09 million in FY 2006 as the Group streamlined its operations and lower provisions.

Net Profit

For the year ended December 31, 2006, the Group continued to operate under challenging conditions, notwithstanding that, the Group's strong emphasis on stringent cost controls and exchange gains led to more than doubling of net profit to US$1.05 million.

Consolidated Balance Sheets and Cash Flow

As at December 31, 2006, the Group remained in a net cash position of US$3.52 million. During the year, the Group paid out dividends amounting to US$546,000.

Net cash from operating activities was US$995,000 versus US$2.37 million previously. This was due mainly to an increase of receivables from US$2.65 million as at December 31, 2005 to US$4.19 million, as at December 31, 2006. However, of the US$4.19 million, more than 91.8% was from billings made in the fourth quarter of FY 2006.

Inventories balance as at December 31, 2006 was approximately US$2.53 million, an increase of 13.2% from US$2.23 million as at December 31, 2005. Inventory turnover days, was stable at 48 days for FY 2006 (FY 2005: 47 days).

Trade payable increased by 22.0% to US$2.75 million as at December 31, 2006, in line with the increased inventories balance. Trade payable turnover days, increased from 47 days for FY 2005 to 50 days for FY 2006.

Commentary On Current Year Prospects

While the Group anticipates competitive operating conditions going forward, the Group remains cautiously optimistic due to the developments outlined below:

The demand for accessories to complement consumer electronics such as MP3 players, digital cameras and laptops has grown significantly. The Group will continue to rollout more products for this market segment.

In particular, the Group's product mix has shown a 71.3% surge in sales of notebook bags from US$1.71 million in FY2005 to US$2.92 million in FY2006. This trend is expected to continue into FY2007 and an active pipeline of such products has been developed.

The Group will respond to the continued pricing pressure from our major customers, via the rollout of higher value-add products, better-cost management through improved manufacturing processes and sourcing.

To sustain long-term growth, the Group will focus on expanding its key markets such as Europe, Asia and Japan.

Barring any unforeseen circumstances, the Group expects to remain profitable in FY2007.

A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year.