Asian Micro Holdings Ltd

FY2007 continued to be a difficult and challenging year for the Group. The Group has recorded reduced turnover of S$17.88 million, or a 32% drop compared to FY2006.The Group's overall performance has been further adversely affected following the merger of Maxtor and Seagate with full year impact recorded in the reporting period.

The Group's clean room grade packaging products manufacturing and trading of cleanroom supplies business activities also contributed lower revenue in the reporting period due to intense competition.

Fortunately, the sharp drop in revenue from its precision tray and media / disk cassettes was partially mitigated by increase of revenue generated from the Group's plastics scrap recycling in Singapore and new customer base from its Thailand plant.

Profit from operation

Profit from operation has reduced from S$3.27 million to S$1.46 million mainly due to lower revenue and inclusion of pre-operating expenses incurred by the Group's new facilities set up in Wuxi Asian Brite Technology Co., Ltd. ("WUXIAB"), a subsidiary incorporated during the reporting period.

WUXIAB also experienced a deferment in the commencement of production as well as lower than expected volume production from a targeted customer. Prolonged qualification procedure by its major customer also affected negatively on the overall performance of the Group.

Administrative, selling & distribution and other operating expenses have overall reduced in line with the reduction in turnover in addition to the Group's continual efforts in reviewing its operational processess and efficiency.

However, the Group has recorded higher other operating income mainly due to exchange gain arising from weakness in US Dollars against Thai Baht. In addition, rental income from the acquired property located at 12 Senoko Way, Singapore, also contributed higher other operating income in reporting period.

Profit before taxation

Financial expenses increased by 15% from S$0.36 million to S$0.42 million. This was principally due to higher borrowing cost for purchase of property at 12 Senoko Way (which was subsequently disposed off in the financial year) and higher borrowing interest in the reporting period.

Financial income rose by 71% from S$0.045 million to S$0.077 million mainly due to higher fixed deposit interest rate during the reporing period.

The Group has recorded exceptional item amounted to S$0.68 million, being gain from disposal of property located at 12 Senoko Way.

Net Profit attributable to shareholders

Net profit attributable to shareholders after taking into consideration of taxation and minority interest amounted to S$1.93 million as compared to S$2.08 million in last corresponding financial year.

Balance Sheet

The Group's non-current assets has increased from S$12.4 million as at 30 June 2006 to S$13.3 million as at 30 June 2007. This was mainly due to increase in fixed assets resulting from the setting up of Wuxi Asian Brite Technology Co., Ltd. during the reporting period.

There are no significant fluctuations in the current assets as the increase of inventory as at reporting dated was off-set by decrease in trade receivables in view of lower turnover.

Current liabilities has increased from S$7.6 million to S$8.5 million mainly due to higher trade facilities utilised for purchase of raw materials and increase of other payable and accruals for period ending 30 June 07. In addition, additional term loan secured for financing of acquisition of additional plant in Serangoon North also contributed higher current liabilities in the reporting period.

The Group has recorded lower non-current liabilities of S$2.9 million as compared to S$3.5 million in FY2006 mainly due to repayment of lease obligation and term loan during the reporting period.

Overall, there are no significant fluctuations in net assets and total equity of the Company.

Cash Flow Statement

The Group's cash and cash equivalent as at 30 June 2007 decreased by S$0.2 million as compared to 30 June 2006. This was mainly due to lower net cash from operating activities and higher net cash used in financing activities.

Commentary

Current Businesses

While the Company's Singapore and Thailand plants are able to expand and secure new customers for its precision cleaning of packaging trays and media/disk cassettes, the new orders are not sufficient to offset the loss in orders from its previous major customer, namely Maxtor Corp.

The Group will increase its effort to broaden its customer case through extensive marketing strategies and at the same time, rationalise the business to keep operating cost low.

With the increased interest in the recycling and recovery from plastics related waste, the market is expected to remain competitive. The Company will focus on increasing capacity utilisation and operational efficiencies in this section.

The competition remains keen in the market for the Group's clean room grade packaging products manufacturing division. The higher oil prices has meant higher cost for our resins used in the manufacturing and we will continue to monitor our cost and to improve efficiencies and will make necessary adjustment.

New Business Activity - Natural Gas Vehicle Conversion Centre in Thailand

Per the announcement made on 18 Jun 2007, the Company had entered into a Joint Venture Investment Agreement with Piyawat and Acrcha for setting up of natural gas vehicle ("NGV") conversion centre in Thailand. A joint venture company called S.O. NGV (Thailand) Co., Ltd. ("SO NGV") has been incorporated pursuant to the Agreement in early July 2007.

About SO NGV

SO NGV has leased a land of 177,800 sq.ft. with vehicle service centre of approximate 19,300 sq.ft. in the Ayuthaya province and able to cater for 28 service bays for buses and trucks.

The Company has made further announcement dated 4 and 17 July 2007 on SO NGV successfully secured its first contract from Thailand Postal Services to convert 500 of its existing postal trucks to Dual Diesel Fuel ("DDF") operated trucks within 12 months. In addition, SO NGV also secured another contract from a plastic injection company to convert its 90 units diesel trucks to DDF system. Both contract are worth approximately S$3.75 million.

The Group will embark on an agressive plan to import NGV related products, for instances, compressed natural gas ("CNG") engines and specifically heavy duty CNG vehicles into Thailand to replace heavy duty diesel vehicles.

SO NGV intends to set up another three NGV conversion centres in the financial year 2008 in view of the demands from its DDF conversion system.

Rationale

In view of the strong demand for diesel and oil worldwide and stronger awareness on environmental protection, the Company views the investment as a strategic and timely expansion and diversification into a growing business to the Group, with fuel saving and elimination of black emission from exhaust system of heavy duty trucks and buses.

Thailand has the fastest growing rate in NGV conversions and the set-up of CNG refilling stations in the region. PTT Public Company Limited ("PTT"), a Thailand National Gas Company and also the certifying body for NGV conversion centres, is agreesively embarking on subsidies for CNG related activities and set up of refill gas stations.

The Group intends to grow this oil and petrol related business into one of its major revenue streams in subsequent years.

Overall Prospect

The Group will agressively seek growth opportunities in the oil and petrol industries, particularly in the setting up of more NGV conversion centres. It is also within the Group's plan to start NGV conversion business in Singapore and Malaysia.