Full-Year Financial Statement ended 31 March 2004

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Business Review
The negative impact of the uncertain economic and business outlook foreseen in the early part of the financial year 2004 had not been as severe as expected. This came about partly due to the gradual improvement of consumer sentiment following the containments of a prolonged conflict in Iraq and the SARS epidemic and partly due to the fruitful results of our Group's expansion scheme in China. This expansion model embraced broadening of customer base and the expansion of the territorial coverage and product segments. Our China market had thus posted a strong sales growth of 110.9% from HK$254.2 million for 2003 to HK$536.0 million for 2004. Overall we achieved a growth of 38.9% in turnover to HK$1.76 billion (2003:HK$1.27 billion).

With this planned growth of scale, together with the competitive environment of the component industry, gross margins have come under pressure. The Group's overall gross margins decreased from 11.8% for the financial year 2003 to 10.1% for 2004.

Distribution costs increased by 35.7% from HK$17.1 million to HK$23.2 million for financial years 2003 and 2004 respectively. The increase in distribution costs were attributable to increased sales incentive for boosting sales and to the transportation charge increase, which corresponded to the higher sales.

The Company was able to contain the increase in administrative expenses at a rate of 17.5%, which is substantially less than the corresponding rate of increase in sales revenue of 38.9%. This moderate increase was achieved through the cost savings measures introduced during the year. Nevertheless, overall administrative expenses increased were due to the increase in number of staff for the expansion scheme in China, training costs for the implementation of SAP system and the increased provison for doubtful debts and inventories along with the increase in sales.

Other operating income increased was mainly attributable to commission income of HK$21.3 million (2003: HK$8.6 million) received from our major principal as an incentive rebate for achieving certain sales target.

Finance charges increased as a result of more bank borrowings raised to finance the inventories increase and the proportionate increase of receivables as a result of the increase of sales.

During the year, the Company derived an exchange gain due to the favourable movements of Japanese Yen and US dollar against Hong Kong dollar. Comparatively, the Company incurred an exchange loss for the financial year 2003 due to the sudden surge of Japanese Yen against Hong Kong dollar.

Financial Position
The increase in trade receivables was mainly attributable to the increase in sales in the current financial year when compared to the financial year 2003. The debtors turnover has maintained stable at the level of about 2 months.

The increase in inventories was due to purchase of inventories to accommodate increased sales for the coming months. Despite the higher inventory level, our stock holding period has remained stable at the level of about 2 months.

Goodwill arose from the acquisition of an additional 20% interest in a non-wholly owned subsidiary from its minority shareholder and is amortised over its estimated economic life of 10 years.

Long-term borrowings represent bank loans of HK$93.9 million which provides us a long-term financing to meet our expansion in the PRC and South Korea markets.

Cash Flow
At 31st March 2004, the Group had a working capital of HK$308.0 million, which included a cash balance of HK$270.1 million, compared to a working capital of HK$204.1 million, which included a cash balance of HK$148.6 million at 31st March 2003. The increase in cash by HK$121.5 million was attributable to a cash outflow of HK$70.1 million from operating activities and a cash inflow of HK$204.4 million from financing arrangements.

Cash outflow from operating activities was mainly attributable to an increase of trade receivables and inventories and a decrease in trade payables.

Cash flows from financing activities increased as there were long-term bank loans raised and the placement of 40,000,000 shares of the Company during the year.

The current market conditions has improved as compared to the same period last year. With the ongoing migration of manufacturing activities to China, along with the gradual improvement of global economy, the electronics industry is expected to see improvements in the coming months.

We are currently in the final stage of formulating a 3-year growth plan. The essence of this plan is to strive for sales growth by means of market expansion, industry breadth and depth, and human resource management.

By maintaining our continuous emphasis on China market, together with our effort in implementing our growth strategy and carrying on the continual cost savings program, barring unforseeable circumstances, we are optimistic about the prospects for the next 12 months.