Group Executive Chairman's Statement

Extracted from the Annual Report 2007

• Chairman's Message by Professor Hang Chang Chieh Non-Executive Chairman
• Group Executive Chairman's Statement by Mr Tan Cheng Leong Group Executive Chairman

FY 2007 was a year where the Group completed the restructuring of the company and put in several initiatives as investments for the future. This mark the beginning of the new Autron, and the fruits of labour put in the last twelve months will be harvested in the new financial year. The first stage of restructuring saw Autron completed its divestment of the old distribution business and used the proceeds to retire most of its banking facilities.

For FY2007, as a results of the restructuring, the Group recorded a net loss of $98.3 million as compared to $4.7 million in FY2006.The loss is attributed mainly to the one time write off of discontinued operations in our distribution of Surface Mount Technology ("SMT") equipment business which registered $78.1 million. Even with increasing labour and material costs, the Group has competitively churned out $21.9 million in revenue in the midst of our restructuring plans. Very importantly, Autron's debt of $103.5 million has been alleviated to $19.8 million. The completion of the divestment of our SMT distribution business not only retired much of our banking debts, but also allowed Autron to have a very strong balance sheet for its future growth.

To reinforce the business's foundation and enhance the Group's liquidity, we decided on the issuance of bonds worth USD7.5 million in March 2007. The proceeds were used later for funding the Group's acquisition of DBG Holdings Limited ("DBG"), which is a leading Electronic Manufacturing Services provider in China. This marks the first asset injected into the Group, and we can expect more assets injection over the next twelve months.

We are also incredibly pleased with the appointment of Mr Ho Sing as an Advisor to the Board. Mr Ho Sing has worked in several ST affiliated companies and his extensive experience and networks in the regional businesses community will open new doors to opportunities beneficial to our Group. Other than the appointment of Mr Ho Sing as Board Advisor, it is our honor to appoint our Chairman, Professor Hang Chang Chieh as Advisor to I. C. Equipment Pte Ltd ("ICE"). His appointment will further enhance and strengthen the brand name of ICE as a local company with 18 years of expertise in high precision electro-mechanical systems.

In June 2007, Autron signed an agreement to acquire 80% stake in DBG, a leading Electronic Manufacturing Services ("EMS") provider in China at a price of approximately $40 million. This acquisition is part of Autron's strategy to acquire synergistic businesses with proven track records and positive cash flows. DBG Group has participated in many strategic alliances with diverse local electronic manufacturers, which Autron would be able to leverage on in terms of manufacturing expertise, resources and relationships.

This is a significant milestone for Autron as it marks Autron's successful initiative to grow and meet the needs of China. This acquisition will provide us with a platform to tap into the growing China EMS industry, thus expanding the market for our services. With this, Fine Pulse (a Malaysian subsidiary of Autron) will be able to reap synergistic benefits through the sharing of technological expertise and processes. In addition, Fine Pulse will be able to offer manufacturing facilities in China to DBG's existing customer base.

FY2008 will be a very exciting year for the Group and for me personally. We can expect more new assets to be acquired and the fruits of our labour to start showing. In August 2007, we have, together with our Middle East and Malaysian partners signed the Sale and Purchase Agreement to acquire, approximately 50.6% of Malaysia main board listed construction play, Putrajaya Perdana Berhad for RM199 million or RM2.90 per share. In the same month, we have also signed a Memorandum of Understanding (MOU) with our Middle Eastern partners for the Iskandar Development Region (IDR) project under our joint venture with our Malaysian partner.

Last but not least, I would like to express my gratitude to the Board of Directors for their insightful counsel and support they have displayed during this period. Not to forget, I would also like to thank our colleagues who have worked tirelessly over the last twelve months. We now look forward with much excitement in the new financial year.