Business

We are a well-established vertically-integrated manufacturing solutions provider for some of the world's reputable leading brand owners of consumer electronics and communications products. The vertically-integrated manufacturing solutions we provide to our customers range from design and development, industrialisation and qualification, volume-manufacturing, quality control to supply chain management. Our largest customers include but not limited to Sony Ericsson Mobile Communications AB, Texas Instruments Incorporated, Sony Computer Entertainment Europe Ltd.and GN Netcom A/S.

We can offer hardware and software design as well as mechanical parts development services to our customers. Our design team of engineers works with our customers in the early stages of product and module design and development and we design, develop and deliver products in accordance with our customers' specifications requirements. We adopt a cost-effective focus in our product and module design and development. We also collaborate with design houses to enhance our design capabilities. We offer product industrialisation services to our customers, assisting our customers in improving the product development cycle and the time-to-market and time-to-volume manufacturing of their products.

Our industrialisation and qualification services ensure we achieve the optimal design for the products in terms of safety and reliability and identify the most reliable materials and components to be used. Our quality control team performs product safety and reliability testing to ensure designs and products meet or exceed required specifications. We also have extensive analysis capabilities concentrating on identifying long-term improvement actions. Our industrialisation and qualification capability is important in ensuring the high quality of our products. We also collaborate with external laboratories to enhance our product industrialisation and qualification capabilities.

We have a system of production lines which allows us to rapidly ramp up operations to high volume production to meet customer needs and flexibly switch between production of different products. We use a wide-range of advanced manufacturing technologies in the manufacturing of our products including COB, SMT, OLB, TAB with ACF and FPHS. Our production lines are designed to accommodate orders with different sizes and product structures manufacturing as well as to accommodate our broad range of products. The flexibility of our manufacturing process allows us to cater for different requirements from different customers. In particular, our production lines allow a change-over between the production of different products to occur within 30 to 60 minutes. Throughout the manufacturing process, we place particular focus on the yield rate and timely delivery.

Throughout the production stage, we inspect and test work-in-progress at several points in the production process to ensure product quality. Before finished products are delivered to customers, we conduct function testing as well as inspection of finished products to ensure that they meet our customers' specifications and quality requirements.

Our supply chain management services consist of the planning, sourcing, purchasing and warehousing of components and materials used in the manufacturing process. During the manufacturing process, we make continuous efforts to procure lower cost and better quality materials for our customers. We implement supply chain management processes to lower the cost of materials procurement. We also utilise a computerised supply chain management system to assist us in managing supplier quality and materials delivery as well as cost control.

We also provide logistics support to our customers and arrange with third party logistics providers to transport the end-products to our customers. We also deliver products directly into customers' distribution channels. Our favourable geographical location in Baoan, Shenzhen, in the PRC allows us ready access to a more convenient and lower cost transportation network and infrastructure and ensures timely delivery to our customers.

Currently we focus on five segments of the consumer electronics and communications sectors:

optical devices such as CMOS image sensor modules;
home entertainment devices such as the USB camera accessory and USB microphone and converter box;
mobile phone accessories such as Bluetooth� headsets, snap-on digital cameras. snap-on flash lights and desk speaker stand;
educational products such as calculators and electronic dictionaries; and
software development services, such as digital dictionaries and car navigation system.

We diversified into new products in the above segments and are also actively exploring opportunities in the automotive electronics sector by pursuing research and development in this sector such as GPS and CMOS image sensor modules for car parking system. In this respect, we have acquired Namtek Software Development Company Limited (“Namtek”) in May 2005. Namtek’s wholly owned subsidiary, Shenzhen Namtek Co., Ltd. (“Namtek Shenzhen”), is in the course of jointly developing a car navigation system with Datawest Inc. which has been in car navigation map business for over 15 years. Namtek Shenzhen also has almost 10 years’ experience in software development, data processing and compression and hardware (electronic) design and development. It is also a leading solution provider for digital dictionary software development in the Japanese electronics industry with extensive customer network in Japan.

We received the ISO 9001:1994 and ISO 9001:2000 certificates for quality control in 1996 and 2002 respectively. In 2000 and 2003, we received the ISO 14001:1996 and ISO 14001: 2004 certificates for environmental management control.

We emphasise a customer-oriented principle to satisfy customer requirements. We have designated direct salespersons for different customers. Our senior management is also heavily involved in customer relations and devotes significant attention to marketing. We target international and leading customers in the strong growth, high profit-margin and large volume segments of the consumer electronics, communications and automotive electronics sectors and are selective in identifying customers that meet our profile, as our strategy is to establish long-term relationships with our customers.

Sales for the year ended 31 December 2005 was US$167.3 million, almost flat as compared to sales of US$163.6 million last year.Profit from operations and net profit for the year ended 31 December 2005 dropped by 4.6% and 2.7% to US$21.5 million and US$22.1 million respectively when compared to last year.