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First Quarter Financial Statement And Dividend Announcement 2012

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First Quarter Financial Statement and Dividend Announcement

Income Statement

Statement of Comprehensive Income for the first quarter ended 31 March 2012.

Balance Sheet

Review of Group Performance

(a) Revenue

The Group's revenue for 1Q 2012 increased by 7.1% to $901.6m as compared to 1Q 2011 of $841.9m. This growth in revenue was mainly attributed to the 16.3% growth in the Distribution segment, driven by increased sales of phone devices, media tablets and desktops. However, Enterprise Systems segment registered a decline of 13.4% year-on-year, mainly as a result of lower sales of networking hardware and servers.

Geographically, revenue from North Asia grew 9.9% year-on-year to $591.1m in 1Q 2012 from 1Q 2011 of $538.0m, driven by stronger sales of phone devices, media tablets and desktops. South East Asia's revenue for 1Q 2012 increased moderately at about 2.2% to $310.5m from 1Q 2011 of $303.9m mainly from improved sales of notebooks in Thailand, and servers and storage products in Singapore.

(b) Profitability

The Group's net profit after tax and non-controlling interests (“NPATMI”) for 1Q 2012 decreased by 41.0% to $6.2m compared to $10.4m for over the same corresponding period in 2011. This is mainly due to the change in sales mix to higher proportion of lower-margin Distribution sales, which accounted for 74.5% of the Group's revenue in 1Q 2012 compared to 68.6% in 1Q 2011.

Gross profit margin for 1Q 2012 was 4.0% compared to 1Q 2011 of 5.1%. Comparing 1Q 2012 against 1Q 2011, the Distribution segment gross profit margin declined to 2.8% from 3.9% mainly due to change in sales mix and intense competition for consumer notebooks and tablets. The decrease in gross profit margin was also attributed to lower early payment discounts and rebates earned in the current quarter. In the Enterprise Systems segment, the lower revenues for higher-margin networking hardware and server products also contributed to the lower gross profit earned.

Total operating expenses as a percentage of revenue reduced to 3.2% in 1Q 2012 from 3.4% in 1Q 2011 due to the stringent control of operating costs within the Group.

Finance costs decreased by 17.3% to $2.1m in 1Q 2012 from $2.6m in 1Q 2011 mainly due to reduced bank borrowings and improved working capital management.

(c) Statement of Financial Position

The Group's total shareholders' funds were $328.6m as at 31 March 2012, an increase of $2.1m from $326.5m as compared to 31 December 2011.

The Group's bank borrowings decreased by $34.8m to $206.8m as at 31 March 2012, from $241.6m as at 31 December 2011, mainly due to improved working capital management and reduced bank borrowings.

Commentary

The uncertainties arising from the economic situation in the Eurozone, pace of recovery in the United States of America, moderating growth from China and intense competition in the ICT industry continue to affect the performance of the Group's businesses.

However, the Group will continue to focus on its strategy to grow its share of higher-margin Enterprise Systems business; broaden its range of distribution products and services; and improve operational and cost efficiencies.

In light of the above and barring unforeseen circumstances, the Group expects that it will remain profitable in 2Q 2012 and FY2012.