Dear Valued Shareholders,

Leveraging on our strong foothold as a major provider of electrical switchgear solutions and greater demand for our products in a booming local construction sector, the Group is pleased to have achieved impressive growth in the top and bottom line for the financial year ended December 31, 2007 ("FY2007").

Financial Highlights

Group turnover for FY2007 increased 13.8% to $191.6 million from the $168.4 million in the previous financial year (FY2006). This improvement is driven mainly by increased demand for our Switchgear products, especially improved sales from our Australian subsidiary.

Net profit attributable to equity holders jumped 155.2% to $19.6 million from $7.7 million in FY2006. This is attributable to higher sales as well as a one-off $7.3 million gain on divestment of the Group’s holdings of Oculus Limited shares.

Basic earnings per share stood at 4.11 cents for FY2007, up from FY2006’s 1.65 cents, while our net assets per ordinary share increased by 4.5% to 23.3 cents in FY2007.

Dividend

The Board of Directors is pleased to propose a Final Dividend of 1.4 cents per ordinary share for FY2007. During the year, we have also paid a Special Dividend of 1.3 cents from our gain on divestment in our stake in Oculus Limited. Our total dividend payout for FY2007 comes to approximately $13.0 million. Upon approval at our upcoming AGM on April 30, 2008, the proposed dividends will be paid on May 21, 2008.

Business Overview

In Singapore, we have commenced work to expand our production capacity for switchgear by setting up a new factory which is adjacent to our existing plant at Senoko Avenue. Once operational in the second quarter of 2008, this new plant will bring the total capacity up to 120,000 square feet, which will enable us to better leverage on the booming construction industry in Singapore and take on bigger and higher-margin jobs which will boost our top and bottom line growth.

In Australia, our subsidiary has returned to the black and we are actively exploring plans to expand its production capacity to meet the increasing market demand in that country.

In Vietnam, through our new subsidiary, SMB Electric Vietnam Co., Ltd, we have set up a factory with a gross floor area of 3,555 square metres in the Binh Duong Province. Our Vietnam operations will provide us with a platform to tap the opportunities in this country whose strong economic growth is driving the robust demand for construction-related products and services.

Baoying Yanlord SMB Electric Co., Ltd, our joint venture company in China with Baoying Yanlord Industrial Co. Ltd, is making steady progress. Production has commenced in the new factory located in Baoying, Yangzhou City, Jiangsu Province.

On the Power & Technology business front, lower sales from leading markets in Europe, Australasia and Asia resulted in decreased revenue for our subsidiary, EDMI Limited (“EDMI”) Group, in FY2007. However, EDMI has made significant strides in expanding its market foothold in India and the ASEAN countries, especially Thailand and Malaysia.

In Thailand, together with a strategic partner, EDMI succeeded in clinching a major contract for the Automatic Meter Reading (AMR) system for the Provincial Electric Authority of Thailand.

We are also pleased to note that as a listed entity, EDMI‘s status was upgraded to the Mainboard of the Singapore Exchange in March 2007.

Positive Industry Outlook

We are optimistic about our prospects for the future, given the buoyant construction sector which bodes well for the Group and in view of our strong market share and positioning in the electrical distribution and monitoring sector.

The Singapore construction industry enjoyed a bumper year in 2007 exceeding even that of the previous peak in 1997. Some $24.5 billion worth of construction contracts were awarded last year, which surpassed the $24 billion awarded in 1997.

Following the strong momentum in 2007, 2008 looks to be another good year for the construction industry. Based on the Building and Construction Authority’s Development Plans Survey, the total construction demand is projected to reach between $23 billion and $27 billion in 2008.

Given this positive market outlook, we intend to capitalise on our key competencies and our competitive edge in the switchgear arena. We will continue to aggressively pursue new business opportunities in the provision of electrical distribution solutions to data centres and high-growth sectors such as wafer fabrication plants and the oil and gas/marine sector.

Having established our brand name for reliability and quality in the industrial and commercial sectors in Singapore, coupled with the numerous new commercial properties coming on stream, we are well-positioned to garner even more contracts in the current financial year. The expanded switchgear production capacity in Singapore will position us well to take on a greater number of contracts.

Outside Singapore, we are also likely to expand our switchgear operations in various markets. Our Malaysian plant, which handles metal fabrication work in support of our Singapore operations, will have its production capacity increased by 30,000 square feet so as to cater to a possible influx of contracts from the Malaysian market, as well as to support our Singapore operations. Our Malaysian factory’s strategic proximity to the Iskandar Development Region also places the Group in an ideal position to harness any potential increase in market demand.

Our subsidiary in Australia is expected to deliver a good performance in the coming year and expansion of production capabilities is on the cards for FY2008. Similarly, our joint venture in China with the Yanlord Industrial Group is also expected to provide us with a strategic springboard to increase our market presence in China.

On the Power & Technology business front, EDMI will continue to lead the electricity meter market with new innovative hardware and software. The Advanced Meter Infrastructure (AMI) market is evolving rapidly with more contracts being floated around the world. Geographically, EDMI will also focus on enlarginWith the bullish outlook in the construction sector, our Trading and Distribution as well as Building Services businesses should continue to ride on this boom in the coming year with greater opportunities for clinching more contracts and product sales, both locally and in the overseas markets.g its market share in the ASEAN region and India.

In Appreciation

On behalf of the Board of Directors, I would like to convey my heartfelt thanks to all our customers and business partners for their continued support. I would also like to thank all of our employees for their hard work, perseverance and dedication, without which our excellent financial performance would not have been possible.

Lee Phuan Weng
Chairman and Chief Executive Officer