Dear Shareholders,

It gives me great pleasure to close the twelve months ended December 31, 2009 ("FY2009") with this letter to cap off another milestone year that the Group has reached. Record growth was achieved in line with the economic upturn since the second quarter of 2009 and the Group emerged unscathed from the recession that shook the financial markets and economies around the world. Riding on the excellent growth achieved in FY2008, the Group turned in a better than expected performance for FY2009.

The economic rebound triggered renewed confidence in the economy as businesses started to re-stock inventory and manufacturing activities in Singapore started to pick up speed. Asian banks restarted lending activities and this led to credit availability in Singapore and the region. This positive business environment benefited SMB and its subsidiaries, which contributed to the Group achieving its best-ever performance in terms of top and bottom lines.

We started the year with an increase in our stake of our SGX-ST Mainboard listed subsidiary EDMI Limited ("EDMI") by 3.1% to 59.3% as the purchase price was less than the value of net assets acquired. The Group is pleased to have recorded a gain of $0.6 million from this acquisition. EDMI also subsequently completed the acquisition of a 100% equity stake in EDMI Gas Pty Ltd for a total consideration of $4.3 million at the end of August 2009 in order to penetrate the gas metering market.

Our Building Services Division also made us proud by clinching the International Quality Crown - Gold Award which recognised the prestige of outstanding companies, organisations and businessmen in the business world. Having our subsidiary recognised by an international selection committee demonstrates its outstanding performance in the area of quality management.

For the year in review, we had continuously explored ways to reduce operating expenses such as streamlining of manufacturing activities and other cost-cutting measures. We took the necessary steps to remain competitive in the midst of all the uncertainties in the financial markets.

As a responsible corporate citizen, we played host to students from both local and overseas technical institutes by conducting single-day tours and lectures within our manufacturing plants. This allowed students the opportunity to learn and experience first-hand, the manufacturing processes and products which were closely linked to what was taught to them in school.

Highest ever turnover and profit

The Group achieved record sales turnover of $226.5 million in FY2009, a 6.2% increase from $213.3 million in FY2008. This is the second consecutive year in which Group revenue exceeded the $200 million mark and it indicates the sustainability of the Group's businesses. This is also the sixth consecutive year of revenue growth dating from FY2004. Strong showings by both our Switchgear and Power & Technology Divisions contributed to the revenue increase for FY2009.

Profit attributable to shareholders reached an all-time high of $21.2 million, up 56.5% from $13.6 million in FY2008. Net profit margins inched up from 7.0% to 10.6%. Earnings per share on a fully diluted basis increased from 2.83 cents in FY2008 to 4.42 cents in FY2009. Net asset value per ordinary share stands at 28.2 cents as of December 31, 2009.

The bulk of the Group's turnover came from the Singapore market with a 3.2% rise in revenue to $116.2 million due to higher switchgear sales. While higher deliveries of electronic meters led to improved sales in the Oceania market which increased by 32.5% to $50.3 million, lower sales were experienced by both our Switchgear and Power & Technology Divisions in Malaysia. This dip is more than offset by a significant increase in sales to other markets such as Europe and Africa with an 84.6% increase in sales revenue to $27.1 million.

The Jobs Credit Scheme which was introduced by the Singapore Government to encourage businesses to preserve jobs during the downturn helped to mitigate our staff costs for FY2009. We received a cash grant based on the employee CPF contributions, thus providing the Group with the incentive to retain existing workers. This scheme will be stepped down in 2010 due to the economic upturn.

Other gains and losses were lower for FY2009 due to the booking of foreign exchange gains as compared to foreign exchange losses recorded in FY2008. The appreciation of the Australian and New Zealand dollars led to the foreign exchange gains.

Looking ahead into FY2010

In the long run, there is no fundamental change to our direction of growing the switchgear markets in Singapore and the region. We had invested a couple of years to improve and refine the M-Cube range of switchgear and we have just re-launched the M-Cube into the market. We are now in a good position to capitalise on any opportunities arising from the economic recovery.

The Building and Construction Authority of Singapore ("BCA") forecasts that construction demand for 2010 is expected to reach between $21 billion to $27 billion, which is similar to the $21 billion worth of contracts awarded in 2009. The bulk of construction demand for 2010 will come from the public sector, which is about 65% of the total construction demand.^

The outlook for our Power & Technology Division looks promising with the growing adoption of energy-saving smart meters for use in smart grids especially in Europe. The Division benefits from the European-led efforts towards ‘Green Technology' which reduces utility bills and eliminates energy wastage and indirectly meeting carbon reduction commitments.

The Group will cautiously seek business opportunities in order to boost growth as the switchgear market in Singapore is at a mature stage. This is possible only because of the healthy cash position that the Group has amassed over the years. Nevertheless, we will continue to prudently manage our cash resources.

The general economic landscape is still uncertain with the risk of sovereign bankruptcies and debt defaults of certain nations in Europe that can trigger ripples of economic instability in countries elsewhere. As such, the Singapore economy may not be entirely out of the woods and we expect FY2010 to be a tough year given the current economic landscape.

Rewarding our shareholders

We are pleased to propose a final dividend of 1.5 cents per ordinary share for FY2009 to reward all our shareholders who have stood by us and believed in SMB during this period of uncertain economic climate. This dividend payout amounts to $7.2 million and is to be approved at the forthcoming AGM on April 30, 2010. Payment shall be made on May 21, 2010 upon approval by shareholders.

Appreciation from our hearts

We thank you for your continued confidence in the Group and its management. We also wish to thank all of our customers and business associates for their ongoing patronage and support. We also like to record our appreciation to all of our employees for their determination, diligence and individual personal sacrifices in helping the Group to achieve another record performance in FY2009.

Lee Phuan Weng
Executive Chairman / CEO