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Aztechs Net Profit Jumped 57% to $10.13 Million

Aztech’s Net Profit Jumped 57% to $10.13 Million
Proposes a 100% hike in dividend to 0.50 cents per share

Singapore, 20 February 2006 — Aztech Systems Ltd, a global leader in data communication, voice communication, multimedia, contract manufacturing and retail distribution, today announced its financial results for the year ended 31 December 2005.

“FY2005 financial performance with its healthy year-on-year increase in revenue of 17%, EBITDA of 35% and operating profits of 50% highlighted the growing momentum of the company since 2003. Net profit attributable to shareholders increased by 57% to $10.13 million and earning per share rose by 57% to 2.53 cents. It demonstrated our commitment to grow our business and enhance shareholder value. In view of our performance in FY2005, we are proposing a final dividend of 0.50 cents,” said Mr Michael Mun, CEO & President of Aztech Systems Ltd.

He added, “We witnessed positive growth in all three businesses in FY2005. This trend has continued to 2006 as seen from orders now on the books. We believe that our strong product pipeline and market expansion activities will fuel growth for FY2006”.

FY2005 Performance

Aztech recorded its third straight year of profit growth with net profit rising 57% in FY2005. The Group’s total revenue for FY2005 was $178.58 million, up 17% from $152.14 million in FY2004.

The Group’s three business segments, namely ODM/OEM Sales, Contract Manufacturing and Retail Distribution, continued to show healthy growth. Revenue from ODM/OEM Sales grew from $88.54 million in FY2004 to $93.47 million in FY2005, up by 6%. It accounted for 52% of the Group’s revenue. Contract Manufacturing business delivered solid revenue growth of 27% from $48.05 million in FY2004 to $60.80 million in FY2005. It contributed 34% to the Group’s total revenue. Retail Distribution business registered strong results in FY2005. Its revenue rose by 56% to $24.32 million in FY2005 as compared to $15.55 million in FY2004.

The Group saw positive growth in all markets and in particular the Asia Pacific region with revenue increase of 90% in FY2005. During the period under review, Europe remained the major market of the Group’s products followed by Asia Pacific and North and South America regions. Together, they accounted for 41%, 37% and 18% of the Group’s total revenue respectively.

Gross profit grew from $25.01 million in FY2004 to $31.72 million in FY2005 due to wider range of product offerings and cost efficient structure. Gross margin as a percentage of revenue in FY2005 was 18% compared to 16% in the prior year period.

Profit from operations was $11.93 million in FY2005, an increase of 50% against $7.95 million in FY2004. While total operating expenses rose by 16% to $21.22 million, attributable to expansion of sales force and sales and marketing expenses, the Group continued to maintain cost efficient structure. Hence, its total operating expenses as a percentage to total revenue remained unchanged, that is 12%.

The Group’s balance sheet as at December 31, 2005 showed total assets of $138.82 million, total liabilities of $74.18 million, a net debt to equity ratio of 44% and shareholders’ funds of $64.65 million.

Outlook for FY2006

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Looking ahead, Aztech expects its business activities in FY2006 to increase. Said Mr Mun, “We expect the Group’s FY2006 performance to be better than FY2005. Our sales are gaining momentum and we are confident of sustaining this growth going forward especially in view that we will be introducing more new products with rich features”.

The Group plans to launch some of its new products at the CeBIT 2006 Exhibition to be held in Hannover, Germany in March this year.

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