Mr. Gary Yen
Chief Executive Officer

2007 was a year of recovery and refocus for New Toyo. Revenue increased from organic growth but margins are still under pressure due to rising raw material and energy costs. These rising costs were slightly offset by some upward price adjustments in our core businesses. Our rationalisation exercises which involved the divestments of some non-strategic businesses have contributed positively to our bottom line.

However, more critically, we now have a more focused portfolio of businesses and we have enhanced our sales and marketing capability. New Toyo will capitalise and build on these elements to deliver ongoing improvement in returns to shareholders.

Group Performance
In 2007, the New Toyo Group ("NT Group") achieved revenue of $221.6m, an increase of 24% compared to 2006. This improvement was mainly achieved by higher revenue from both the Specialty Papers and the Printed Cartons and Labels divisions, which more than offset the reduction in revenue from the Corrugated Containers division, which had two of its business units divested during the year.

Net profit was $13.1m, almost double the profits achieved in 2006. This was attributed to increased revenue, divestments gains and savings on interest expenses.

Moving to 2008, the Group is expecting to deliver growth in our core businesses, driven by the healthy regional economies. However, oil price induced inflationary pressures remain and currency fluctuations may impact margins.

Specialty Papers ("SP") Business Performance
The SP business produces mainly laminated foil paper and printed paper for tobacco packaging. The SP operations are recognised by our customers for its quality, competitiveness and reliable network across Asia. The SP business has seven plants in six countries (Singapore, Malaysia (two plants), China, Vietnam, Thailand and Pakistan). During the year, the division ceased its operation in Australia, as the supply to a key customer was transferred to Singapore. In addition to tobacco packaging, the business also produces paper core in Vietnam serving mainly the textile industry, and metalized paper used for cosmetic packaging.

The SP operations had a solid year in terms of revenue but lower earnings. Revenue increased by 8% to $82.1m and PBT reduced by 23% to $5.4m. The contribution to Group revenue and PBT are 37% and 30% respectively.

Higher revenue was due to increased sales to existing customers and new business. However, the loss of profit margins was a result of the foil board supply which was partially substituted by printed board. All business units were profitable except for Pakistan and Australia. The development of the operation in Pakistan was stifled by the country’s political unrest during the year but the situation has improved and the plant continues its operations. The operation in Pakistan is expected to be profitable in 2008 on the back of increased volumes.

The SP division is expected to deliver improved results in 2008 despite the potential of further margin erosion due to substitutes in foil board packaging. We would hope to further grow our supply to major tobacco customers and expand geographically. While Tobacco market is the main contributor of revenue, the business will continue its focus in tobacco packaging including the development of new packaging features, and refine plans for new customers in non-tobacco markets.

Printed Cartons and Labels ("PCL") Business Performance
The PCL business produces mainly gravure and offset printed materials for fast moving consumer product packaging including cigarette packs. This business line has two plants, one in Malaysia and another in Vietnam. Both operations are major suppliers to a major international tobacco company in Malaysia and Vietnam. The Malaysia plant also supplies to independent tobacco companies in the Middle East.

The PCL business performed well in both in terms of revenue and profits in 2007. Revenue increased to $72.0m and PBT was $7.9m, mainly as a result of the consolidation of TWP. The contribution to Group’s revenue and PBT is 32% and 43% respectively.

Revenue was higher with increased sales in Vietnam and to the Middle East but sales in Malaysia declined due to the switch in demand of 20 sticks cigarette packs to 14 sticks packs, which is supplied by a competitor. Fortunately, this decline was mitigated by gains from sales to Singapore market. During the year, the Malaysia operation successfully qualified itself as a supplier to a major tobacco company supported by state of the art printing equipment, high production standards and practices, and compliance to stringent Health, Safety and Environment criteria. We do hope to become an established supplier to this major tobacco company in Vietnam, the operation started the supply to a major local tobacco company.

The PCL division is expected to deliver improved results in 2008 with developments in Vietnam and overseas markets. The business will invest in new printing capability to improve product features and allow differentiation and focus its development in both tobacco and other fast moving consumer business packaging.

Corrugated Containers ("CC") Business Performance

The CC business produces corrugated recycled cartons and sheets for general packaging with fast moving consumer goods, electronics and furniture markets. The CC business went through a rationalisation exercise in 2007. It was decided that two operations in Vietnam and a trading subsidiary handling the sale of shoe boxes would be divested. After exiting the Vietnam market, the business has three remaining plants, one in Vietnam and two in China.

The revenue contribution from the three remaining operations declined by 46% to $27.5m and PBT reduced by 31% to $2.2m.

The outlook for the CC industry remains highly competitive in China and further pressure from rising raw material and energy prices is expected. The Group will focus in increasing sales and consider ways to improve margins.

Trading Performance

The Trading business trades several related packaging materials including cigarette packaging, aluminum foil, paper and board, and acts as representative agent in selling acetate tow to tobacco companies in Vietnam on behalf of a major USA manufacturer. The trading business also functions as a central procurement for the Group.

The trading business had higher revenue and lower losses in 2007. Revenue grew by 73% to $39.1m and losses reduced by 78% to $0.2m. The improvements were mainly a result of increased trading, which is encouraging, but insufficient to fully cover the losses.

The Group will grow the business in 2008 by using its Asian and Industry networks, particularly in the Vietnam market to improve results.