2006 was a year of growth for the Medtecs Group. The Group as a whole enjoyed a 13.7% gain in revenue from US$71.6 millionto US$81.3 million. We also witnessed a 1.6% incrase in net profit, which amounts to US$745,000, despite continued increase in energy cost, research and development costs and decreased contribution from the Hospital Services and Distirbution business.

Our Original Product Manufacturing (OPM) business, which saw its revenue increase up to 19.3% to US$69.4 million, was largely responsible for our growth. The OPM growth was made possible by stronger demands for linen, hospital and hospitality apparel from existing customers and to strong performance by the Group's subsidiaries in China.

Revenue from our Hospital Services remained steady even as we moved aggressively to consolidate operations and increase efficiencies for future expansion. Contributions from our OTC divisions declined due to restructuring of our OTC sales unit in Taiwan.

Current Year 2007 Focus & Outlook

Having braved the difficulties and market uncertainty brought about by unusual price increases over the past two years and China's entry into the WTO, we remain optimistic about our prospects for 2007. Although oil prices are high, prices of oil-based raw materials have stabilized, thus allowing us to better manage our gross profit margins.

The Group's OPM division will continue to enhance and widen our product range, secure orders from existing clients and foster new business relations. We expect to continue to benefit from the global outsourcing trend, especially for our medical consumables and hospitality apparel divisions. Although our distributors are cost-conscious, they are also mindful of the quality of their products and the reliability of their suppliers. This will work to the Group's advantage as we are able to minimize costs through bulk production without compromising quality and efficiency.

In addition to expanding our marketing and manufacturing operations, we have continued to invest in our Research and Development department to improved quality and design for our existing products this year, and for delivery of new products under our own Medtecs brand in 2008 and beyond.

We are confident that the changes we have implemented at the Medtecs Group will prove fundamental to the continuing success of our business in the long term.
Clement Yang