7/Fl. B, No. 132, Sec. 3
Min-Sheng East Road
Taipei, 105, Taiwan
Republic of China

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes

Indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18

Our disclosure and analysis in this Annual Report on Form 20-F contain some forward-looking statements. Forward-looking statements give our current beliefs or expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘plan,’’ ‘‘believe’’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance.

Such statements are not promises or guarantees and are subject to a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include our ability to maintain and develop market share for our products, the introduction of competing products or technologies, our inability to successfully identify, consummate and integrate acquisitions, our potential exposure to liability claims, the uncertainty and volatility of the markets in which we operate, the availability and price for copper, our principal raw material, the fact that we have operations outside the United States that may be materially and adversely affected by acts of terrorism or major hostilities, fluctuations in currency, exchange and interest rates, operating results and other factors that are discussed in this report and in our other filings made with the Securities and Exchange Commission (the ‘‘SEC’’).

In particular, these statements include, among other things, statements relating to:

We undertake no obligation to update any forward-looking statements or other information contained in this report, whether as a result of new information, future events or otherwise except as required by law. You are advised, however, to consult any additional disclosures we make in our Form 6-K reports periodically filed with the SEC. Also note that we provide a cautionary discussion of risks and uncertainties under ‘‘Risk Factors’’ beginning on page 6 of this report. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect us. This discussion is permitted by the Private Securities Litigation Reform Act of 1995.

Unless otherwise specified, all references in this Annual Report to ‘‘Thailand’’ are to the Kingdom of Thailand, all references to ‘‘Singapore’’ are to The Republic of Singapore, all references to ‘‘Taiwan’’ are to Taiwan, The Republic of China, all references to ‘‘China’’ and to the ‘‘PRC’’ are to The People’s Republic of China, all references to ‘‘Australia’’ are to the Commonwealth of Australia and all references to the ‘‘U.S.’’ are to the United States of America.

Most measurements in this Annual Report are given according to the metric system. Standard abbreviations of metric units (e.g., ‘‘mm’’ for millimeter) have been employed without definitions. All references in this Annual Report to ‘‘tons’’ are to metric tons, which are equivalent in weight to 2,204.6 pounds.

With respect to measurements relating to the manufacture of wire and cable products, references to ‘‘pkm’’ are to kilometers of twisted pairs of copper wire.

We are filing this combined annual report (the ‘‘Annual Report’’) during March 2008 to report on the Company for the fiscal years ended December 31, 2005 and December 31, 2006 in lieu of filing separate annual reports for such periods. After filing this Annual Report, it is the Company’s intention to resume current periodic reporting under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), on a current basis as soon as practicable. While we do make reference to certain events and developments since December 31, 2006, the principal purpose of this Annual Report is to describe our business, management, ownership, results of operations, financial condition and other matters as of December 31, 2005 and December 31, 2006 and during the historic periods ended on or before those dates. Shareholders should not rely upon this Annual Report for a comprehensive statement of all material developments regarding the Company for any periods subsequent to the fiscal year ended December 31, 2006 and shareholders should not assume that the information reported in this Annual Report for the 2005 and 2006 fiscal years accurately describes the current business, management, ownership, results of operations, financial condition and other matters regarding the Company. For more detailed information on subsequent periods, reference should be made to annual reports and other filings we expect to make in the future regarding those periods and to current reports filed by the Company from time to time. See — ‘‘Recent Developments, Section 4.1.2.’’

The following selected consolidated financial data is derived from the consolidated financial statements of Asia Pacific Wire & Cable Corporation Limited (the ‘‘Company’’) for the years ended December 31, 2001, 2002, 2003, 2004, 2005 and 2006 prepared in accordance with U.S. GAAP.

The selected data set forth below should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements of the Company included in Item 5: Operating and Financial Review and Prospects, Item 18: Financial Statements, and the notes thereto.


	For the Year Ended December 31,
	2001				2002				2003				2004				2005				2006
	(in thousands, except per share amounts)
Income Statement Data:
Net sales		$	197,311			$	241,179			$	211,399			$	294,256			$	337,262			$	468,117
Cost of sales			(177,352	)			(206,435	)			(178,111	)			(255,384	)			(300,455	)			(409,702	)
Gross profit			19,959				34,744				33,288				38,872				36,807				58,415
Other operating income			—				—				1,336				—				—				—
Operating expenses			(15,616	)			(19,282	)			(20,479	)			(28,867	)			(26,754	)			(28,733	)
Goodwill written off			(506	)			—				—				—				—				—
Impairment loss			—				(1,559	)			—				(134	)			(3,223	)			(86	)
Operating profit/(loss)			3,837				13,903				14,145				9,871				6,830				29,596
Exchange gain/(loss)			(81	)			(16	)			4,161				233				(3,137	)			5,464
Net interest income/(expense)			(3,173	)			(1,499	)			(1,122	)			(2,025	)			(2,747	)			(5,181	)
Share of net income/(loss) of equity investees			(2,535	)			(4,090	)			1,475				(4,224	)			170				73
Gain on share issuance by subsidiaries and affiliates			—				1,011				—				—				—				1,801
Gain/(loss) on sale of investment			743				(557	)			(885	)			(1,161	)			(259	)			(729	)
Others			1,619				2,502				(214	)			925				829				1,536
Income/(loss) before income taxes and minority interests			410				11,254				17,560				3,619				1,686				32,560
Income taxes			1,411				(4,683	)			(2,477	)			(4,716	)			(3,860	)			(10,257	)
Minority interests			(1,730	)			(1,780	)			(5,083	)			(1,427	)			(2,783	)			(9,330	)
Net income/(loss)		$	91			$	4,791			$	10,000			$	(2,524	)		$	(4,957	)		$	12,973
Earnings/(loss) per share⁽¹⁾		$	0.01			$	0.35			$	0.72			$	(0.18	)		$	(0.36	)		$	0.94

Unless otherwise specified, references in this Annual Report to ‘‘$’’, ‘‘U.S. dollars’’ or ‘‘US’’ are to United States dollars; all references to ‘‘Bt,’’ ‘‘Thai Baht’’ or ‘‘Baht’’ are to Baht, the legal tender currency of Thailand; all references to ‘‘S$’’ are to Singapore dollars, the legal tender currency of Singapore; all references to ‘‘A$’’ are to Australian dollars, the legal tender currency of Australia; and all references to ‘‘Rmb’’ are to Chinese Renminbi, the legal tender currency of China.

Unless otherwise noted, for the convenience of the reader, translations of amounts from Baht, Singapore dollars, Australian dollars and Renminbi to U.S. dollars have been made at the respective noon buying rates in New York City for cable transfers in those currencies as certified for customs

purposes by the Federal Reserve Bank of New York (the ‘‘Noon Buying Rate’’) on December 29, 2006. The respective Noon Buying Rates on December 29, 2006 were US$1.00 = Bt 36.100; S$ 1.534; A$ 1.268; and Rmb 7.804. The respective Noon Buying Rates on March 4, 2008, the latest practicable date before publication of this Annual Report, were US$1.00 = Bt 31.450; S$ 1.340; A$ 1.084; and Rmb 7.106. No representation is made that the foreign currency amounts could have been or could be converted into U.S. dollars on these dates at these rates or at any other rates.

On July 2, 1997, the Bank of Thailand announced it had switched from a system which had pegged the Baht to a basket of foreign currencies dominated by the U.S. dollar (the composition of which is not made public) to ‘‘a managed float which would allow the Baht’s value to be determined by market forces to reflect economic fundamentals.’’ This change in monetary policy allowed the Baht to decline in value relative to the U.S. dollar. The fall in the value of the Baht was exacerbated by subsequent financial crises in the region, particularly in Indonesia and South Korea. The Baht stabilized in 1999, buoyed by return of investors’ confidence and some capital inflows. However, for several years thereafter, the Thai economy began to decelerate as a result of weak domestic demand, coupled with a major fiscal expansion program espoused by the government, which contributed to a weakening of the Thai Baht. In the past several years, the global weakening of the U.S. dollar against many other currencies has resulted in a strengthening of the Baht against the U.S. dollar.

The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate. No representation is made that the Baht or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Baht, as the case may be, at any particular rate or at all.

⁽¹⁾ Average means the average of the Noon Buying Rates on the last day of each month during a year.

The high and low exchange rates for the six months preceding the date of this Annual Report were:

Sources: Federal Reserve Bulletin, Board of Governors of the Federal Reserve System. Federal Reserve Statistical Release H.10(512), from the website of the Board of Governors of the Federal Reserve System at http://www.federalreserve.gov.

The Singapore dollar is convertible into foreign currencies and floats against a trade-weighted basket of foreign currencies, the composition of which is not made public by Singapore’s central bank,

the Monetary Authority of Singapore, but of which the U.S. dollar is a component. The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Singapore dollar. No representation is made that the Singapore dollar or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Singapore dollars, as the case may be, at any particular rate or at all.

The high and low exchange rates for the six months preceding the date of this Annual Report were:

The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. The following tables set forth, for the periods indicated, certain information concerning the Noon Buying Rate of the Renminbi. No representation is made that the Renminbi or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars or Renmimbi, as the case may be, at any particular rate or at all.

The high and low exchange rates for the six months preceding the date of this Annual Report were:

The Company failed to timely file its annual report on Form 20-F with the Securities and Exchange Commission (the ‘‘SEC’’) for the fiscal year ended December 31, 2004. Accordingly, on August 29, 2005, the Company was delisted from the Over-the-Counter Bulletin Board (the ‘‘OTC BB’’) operated by the National Association of Securities Dealers, Inc. (the ‘‘NASD’’). Since that delisting, the Common Shares have traded only on the Pink Sheets (www.pinksheets.com) under the trading symbol ‘‘AWRCF.’’ The Pink Sheets market is often highly illiquid and there may not be any market makers for the Common Shares on the Pink Sheets. The Company will not be able to be restored to the OTC BB or apply for listing on a national exchange until the Company has filed this Annual Report and becomes current in its periodic reporting under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). In addition, approximately 75.4% of our Common Shares are held as restricted securities, which are not publicly registered securities, and are, therefore, not freely tradable. In the recent past, the volume of trading in our Common Shares has not been substantial. The illiquidity of your ownership interest in the Company may negatively impact the value of your Common Shares.

Since the beginning of 2004, the Company has undergone three and arguably four changes of control, in that there have been four changes in the record holder of a majority of the Common Shares. Since 2004, the record holders of a majority of the Common Shares have been, in sequence, Pacific Electric Wire & Cable Co., Ltd. (‘‘PEWC’’), Set Top International Inc. (‘‘Set Top’’), Sino-JP Fund Ltd. (‘‘Sino-JP’’), Chiao Tung Bank and then again, PEWC.

As of December 31, 2004, Sino-JP held 10,074,102 shares, representing approximately 72.84% of the outstanding Common Shares (the ‘‘Supramajority Shares’’). Sino-JP acquired its shares of the Company pursuant to an assignment from Asset Managers Co., Ltd. (‘‘AMC’’). The Supramajority Shares were acquired by AMC pursuant to a Share Purchase Agreement dated as of September 10, 2004 (the ‘‘2004 Share Purchase Agreement’’) by AMC and PEWC. The 2004 Share Purchase Agreement and a related Option Agreement dated September 10, 2004 (the ‘‘2004 Option Agreement’’) were entered into in connection with a settlement of certain litigation commenced by PEWC against Set Top and other parties. In connection with that settlement, Set Top was paid $25,000,000 by AMC in exchange for the ownership interest in and all claims relating to the Supramajority Shares. Upon the consummation of the 2004 Share Purchase Agreement, PEWC, which formerly held 75.4% of the outstanding Common Shares, held indirectly approximately 2.56% of the outstanding shares. Under the terms of the 2004 Option Agreement, PEWC was granted an option to reacquire 52.84% of the total issued and outstanding Common Shares (the ‘‘Repurchase Option’’). See — ‘‘Recent Developments, Section 4.1.2.’’

On September 14, 2005, PEWC exercised the Repurchase Option and reacquired 7,307,948 Common Shares (the ‘‘Repurchased Shares’’), representing 52.84% of the total issued and outstanding shares, for a price of $2.581 per share, or a total purchase price of $18,861,813.78, plus certain guaranteed returns payable by PEWC to Sino-JP. As a result of the reacquisition by PEWC of majority control, as of September 14, 2005, PEWC indirectly held 7,664,615 Common Shares, representing 55.4% of the total issued and outstanding Common Shares, and Sino-JP held 2,766,154 Common Shares, representing 20% of the total issued and outstanding Common Shares (the ‘‘Sino-JP Shares’’).

Subsequent to the 2004 Share Purchase Agreement, a number of disputes arose between Sino-JP and PEWC regarding the governance of the Company and other matters. Litigation was commenced in Bermuda, in which the Company was named a party, and in Hong Kong, in which the Company was not named a party. On June 28, 2007, the Company entered into a comprehensive settlement and release agreement with Sino-JP (the ‘‘Settlement Agreement’’), which dismissed and released all claims between the parties and which put an end to all related litigation. PEWC also entered into a settlement and release agreement with Sino-JP that terminated all disputes and litigation between those parties. On the same date, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership, acquired the Sino-JP Shares (the ‘‘SOF Acquisition’’) and entered into a shareholders agreement with the Company and PEWC. Upon the closing of that acquisition, all of the directors and officers designated by Sino-JP submitted their resignations and Sino-JP ceased to have any interest in the Company. As part of the Settlement Agreement, the Company agreed to indemnify all of those Sino-JP designated directors and officers (the ‘‘Sino-JP Indemnified Persons’’) for all acts or omissions taken in their capacity as a director or officer to the maximum extent permitted under the memorandum of association and the Bye-laws of the Company and the Bermuda Companies Act (the ‘‘Companies Act’’). The Company could incur significant costs in the event any claims are asserted or actions commenced against any of the Sino-JP Indemnified Persons for matters within the scope of the indemnification provisions of the Settlement Agreement. See — ‘‘Recent Developments, Section 4.1.2.’’

In accordance with the provisions of the 2004 Share Purchase Agreement, Sino-JP caused the Bye-laws of the Company to be amended to establish a classified board of directors, consisting of up to three (3) Class A Directors and up to seven (7) Class B Directors. Sino-JP and its affiliates were entitled to designate candidates for election as the Class A directors, who, under the terms of the then revised Bye-laws, had a veto power over all matters presented to the Board of Directors of the Company for a vote.

Commencing in 2004, the banking group creditors of PEWC, consisting of a consortium of 32 banks (the ‘‘PEWC Banking Group’’), represented by Chiao Tung Bank, exercised control over any material expenditures by PEWC. Funding the exercise of the Repurchase Option required the approval of the PEWC Banking Group, which imposed certain conditions on the exercise of the Repurchase Option. Among the conditions, PEWC was required to enter into a letter of undertaking (the ‘‘PEWC Letter of Undertaking’’) which provides that (i) the funds made available would be used only to buy the Repurchased Shares, (ii) as indirect majority shareholder, PEWC would cause the Board of Directors of APWC to consist of a majority of independent directors, with the PEWC Banking Group having the right to consent to nominees for any independent directorships, (iii) PEWC shall deposit the Repurchased Shares in a trust to secure the obligations of PEWC to the PEWC Banking Group and (iv) PEWC shall make monthly installments up to NT$240 million through December 2006 in repayment of debt owed to the PEWC Banking Group.

In order to secure its obligations under the PEWC Letter of Undertaking, PEWC entered into a trust agreement dated September 12, 2005 (the ‘‘PEWC Trust Agreement’’) by and among PEWC, Moon View Ventures Limited BVI, a wholly-owned subsidiary of PEWC (‘‘Moon View’’), and Chiao Tung Bank Trust Department Trust Assets (‘‘CTB’’). Under the terms of the PEWC Trust Agreement, the Repurchased Shares were deposited with, and registered with the Company registrar in Bermuda in the name of, CTB. In addition to the Repurchased Shares, the trust assets include all dividend and voting rights; provided that PEWC may direct the voting of the Repurchased Shares unless and until there is a default under the PEWC Letter of Undertaking. In the event of a default by PEWC under

the PEWC Letter of Undertaking, which includes a default for three consecutive months under the agreements with the PEWC Banking Group, CTB was permitted to dispose of all of the Repurchased Shares and apply the proceeds to pay the PEWC Banking Group, or CTB may exercise all voting rights associated with the Repurchased Shares.

In May 2006, the PEWC Banking Group determined that PEWC had fulfilled or was in a position to fulfill the requirements with respect to the PEWC Letter of Undertaking under which a total repayment of US$6 million ought to be made by the end of 2006. Therefore, on June 6, 2006, CTB, on behalf of the PEWC Banking Group, delivered a letter instructing the termination of the PEWC Trust Agreement and authorizing the registration of the Repurchased Shares on behalf of PEWC without any pledge or encumbrance in favor of the PEWC Banking Group.

Accordingly, the Company believes that the risk of a change of control in favor of the PEWC Banking Group is significantly diminished, if not eliminated. The Company cannot assure you, however, that PEWC would not sell all or a sufficient number of its Common Shares so as to trigger a further change of control, although PEWC has informed us that it does not have any present intention to do so.

PEWC has informed the Company that it is party to a debt restructuring agreement with the PEWC Banking Group which provides PEWC with certain relief from the original loan terms and contains an agreement by the banking group to forbear on exercising certain remedies against collateral so long as PEWC adheres to the terms of the debt restructuring. That debt restructuring agreement has been extended through 2009.

As of December 31, 2005 and 2006, the Company owned approximately 52.43% and 50.39%, respectively, of the issued and outstanding shares of Charoong Thai Wire and Cable Public Company Limited (‘‘Charoong Thai’’). The decrease in the Company’s percentage ownership is attributable to the exercise of warrants or conversion of convertible securities by third parties. The Company’s present intention is to maintain majority ownership of the voting securities of Charoong Thai. However, there may be circumstances under which the Company cannot maintain majority ownership of Charoong Thai. In the event Charoong Thai determined to make a further offering of voting securities, or securities convertible into or exchangeable for voting securities, and the Company was not in a position to fund or finance its participation in the offering, the ownership interest of the Company in Charoong Thai could fall below 50%. If the Company’s holding in Charoong Thai were to fall below 50%, the accounts of the Charoong Thai group, which includes all of the Company’s Thailand operations, will not be consolidated but instead will be equity accounted. In such an event, the Company’s accounts will show a fall in revenue and most categories of assets and liabilities, which events could have a material adverse effect on the value of your Common Shares.

Commencing in the fourth quarter of 2004 and continuing into the fourth quarter of 2005, the Company conducted an internal review regarding certain past financial and accounting practices. In addition, the Company retained an internationally recognized forensic accounting firm as outside advisor to assist in the conduct of the internal review. The internal review examined the adequacy of the Company’s disclosure controls and procedures. Management and the Company’s forensic accounting advisors identified the following material weaknesses:

The Company engaged a consultant to advise and assist on establishing an internal audit department and to assist in establishing and maintaining satisfactory disclosure controls and procedures. However, the Company has not completed this process and cannot assure its shareholders at this time that satisfactory disclosure controls and procedures are in place. The certifications provided as part of this Annual Report by our Chief Executive Officer and by our Chief Financial Officer are subject to and qualified by the disclosures and discussion in this Annual Report on the lack of adequate disclosure controls and procedures.

The Company appointed two independent directors on September 28, 2007. Other than those two independent directors, all of the members of the Board are also directors or officers or otherwise affiliated with PEWC, the majority shareholder. Certain of our officers are also affiliated with PEWC. In each case, they may be subject to potential conflicts of interest. In addition, certain of our officers and directors who are also officers and/or directors of PEWC may be subject to conflicts of interest in connection with, for example, pursuing corporate opportunities in which we and PEWC or one of its affiliates have competing interests, and the performance by us and PEWC of our respective obligations under existing agreements, including the Composite Services Agreement and the Indemnification Agreement (discussed below in Section 10.2). In addition, some of these persons will devote time to the business and affairs of PEWC and its affiliates as is appropriate under the circumstances, which could reduce the amount of time available for overseeing or managing our business and affairs. Notwithstanding any such potential conflicts, however, such individuals, in their capacities as our directors and officers, are subject to fiduciary duties to our shareholders.

The Bermuda Companies Act 1981, as amended (the ‘‘Companies Act’’), subjects our officers and directors to certain fiduciary standards in the exercise of their fiduciary duties on our behalf. Under the Companies Act, an officer of ours (which term includes our directors) is subject to a duty of care requiring him to act honestly, in good faith and in the best interests of the Company in the discharge of his duties and to, among other things, give notice to the Board at the first opportunity of any interest he has in any material contract or proposed material contract with us or any of our subsidiaries. The Companies Act also prohibits us, subject to certain exceptions, from making loans to any directors without first obtaining the consent of shareholders holding in the aggregate not less than nine-tenths of the total voting rights of all the shareholders having the right to vote at any shareholders meeting. As of May 31, 2004, we do not make any loans to our directors or executive officers in accordance with the provisions of The Sarbanes-Oxley Act of 2002.

The record holder of a majority of the Common Shares of the Company has changed four times since the beginning of 2004. With the changes in majority ownership, the Company has also experienced significant changes in a number of senior management positions. Certain members of the Board of Directors have resigned because of the requirements of the PEWC Banking Group after it reacquired majority control, although certain of those Board members who resigned have since been re-elected following the fulfillment by PEWC of the requirements of the PEWC Letter of Undertaking. The Company believes that its current management team is experienced and qualified to manage the operations of the Company. However, there remains a risk of continued instability in majority ownership or Company leadership that could adversely affect the business and operations of Company and have a negative impact on the value of your ownership interest.

In connection with the acquisition by SOF of all of the Common Shares previously held by Sino-JP, the Company, PEWC and SOF entered into a shareholders agreement dated as of June 28, 2007 (the ‘‘Shareholders Agreement’’), pursuant to which the Company granted to SOF certain rights and protections. Under the Shareholders Agreement, the Company has agreed to indemnify SOF, and its partners and certain of its affiliates (the ‘‘SOF Indemnified Persons’’), for any additional taxes, interest, penalties and other costs that might be imposed upon or incurred by the SOF Indemnified Persons in the event that the Company is determined by the Internal Revenue

Service (the ‘‘IRS’’) to be a ‘‘controlled foreign corporation’’ (a ‘‘CFC’’) or a ‘‘passive foreign investment company’’ (a ‘‘PFIC’’) as such terms are interpreted and defined under IRS rules or regulations. The Company does not believe that it is now or is likely to become a CFC or a PFIC; however, the Company cannot provide any assurances that it will not become a CFC or a PFIC in the future.

In addition, the Company has granted certain registration rights to SOF with respect to the 2,766,154 Common Shares (the ‘‘Registrable Securities’’) acquired by SOF from Sino-JP. In particular, the Company has agreed to use its reasonable best efforts to prepare and file, and cause to go effective, as soon as practicable, a shelf registration statement covering the resale of the Registrable Securities on a continuous basis. In addition, the Company has granted to SOF two demand registration rights for underwritten offerings and customary piggyback registration rights with regard to the Registrable Securities. Moreover, the Company has agreed that, not later than January 31, 2009, it shall have used its reasonable best efforts to cause the Common Shares to be listed on a national ‘‘Securities Market,’’ which means any of the Nasdaq Stock Market, Inc. (Global Market or Global Select Market), the American Stock Exchange LLC, the New York Stock Exchange LLC or one or more of the principal or secondary exchanges for the public trading of equity securities in any of Hong Kong, Tokyo or Singapore. All of the costs and expenses of the Company in connection with the fulfillment of its obligations under the Shareholders Agreement are to be paid by the Company, other than underwriting fees, discounts and commissions attributable to the sale of Registrable Securities.

The Company has also granted to SOF preemptive rights in the event of any issuance of additional equity securities (or securities convertible into or exchangeable for equity securities) by the Company, such that SOF may subscribe for additional securities in order to maintain its then percentage ownership interest in the issued and outstanding equity securities of the Company.

If the Company fails to fulfill its obligations under the Shareholders Agreement, SOF may have a claim for damages against the Company or, if the Company fulfills its reasonable best efforts undertakings but fails to meet one or more of the stated goals, SOF may have a put right of its Common Shares to PEWC, either of which events may adversely impact the value of your Common Shares. See — ‘‘Recent Developments, Section 4.1.2’’; see also the Shareholders Agreement for a complete statement of the obligations of the Company under that agreement.

Copper is the principal raw material we use, accounting for a majority of the cost of sales. We purchase copper at prices based on the average prevailing international spot market prices on the London Metal Exchange (the ‘‘LME’’) for copper for the one month prior to purchase. The price of copper is influenced heavily by global supply and demand as well as speculative trading. As with other costs of production, changes in the price of copper may affect the Company’s cost of sales. Whether this has a material impact on our operating margins and financial results depends primarily on the Company’s ability to adjust charges to its customers, such that increases and decreases in the price of copper are fully reflected in those charges. The selling price of our products is based in part on the cost of copper used to manufacture those products. In addition, in the ordinary course of business we maintain inventories of raw materials and finished products reasonably necessary for the conduct of our business. These inventories typically reflect the cost of copper prevailing in the market at the time of purchase. Most of our sales of manufactured products reflect copper prices prevailing at the time the products are ordered. A long-term decrease in the price of copper would require the Company to revalue the value of its inventory at periodic intervals to the then net realizable value, which could be below cost. Copper prices have been subject to considerable volatility and it is not always possible to manage our copper purchases and inventory so as to neutralize the impact of copper price volatility. Accordingly, significant volatility in copper prices could have an adverse effect on our operations. No assurance can be given that such volatility will not continue to recur. See — ‘‘Risks Relating to Copper, Section 11.3’’ for additional information.

Changes in exchange rates influence our results of operations. Our principal operations are located in Thailand, Singapore and China and a substantial portion of our revenues is denominated in Baht, Singapore dollars or Renminbi. Nearly all of the raw materials for these operations are imported and paid for in U.S. dollars and a substantial portion of our future capital expenditures are expected to be in U.S. dollars. We require a significant amount of U.S. dollars for our ongoing equipment upgrade and maintenance programs. Any devaluation of the Baht, the Singapore dollar or Renminbi against the U.S. dollar would increase the effective cost of foreign manufacturing equipment and the amount of foreign currency denominated expenses and liabilities and would have an adverse impact on our operations. Forward foreign exchange contracts are used on a selective basis to hedge foreign exchange risk, but they do not provide any assurance that we will not incur substantial losses in the event of a devaluation of the Baht, Singapore dollar or Renminbi against the U.S. dollar.

Although our reporting currency is U.S. dollars, the functional currency of our Singapore operations, which accounted for 15.0% and 12.5% of Company sales (including sales of Distributed Products) in 2005 and 2006, respectively, is the Singapore dollar, the functional currency of our Thai operations, which accounted for 44.2% and 45.3% of our sales in 2005 and 2006, respectively, is the Baht, and the functional currency of our Chinese operations, which accounted for 30.5% and 31.7% of our sales in 2005 and 2006, respectively, is the Renminbi. Accordingly, the functional currency accounts of these operations are translated into U.S. dollars utilizing, for the year, the balance sheet exchange rate for balance sheet accounts, and an average exchange rate for the year for the income statement accounts. Such translation of the functional currency accounts is recognized as a separate component of shareholders’ equity. Any devaluation of the Baht, Singapore dollar or Renminbi against the U.S. dollar would adversely affect our financial performance measured in U.S. dollars.

Substantially all of the revenues of our operations in China are denominated in Renminbi. The value of the Renminbi against the U.S. dollar and other foreign currencies fluctuates and is subject to changes in the Chinese and international political and economic conditions. From 1994 to July 20, 2005, the conversion of Renminbi into foreign currencies, including U.S. dollars, was based on rates set by the People’s Bank of China daily based on the previous business day’s inter-bank foreign exchange market rates and current exchange rates on the world financial markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On the same day, the value of the Renminbi appreciated by approximately 2% against the U.S. dollar. The PRC government has since made and in the future may make further adjustments to the exchange rate system. Fluctuations in exchange rates may adversely affect the value, translated or converted into U.S. dollars, of our net assets, earnings and any declared dividends payable by our operating subsidiaries and joint ventures in China. We cannot assure you that any future movements in the exchange rate of the Renminbi against the U.S. dollar or other foreign currencies will not adversely affect our results of operations and financial condition.

For further information on our foreign exchange risks and certain exchange rates, see ‘‘Quantitative and Qualitative Disclosures about Market Risk: Foreign Currency Exposure, Section 11.1.’’

The wire and cable industry in the Asia Pacific region is highly competitive. Our competitors include a large number of independent domestic and foreign suppliers. Certain competitors in each of our markets have substantially greater manufacturing, sales, research and financial resources than we do. We and other wire and cable producers increasingly compete on the basis of product quality and performance, reliability of supply, customer service and price. To the extent that one or more of our competitors is more successful with respect to the primary competitive factors, our business could be

adversely affected. See ‘‘Competition, Section 4.2.6’’ for additional information with reference to the competitive environment we face in specific countries.

We engage in transactions in the ordinary course of business with PEWC, including the purchase of certain raw materials and the distribution of PEWC products in various countries in the Asia Pacific region. We and PEWC have entered into a composite services agreement dated November 7, 1996, as amended and supplemented (the ‘‘Composite Services Agreement’’), which contains provisions that define our relationship and the conduct of our respective businesses and confers certain preferential benefits on us. The Composite Services Agreement is renewable at our option and is currently in force. However, we are unable to predict whether PEWC would, at some future date, seek to limit the business it conducts with the Company pursuant to the terms of the Composite Services Agreement.

We conduct substantial business operations in China. Accordingly, our results of operations and prospects are likely to be materially impacted by economic, legal and other developments in China.

In recent years, the PRC government has implemented economic reform measures emphasizing decentralization, utilization of market forces in the development of the economy and a high level of management autonomy. While such economic reform measures are generally viewed as a positive development for foreign businesses investing or establishing operations in China, the reforms are at an early stage and there is not sufficient administrative or judicial precedent to permit the Company to determine with any degree of certainty how the reforms will impact our business in China.

The Chinese legal system is a civil law system based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the central government has promulgated laws and regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. In particular, legislation over the past decades has significantly enhanced the protections afforded to various forms of foreign investment in China. As foreign investment laws and regulations in China are relatively new and because of the limited volume of published decisions and their non-binding nature, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit the remedies available to us in the event of any claims or disputes with third parties. In addition, any litigation in China may be protracted and could result in substantial costs and diversion of resources and management attention.

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade related transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange (‘‘SAFE’’) by complying with certain procedural requirements. However, approval from SAFE or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. Shortages in the availability of foreign currency may restrict the ability of our subsidiaries in the PRC to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated obligations.

In addition, the PRC government has considerable control over the structure and overall development of the telecommunications industry in the PRC. Purchasers of our telecommunications cable in China are subject to extensive regulation by and under the supervision of the Ministry of Information and Industry (the ‘‘MII’’), which is the primary telecommunications industry regulator in China. The MII is responsible for formulating policies and regulations for the telecommunications industry, granting telecommunications licenses, allocating frequency spectrum and numbers, formulating interconnection and settlement arrangements between telecommunications operators, and

enforcing industry regulations. Other PRC governmental authorities also regulate tariff policies, capital investment and foreign investment in the telecommunications industry. As a result of its accession to the World Trade Organization (‘‘WTO’’) and the adoption of the Regulations on the Administration of Foreign-Invested Telecommunications Enterprises in January 2002, which implement its commitments to the WTO, the Chinese government has agreed to gradually liberalize the various segments and regions of the telecommunications market to foreign telecommunications operators. Currently, however, the MII has only granted licenses to operate fixed-line telecommunications networks (which use our telecommunications cables) to certain domestic entities. As a result, the business of our companies in China may be more dependent on the political stability of the country than if there were more consumers of telecommunications cable and if the government-related entities were not so closely involved in the telecommunications industry. Future changes to the regulations and policies governing the telecommunications industry in China, including possible future industry restructurings, may have a material adverse effect on our business.

Political or social instability in China could also adversely affect our business operations or financial condition. In particular, adverse public health epidemics or pandemics in China could not only interfere with our ability to operate our PRC subsidiaries, but could also affect the country’s overall economic growth, which could in turn affect the sales of our products in China.

A substantial portion of our Thai operations, which accounted for approximately 44.2% and 45.3% of our net sales in 2005 and 2006, respectively, consists of the manufacture of telecommunications and power cable and sales of those products for use in large-scale telecommunications projects and various construction projects in Thailand. As a result, our future performance will depend in part on the political situation in Thailand and the general state of the Thai economy. In recent years the Thai economy has been highly cyclical and volatile, depending for economic growth in substantial part on a number of government initiatives for economic expansion. However, the Baht remains volatile and subject to significant fluctuations in relation to the U.S. dollar. Such fluctuations in the value of the Baht may negatively impact our performance. The Baht traded in the range of approximately Baht 38.21 to Baht 42.08 to US$1 in 2005 and Baht 35.19 to Baht 40.76 to US$1 in 2006.

Our fiber optic and copper-based telecommunications business is subject to competition from other transmission technologies, principally wireless-based technologies. Fiber optic cable is presently being used in telecommunications trunks and feeder cable businesses and minimally in the access cable business. In the Asia Pacific markets where we compete, wireless telecommunications businesses have sometimes made substantial inroads in early emerging markets where sufficient funding may not then be available to install the infrastructure necessary for market-wide fixed line telecommunications. In addition, the ease of use of wireless telecommunications may make that medium an attractive alternative in circumstances where access to fixed line telecommunications is limited. While these technologies do present significant competition in the markets in which we conduct or plan to conduct business, the Company believes that demand for its fixed wire products will remain strong. However, no assurance can be given that the future development and use of such alternative technologies will not adversely affect our results of operations.

3.3.15 Holding Company Structure; Potential Restrictions on the Payment of Dividends

We have no direct business operations other than our ownership of the capital stock of our subsidiaries and joint venture holdings. While we have no present intention to pay dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet our other obligations will depend upon the amount of distributions, if any, received from our operating subsidiaries and other holdings and investments. Our operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants contained in loan agreements, restrictions on the conversion of local currency earnings into U.S. dollars or other hard currency and other regulatory

restrictions. For example, PRC legal restrictions permit payments of dividends by our business entities in the PRC only out of their retained earnings, if any, determined in accordance with relevant PRC accounting standards and regulations. Under PRC law, such entities are also required to set aside a portion of their net income each year to fund certain reserve funds. These reserves are not distributable as cash dividends. The foregoing restrictions may also affect our ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary. See — ‘‘Consolidation of Charoong Thai Group Accounts, Section 3.3.3’’.

We are subject to risks specific to our international business operations, including: the risk of supply disruption, production disruption or other disruption arising from the outbreak of highly infectious or communicable diseases such as Severe Acute Respiratory Syndrome; the risk of potential conflict and further instability in the relationship between Taiwan and the PRC; risks related to international political instability and to the recent global economic turbulence and adverse economic circumstances in Asia; unpredictable consequences on the economic conditions in the U.S. and the rest of the world arising from terrorist attacks, such as the attacks of September 11, 2001 in the U.S. and other military or security operations; unexpected changes in regulatory requirements or legal uncertainties regarding tax regimes; tariffs and other trade barriers, including current and future import and export restrictions; difficulties in staffing and managing international operations in countries such as Singapore, the PRC, Thailand and Taiwan; risks that changes in foreign currency exchange rates will make our products comparatively more expensive; limited ability to enforce agreements and other rights in foreign countries; changes in labor conditions; longer payment cycles and greater difficulty in collecting accounts receivable; burdens and costs of compliance with a variety of foreign laws; limitation on imports or exports and expropriation of private enterprises; and reversal of the current policies (including favorable tax and lending policies) encouraging foreign investment or foreign trade by our host countries. Although we have not experienced any serious harm in connection with our international operations, we cannot assure you that such problems will not arise in the future.

We are incorporated in and organized pursuant to the laws of Bermuda. In addition, most of our directors and officers reside outside the United States and a substantial portion of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon such persons or to realize against them in courts of the United States upon judgments predicated upon civil liabilities under the United States federal securities laws. We have been advised by our legal counsel in Bermuda, Appleby, that there is doubt as to the enforcement in Bermuda, in original actions or in actions for enforcement of judgments of United States courts, of liabilities predicated upon U.S. federal securities laws, although Bermuda Courts will enforce foreign judgments for liquidated amounts in civil matters subject to certain conditions and exceptions.

This Annual Report, including any documents incorporated by reference, contains statements that we believe constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements appear throughout this Annual Report and include statements regarding the intent, belief or current expectations of the Company and its management, including with respect to trends affecting the Company’s financial condition or results of operations and the Company’s plans with respect to capital expenditures and investments. These forward looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those described in these forward looking statements as a result of various factors. See — ‘‘Risk Factors, Section 3.3’’ for a further discussion of some of the factors that could cause such material differences.

The Company (Asia Pacific Wire & Cable Corporation Limited), formed on September 19, 1996, is a Bermuda exempted limited liability company which, through its operating subsidiaries, is principally engaged in the manufacture and distribution of telecommunications (copper and fiber optic) and power cable and enameled wire products in the Asia Pacific region, primarily in Singapore, Thailand, Australia and China. The Company manufactures and distributes its own wire and cable products and also distributes copper rod and wire and cable products (‘‘Distributed Products’’) manufactured by its principal shareholder, PEWC. From 1997, the Company has also offered project engineering services in the supply, delivery and installation (‘‘SDI’’) of power cables. Pacific Electric Wire & Cable Company, a Taiwanese company (‘‘PEWC’’), currently owns beneficially 55.4% of the issued and outstanding Common Shares of the Company. Sino-JP Fund Co., Ltd. is a privately owned investment company, incorporated under the laws of the Cayman Islands. From September 10, 2004 until September 14, 2005, Sino-JP owned 10,074,102 Common Shares of the Company, representing 72.84% of the issued and outstanding Common Shares. From September 14, 2005 until June 28, 2007, Sino-JP owned 2,766,154 shares of the Company, representing 20% of the issued and outstanding Common Shares. On June 28, 2007, SOF Capital, L.P. acquired from Sino-JP the 20% of the issued and outstanding Common Shares previously held by Sino-JP. See — ‘‘Recent Developments, Section 4.1.2’’; ‘‘Legal Proceedings, Section 8.1.’’ The remaining 24.6% of the issued and outstanding Common Shares are publicly traded on the Pink Sheets in the United States under the trading symbol ‘‘AWRCF.’’

The Company is one of the five largest producers of telecommunications and low voltage power cable and enameled wire in Thailand and believes that it is the largest producer of low voltage power cable in Singapore. Approximately 54.4% in 2005 and 55.0% in 2006 of the manufactured products sold by the Company were sold by its subsidiaries in Singapore and Thailand, with the remainder sold by its subsidiaries in China, Australia and Malaysia.

In Singapore, the Company also sells Distributed Products, which largely consist of copper rod and medium and high voltage power cable. Sales of Distributed Products accounted for 5.9% and 2.7% of the Company’s revenues in 2005 and 2006, respectively. As the Company continues to focus its resources on manufacturing and distributing its own products, sales of Distributed Products are expected to decline over time as a percentage of the Company’s business. The Company’s SDI project engineering services accounted for 4.7% and 3.5% of the Company’s revenue in 2005 and 2006, respectively.

The Company sells its cable products primarily to government agencies, telecommunications network operators and large construction companies and subcontractors bidding for government contracts. Telecommunications cable products manufactured by the Company are largely used as access lines to connect buildings and residences to feeder and trunk cables. Power cable manufactured by the Company is used primarily in power transmissions for public lighting, outdoor installations and in and to commercial and residential buildings. Enameled wire is sold primarily to private sector manufacturers of electric motors for use in various consumer appliances. The Company maintains local sales personnel in each country where it has manufacturing operations, and export sales are conducted through independent suppliers as well as the Company’s own sales personnel. The Company principally competes on the basis of product quality and performance, reliability of supply, timely delivery, customer service and price.

In September 2005, the Company relocated its executive business office from Singapore to Taipei, Taiwan. It is presently located at Room B, 7/Fl., No. 132, Sec. 3, Min-Sheng East Road, Taipei, 105 Taiwan, ROC. The Company’s registered office is located at Canon’s Court, 22 Victoria Street, Hamilton HM EX, Bermuda, telephone number (441) 295-2244.

As of December 31, 2004, Sino-JP Fund Co., Ltd. (‘‘Sino-JP’’) held 10,074,102 shares, representing approximately 72.84% of the outstanding Common Shares (the ‘‘Supramajority Shares’’). Sino-JP acquired its shares of the Company pursuant to an assignment from Asset Managers Co., Ltd. (‘‘AMC’’). The Supramajority Shares were acquired by AMC pursuant to a Share Purchase Agreement dated as of September 10, 2004 (the ‘‘2004 Share Purchase Agreement’’) by AMC and Pacific Electric Wire & Cable Co., Ltd. (‘‘PEWC’’). The 2004 Share Purchase Agreement, and a related Option Agreement dated September 10, 2004 (the ‘‘2004 Option Agreement’’) were entered into in connection with a settlement of certain litigation commenced by PEWC against Set Top. In connection with that settlement, Set Top was paid $25,000,000 by AMC in exchange for the ownership interest in and all claims relating to the Supramajority Shares. Upon the consummation of the 2004 Share Purchase Agreement, PEWC, which formerly held 75.4% of the outstanding Common Shares, held indirectly approximately 2.56% of the outstanding Common Shares. Under the terms of the 2004 Option Agreement, PEWC was granted an option to reacquire 52.84% of the total issued and outstanding Common Shares (the ‘‘Repurchase Option’’). See — ‘‘Legal Proceedings, Section 8.1.’’

In accordance with the provisions of the 2004 Share Purchase Agreement, Sino-JP had caused the Bye-laws of the Company to be amended to establish a classified board of directors, consisting of up to three (3) Class A Directors and up to seven (7) Class B Directors. Sino-JP and its affiliates were entitled to designate candidates for election as the Class A directors, who, under the terms of the revised Bye-laws, had a veto power over all matters presented to the Board of Directors of the Company for a vote.

On September 14, 2005, PEWC exercised the Repurchase Option and reacquired 7,307,948 Common Shares (the ‘‘Repurchased Shares’’), representing 52.84% of the total issued and outstanding Common Shares, for a price of $2.581 per share, or a total purchase price of $18,861,813.78, plus certain guaranteed returns payable by PEWC to Sino-JP. As a result of the reacquisition by PEWC of majority control, PEWC indirectly holds 7,664,615 Common Shares, representing 55.4% of the total issued and outstanding Common Shares and Sino-JP then held 2,766,154 Common Shares, representing 20% of the total issued and outstanding Common Shares (the ‘‘Sino-JP Shares’’).

Commencing in 2004, the banking group creditors of PEWC, consisting of a consortium of 32 banks (the ‘‘PEWC Banking Group’’), represented by Chiao Tung Bank, exercised control over any material expenditures by PEWC. Funding the exercise of the Repurchase Option required the approval of the PEWC Banking Group, which imposed certain conditions on the exercise of the Repurchase Option. Among the conditions, PEWC was required to enter into a letter of undertaking (the ‘‘PEWC Letter of Undertaking’’) which provides that (i) the funds made available would be used only to buy the Repurchased Shares, (ii) as indirect majority shareholder, PEWC would cause the Board of Directors of APWC to consist of a majority of independent directors, with the Banking Group having the right to consent to nominees for any independent directorships, (iii) PEWC shall deposit the Repurchased Shares in a trust to secure the obligations of PEWC to the PEWC Banking Group and (iv) PEWC shall make monthly installments through September 2006 in repayment of debt owed to the PEWC Banking Group.

in Bermuda in the name of, CTB. In addition to the Repurchased Shares, the trust assets include all dividend and voting rights; provided that PEWC was permitted to direct the voting of the Repurchased Shares unless and until there is a default under the PEWC Letter of Undertaking. In the event of a default by PEWC under the PEWC Letter of Undertaking, which includes a default for three consecutive months under the agreements with the PEWC Banking Group, CTB was permitted to dispose of all of the Repurchased Shares and apply the proceeds to pay the PEWC Banking Group or CTB could exercise all voting rights associated with the Repurchased Shares.

In May 2006, the PEWC Banking Group determined that PEWC had or was in a position to fulfill the requirements with respect to the PEWC Letter of Undertaking. Therefore, on June 6, 2006, CTB, on behalf of the PEWC Banking Group, delivered a letter instructing the termination of the PEWC Trust Agreement and authorizing the registration of the repurchased Shares on behalf of PEWC without any pledge or encumbrance in favor of the PEWC Banking Group.

Following the closing of the SOF Acquisition and the entering into the Settlement Agreement with Sino-JP, the Board called for an annual general meeting of shareholders which was held on September 7, 2007 (the ‘‘2007 AGM’’). At the 2007 AGM, the shareholders approved, among other things, the reappointment of Ernst & Young LLP to complete its audit of the consolidated financial statements of the Company for the year ended December 31, 2004 and the appointment of Moores Rowland International – Singapore (which now does business under the name Mazars Moores Rowland LLP) to act as the independent auditors of the Company for fiscal years 2005, 2006 and 2007.

On March 18, 2005, independent director Tim Wong resigned from the Board, followed by independent director Charles Xue, who resigned on March 22, 2005. They were replaced on March 24, 2005 by Ulyos Maa and Jimmy Tsay. Thereafter, Jack Sun, Andy Cheng and David Sun resigned from the Board on October 14, 2005. Independent director Ulyos Maa also resigned on October 14, 2005. Christopher Cheng was appointed on April 6, 2006 to replace Mr. Maa, along with three other directors, Ching Rong Shue, Gai Poo Lee and Fang-Hsiung Chen. On June 29, 2006, Jimmy Tsay resigned from the Board, followed by Christopher Cheng on July 3, 2006. On June 28, 2007, Eric Chi Chiu Yip, Wellen Sham and Ryoji Furukawa, who were director-designees of Sino-JP, resigned from the Board. On the same date, Andy Cheng, Jack Sun and David Sun were re-appointed to the Board.

At an annual meeting on September 7, 2007 (the ‘‘2007 AGM’’), shareholders of the Company voted to change from a classified to an unclassified Board, composed of eight shareholder-elected directors and two casual vacancies to be filled after the meeting. As of the date of the filing of this Annual Report, the Board consists of ten members. The following eight members were elected by

shareholders at the 2007 AGM: Michael Lee, Andy C.C. Cheng, David T. Sun, Jack T. Sun, Gai Poo Lee, Ching Rong Shue, Fang-Hsiung Cheng and Yuan Chun Tang.

Certain current Board members have relationships with PEWC. Directors Ching Rong Shue and Gai Poo Lee are Vice Presidents of PEWC, and Fang-Hsiung Cheng is an Assistant Vice President of PEWC.

At a Board meeting held on September 28, 2007, the Board appointed Mr. Samuel See as interim chief financial officer. In addition, the Board filled the two casual vacancies on the Board by appointing Mr. Anson Chan and Dr. Yichin Lee to be independent directors of the Company and to constitute the audit committee of the Board, with Mr. Anson Chan to serve as its chairman. In addition, the Board agreed to appoint Mr. Wei Gong as deputy chief operating officer, to be based in Bangkok at the offices of Charoong Thai. Mr. Gong works with current chief operating officer, Mr. Carson Tien.

In late 2004 and continuing into 2005, the Board of Directors determined to undertake an internal review regarding certain past financial and accounting practices. The Company retained an internationally-recognized forensic accounting firm as outside advisors to assist in the conduct of the internal review.

The focus of the investigation included certain internal control weaknesses and other matters, including:

As a result of the internal investigation, certain members of management at one of the Company’s subsidiaries in China, Ningbo Pacific Cable Company Limited (‘‘NPC’’), were terminated. The Board has determined that, in a number of instances, management at NPC and one or more other subsidiaries in China failed to exercise satisfactory supervision over financial and accounting practices, engaged in transactions without an adequate business purpose and did not exercise good business judgment. In 2006, the Board determined to cease operations at NPC due to the dim prospects in the near to medium term for reversal of losses and a turn to profitability.

Management and the Company’s forensic accounting advisors concluded that there were many instances of inadequate supervisory and internal controls at several of the significant operating subsidiaries and that there existed a widespread failure to establish and implement disclosure controls and procedures sufficient to ensure that material information relating to the Company is disclosed to senior management by others within the corporate group. Management concluded that the failure to have effective disclosure controls and procedures had a material adverse effect on the financial results of certain operating subsidiaries, particularly in the case of NPC located in China where the Company determined to cease operations in part due to the failures and misconduct of local management.

measures taken include engaging external consultants to advise on risk control and internal audit functions and to assist in achieving compliance with applicable regulatory requirements, sending staff for training on U.S. GAAP accounting, employing more staff progressively to strengthen the accounting, finance and internal audit departments, implementing credit control policies at certain subsidiaries, and commencing the process of documenting policies and procedures governing the Company’s accounting policies, internal control and code of conduct.

While the Company has undertaken the steps summarized above as part of its efforts to establish and maintain satisfactory disclosure controls and procedures, this process has not been completed. The Company cannot now offer any assurances to its shareholders that satisfactory disclosure controls and procedures will be successfully established and maintained. The certifications provided as part of this Annual Report by our Chief Executive Officer and by our Chief Financial Officer are subject to and qualified by the disclosures and discussion in this Annual Report on the lack of adequate disclosure controls and procedures.

The Company’s Thai operations are conducted through Charoong Thai Wire and Cable Public Company Limited (‘‘Charoong Thai’’), Siam Pacific Electric Wire & Cable Company Limited (‘‘Siam Pacific’’) and Pacific-Thai Electric Wire & Cable Co. Ltd. (‘‘Pacific Thai’’).

Charoong Thai is a publicly-traded Thai corporation, the shares of which are listed on the Stock Exchange of Thailand (‘‘SET’’). Immediately after the acquisition of Siam Pacific by Charoong Thai, the shareholders of Charoong Thai consisted of the Company (68.42%), Ital-Thai (16.90%) and Bangkok Insurance (5.31%). The rest of the shares are publicly traded on the SET. After the sale of some of its Charoong Thai shares on the open market, the Company held approximately 52.43% of the issued and outstanding shares of Charoong Thai as of December 31, 2005. As of December 31, 2006, the Company owned approximately 50.39% of the issued and outstanding shares of Charoong Thai, with the decrease in the Company’s percentage ownership being attributable to the exercise of warrants or conversion of convertible securities by third parties. The Company’s present intention is to maintain majority ownership of the voting securities of Charoong Thai. Charoong Thai manufactures aluminum and copper electric wire, medium and high voltage power cable and telecommunications cable. It has subsidiaries and affiliates in the business of optic fiber cable manufacturing and the provision of telecommunication and network services.

Siam Pacific is a 100%-owned subsidiary of Charoong Thai. Siam Pacific manufactures telecommunications cable, power cable and enameled wire for the domestic Thai market.

Pacific Thai is a 100%-owned subsidiary of Siam Pacific. Pacific Thai manufactures enameled wire for the export market.

The Company’s Singapore operations are principally conducted through its 98.3%-owned subsidiary, Sigma Cable Company (Private) Limited (‘‘Sigma Cable’’). Sigma Cable manufactures low voltage power cable for sale and distribution in Singapore and countries in the Asia Pacific region. Sigma Cable also distributes in Singapore a wide range of wire and cable products produced by PEWC and provides SDI project engineering services.

The Company had a 100% interest in Sigma-Epan International Pte. Ltd. (‘‘Sigma-Epan’’), a group of companies with operations in Singapore and Malaysia. Sigma-Epan group had its headquarters in Singapore. Sigma-Epan manufactured specialty cables and assembled cable harnesses for the electronics, computer, building automation, audio and communication industries. Sigma-Epan ceased operations as of May 2007.

The Company holds a 98.53% effective interest in Australia Pacific Electric Cables Pty Limited (‘‘APEC’’), a subsidiary of Sigma Cable, located near Brisbane, Australia. APEC is one of three major wire and cable manufacturers in Australia. The company produces a range of power cables, which is supplemented by imports from overseas sister companies. APEC possesses a substantial marketing and distribution infrastructure with a network of sales offices and warehouses in the major capital cities of Brisbane, Sydney, Melbourne and Perth.

During fiscal year 2006, the Company’s China operations were conducted through seven business entities. The operating entities included Ningbo Pacific Cable Co. Ltd. (‘‘NPC’’), a telecommunications cable manufacturing joint venture located in Ningbo Yin County, Zhejiang Province in eastern China, in which the Company owned a 94.31% interest. The other owner of NPC was China Ningbo City Yin County Yinjiang Town Industrial Corporation (‘‘CIC’’). NPC manufactured a range of telecommunications cable and local area network (‘‘LAN’’) electronic cables for sale and distribution in the Chinese domestic market and export market.

NPC’s performance since 1997 was below the Company’s expectations due primarily to difficulties faced in marketing its products and market penetration in China. The Company’s 2002 results included a write off of approximately $1.5 million in the carrying value of the telecommunication cable machinery at NPC. In 2006, the Company determined to cease operations at NPC, as it concluded that the prospects for reversing the losses and achieving profitability were too remote.

Shanghai Yayang Electric Co., Ltd. (‘‘Shanghai Yayang’’), formerly known as Shanghai Pacific Electric Co., Ltd., is a joint venture in Shanghai incorporated in June 1998 to manufacture enameled wire. The Company’s effective holding in Shanghai Yayang is 53.90%. Shanghai Yayang is also partly held by Pacific Thai. Shanghai Yayang manufactures enameled wire with a diameter of between 0.05mm and 2.5mm.

Shangdong Pacific Fiber Optics Cable Co., Ltd. (‘‘SPFO’’) is a joint venture company in Yanggu County, Shandong Province, China. SPFO was established to manufacture fiber optic cables for the China market. The Company owns a 51.0% interest in SPFO, with the remaining interest owned by the joint venture partner, Shandong Yanggu Cable Company (‘‘Shandong Yanggu’’), an established cable manufacturer in Shandong Province that produces a wide range of cable products and is considered one of the leading cable producers in China.

On June 30, 2001, the Company invested approximately $1.2 million for a 25.0% interest in an existing profitable company, Shandong Pacific Rubber Cable Company, Ltd. (‘‘SPRC’’), which manufactures rubber cable for the China market. The remaining 75% is owned by Shandong Yanggu. The investment was in the form of a contribution of machinery and cash.

On August 18, 2001, a joint-venture agreement was signed with Shandong Yanggu to establish Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. (‘‘SHP’’) for the manufacture of optic fibers. The Company owns 49% of SHP with the remaining 51% owned by Hebei Huayu Co. Ltd. (as the successor in interest to Shandong Yanggu). Due to the subsequent deterioration of the fiber optic market price, the plant has yet to be completed and production date has yet to be announced. The actual commencement of operations, if it occurs at all, will depend on our ongoing assessment of market conditions. In 2004 and 2005, the Company took a $1.3 million and $0.2 million impairment loss, respectively, on the SHP investment to reflect that assessment. In 2007, the Company sold all major equipment owned by SHP.

On March 22, 2002, the Company acquired two companies, namely, Crown Century Holdings Limited (‘‘CCH’’) and its wholly-owned subsidiary company, Pacific Electric Wire & Cable (Shenzhen) Co., Ltd. (‘‘PEWS’’) from PEWC, the majority shareholder of the Company. The acquisition was in exchange for 3,097,436 new shares of the Company issued to PEWC. PEWS manufactures enameled wire for electronic, video and audio products for the South China market and for export. CCH is the trading arm of PEWS. The operations of PEWS and CCH have been profitable since 1999 and have contributed to the profits of the Company in 2005 and 2006.

The Company manufactures and sells a wide variety of wire and cable products primarily in four general categories: telecommunications cable, power transmission cable, enameled wire and electronic cables. The Company’s telecommunications and power cables are used in a range of infrastructure projects and in commercial and residential developments. The Company’s enameled wire is used in the manufacturing of components and sub-components of household appliances and small machinery. The electronic cables, which include cable harnesses, are used in the electronics, computer, building automation, audio and communication industries. In addition, the Company acts as the Singapore

distributor of copper rod and wire and cable products manufactured by PEWC. The Company also offers SDI project engineering services of medium and high voltage cable for power transmission projects in Singapore.

The Company produces a wide range of bundled telecommunications cable for telephone and data transmissions with different capacities and insulations designed for use in various internal and external environments principally as access cable to connect buildings and residents to trunk cables. Telecommunications cables produced by the Company include copper-based and fiber optic cables.

Copper-based cables contain twisted pairs of insulated copper wire, each pair color-coded and corresponding to one telecommunications line. The cables are produced with different insulators such as polyethylene (‘‘PE’’), polyvinyl chloride (‘‘PVC’’) and foam skin, suitable for different installations and environmental conditions. The Company manufactures telecommunications cable with capacities and sizes ranging from 25 to 3,000 pairs of 0.4 mm-diameter wire to 10 to 600 pairs of 0.9 mm-diameter wire.

The Company produces a range of armored and unarmored low-voltage power transmission cable. Low-voltage power cable, generally considered to be cable with a capacity of 1 to 3.3 kilovolts, is typically used to transmit electricity to and within commercial and residential buildings, as well as to outdoor installations such as street lights, traffic signals and other signs. Armored low-voltage power cable is usually used for public lighting and power transmission running to buildings and installed either above or below ground. Unarmored low-voltage cable is mainly used as lighting and power supply cable inside and outside of buildings. The voltage capacity of the Company’s power cables range from 300 volts to one kilovolt.

Unarmored cable is composed of one or more cores of copper wire, insulated by substances such as PVC. Armored cable is produced in the same range of configurations as unarmored cable, but with the addition of an outer layer of galvanized steel or iron wires to protect the cable from damage.

The Company also produces several varieties of enameled wire. Enameled wire is copper wire varnished, in an enameling process, by insulating materials. The enameling process makes the wire more resistant to oil, heat, friction and fusion, and therefore suitable for use in machinery and components and sub-components of manufactured goods. The Company manufactures enameled wire in sizes that range from 0.02 mm to 4.00 mm in diameter, varnished by various types of petroleum insulation materials including polyvinal formal, polyurethanea wire and polyester, among others. Enameled wire products are used in the assembly of a wide range of electrical products, including oil-filled transformers, refrigerator motors, telephones, radios, televisions, fan motors, air conditioner compressors and other electric appliances.

The Company produces a wide range of electronic cables and related byproducts, which includes high specification telecommunication cables, data-communication cables, security cables, cable assemblies, fiber optic cables, local area network (‘‘LAN’’) patch-cords products and harness assembly. The products are used in the electronics, building automation, telecommunications and data-communications industries. The customers include government bodies, large construction companies, subcontractors bidding for government contracts and system integrators. These cables were produced by the Sigma-Epan group, which had manufacturing operations in Singapore and Malaysia.

The Company is also a distributor of copper rod and wire and cable products manufactured by PEWC. The leading PEWC products sold by the Company are medium and high voltage power cable

(with capacities ranging from 3.3 kilovolts to 69 kilovolts) and copper rod, with the vast majority of such sales made in Singapore. The PEWC products sold by the Company do not compete with the Company’s manufactured products.

Based on trends of government and private sector expansion and upgrading of residential and commercial buildings and infrastructure projects in Singapore, the Company anticipates demand for medium and high voltage power and for value added services in the power supply industry. To take advantage of these opportunities, the Company has developed its SDI project engineering capability. The SDI project engineering operations supply, deliver and install primarily medium and high voltage cable to power transmission projects in Singapore. After entering into a contract to supply, deliver and install cable for a power transmission project, the Company delivers medium and high voltage cables and enters into subcontracting agreements with local companies to install the cable as required by the project.

Copper rod is the base component for most of the Company’s products. The manufacturing processes for these products require that the rod be ‘‘drawn’’ and insulated. In the ‘‘drawing’’ process, copper rod is drawn through a series of dies to reduce the copper to a specific diameter. For certain applications, the drawn copper conductor is then plated with tin. Copper used in cable is covered with various insulating materials that are applied in an extrusion process. The insulated wires are then combined, or ‘‘cabled’’ to produce the desired electrical properties and transmission capabilities. Then, depending upon the cable, some form of protective cover is placed over the cabled wires.

A summary of the manufacturing process used for the Company’s primary wire and cable products is set forth below.

Production of telecommunications cable begins by drawing a copper rod until it has reached the desired diameter, after which the drawn wires are subjected to a process called ‘‘annealing’’ in which the wires are heated in order to make the wires softer and more pliable. Utilizing an extrusion process, which involves the feeding, melting and pumping of a compound through a die to shape it in final form as it is applied to insulate the wire, the wires are then covered by a PE or PVC compound in one of ten standard colors. In order to reduce the cross-talk between pairs of communication wires, the insulated wires are then ‘‘twinned’’ or twisted so that two insulated single wires are combined to create a color-coded twisted pair. The twisted pairs of wire are then ‘‘cabled’’ or ‘‘stranded’’ into units of 25 twisted pairs for combination with other 25 pair units to form cable of various widths and capacities. The appropriate number of units are cabled together after stranding to form a round cable core. Depending upon the planned environment, a petroleum jelly compound may then be added to fill the cable core to seal out moisture and water vapor. Aluminum or copper tape is used to ‘‘shield’’ the cable and, finally, the shielded cable core is covered by plastic outer sheathing.

Unarmored cable. Production of unarmored cable begins by drawing and annealing of copper rods. The drawn copper wires are then stranded or ‘‘bunched’’ into round or sector-shaped conductors in sizes ranging from 1.5 square millimeter to 1000 square millimeters. The copper conductors are then covered in an extrusion process with a plastic insulator such as a PVC, after which 2-5 conductors are twisted into a circular cable core in a cabling process and covered by a plastic outer cover.

Armored cable. Armored cable is produced in the same manner as unarmored cable, except that armored cable requires the addition of a helical wrap of galvanized steel or iron wires prior to the application of a final plastic outer cover.

Production of enameled wire begins by drawing the copper rods until they have reached the desired diameter, after which the drawn wires are annealed. The annealed wires are then varnished by

one or more types of petroleum-based insulation material. Up to 14 coats of varnish are applied, depending upon the intended application of the enameled wire.

Copper is the principal raw material used by the Company, accounting for approximately 60% and 70% of total cost of sales of products using copper as a conductor in 2005 and 2006, respectively. The Company purchases copper at prices based on the average prevailing international spot market prices on The London Metal Exchange (the ‘‘LME’’) for copper for the one month prior to purchase. The price of copper is influenced heavily by global supply and demand as well as speculative trading. As with other costs of production, changes in the price of copper may affect the Company’s cost of sales. Whether this has a material impact on the Company’s operating margins and financial results depends primarily on the Company’s ability to adjust charges to its customers, such that increases and decreases in the price of copper are fully reflected in those charges. Most sales of Company manufactured products reflect copper prices prevailing at the time the products are ordered. A long-term decrease in the price of copper would require the Company to revalue the value of its inventory at periodic intervals to the then net realizable value, which could be below cost.

The Company purchases copper in the form of rods and cathodes. Copper cathodes are thin sheets of copper purified from copper ore. Copper purchased by the Company in the form of cathodes must be sent to subcontractors to be melted and cast into the copper rods necessary for the manufacturing processes, for a processing fee equal to approximately 3.5% of the copper cathode purchase price. The Company presently relies on the services of Thai Metal Processing Co., Ltd. to process its copper cathodes into copper rods in Thailand, although the Company has a variety of processing companies from which to obtain these services. Construction of such a facility could also be an additional source of revenues and profit, to the extent that sales are made to unaffiliated parties. Copper rods are drawn into copper wire for the production of telecommunications cable, power cable and enameled wire.

The Company has historically purchased a substantial portion of its copper rods from PEWC. Under the Composite Services Agreement between the Company and PEWC, PEWC agreed to supply to the Company on a priority basis its copper rod requirements at prices at least as favorable as prices charged to other purchasers in the same markets purchasing similar quantities. PEWC continues to be the principal supplier of copper rods to the Company’s operations. Under the Company’s copper rod supply arrangements, orders will be placed between eight to ten weeks before the desired delivery date, with prices ‘‘pegged’’ to the average spot price of copper on the LME for the one month prior to delivery plus a premium.

The Company purchases copper cathodes, which are subject to a 1.0% import tariff, for use at its Thailand operations in order to avoid the higher import tariff of 5.0% on copper rods. The Company obtains copper cathodes from three major suppliers which import cathodes into the Thai market. These suppliers are Mitsubishi Corporation, Mitsui & Co (Thailand) and Marubeni Corporation. The Company has regularly signed one year contracts with each of its copper cathode suppliers pursuant to which the Company agrees to purchase a set quantity of copper cathodes each month. Under the terms of such contracts, the price of copper cathodes is usually ‘‘pegged’’ to the average of the spot price of copper on the LME for the delivery month plus a premium. The Company believes its relationships with its three copper cathode suppliers will allow access to alternative supplies in the event one or more of such suppliers was unable or unwilling to renew a supply contract on terms satisfactory to the Company, although the Company does not anticipate any change in relations in the near term.

The Company attempts to maintain approximately a three to five week supply of copper rods and cathodes for its Thai operations and approximately a two to four week supply in Singapore. The Company has never experienced a material supply interruption or difficulty obtaining sufficient supply of copper rod or cathode.

Other raw materials used by the Company include aluminum used as a conductor in power cable and petroleum-based insulation materials such as PE, PVC and jelly compounds for insulating covers

on cables and varnishes on enameled wire; aluminum foils for sheathing of communication cable; and galvanized steel wire for the production of armored wire. The Company has not had any difficulty in maintaining adequate supplies of these raw materials and expects to continue to be able to purchase such raw materials at prevailing market prices.

The Company is a major user of electric power and has not experienced any problem in obtaining a constant electricity supply in the past. The Company does not maintain any in-house power generating capacity.

Other than import tariffs in Thailand, the Company does not face any restriction or control on the purchase or import of its raw materials. The Company may freely choose its suppliers and negotiate the price and quantity of material with its suppliers. The Company formulates consumption plans for raw materials regularly and continually monitors market conditions in respect of the supply, price and quality of raw materials.

The Company places a significant emphasis on product quality. The Company has implemented a range of quality control procedures with stringent quality standards under the supervision of a dedicated quality control staff. Quality control procedures are implemented from the raw material to the finished product stages at each of the Company’s major production facilities. Raw materials are inspected to ensure they meet the necessary level of quality before production begins. During the manufacturing process, quality control procedures are performed at several stages of production. Upon completion, finished goods are brought to quality control centers set up in the factory for inspection and testing of different electrical and physical properties.

Depending on the requirements of its customers, the Company has the capability to manufacture its products to meet a variety of different quality and production standards. These include local standards and certifications, such as the Singapore Institute of Standards and Industrial Research Quality Mark and the Thailand Industrial Standard, as well as other standards including the National Electrical Manufacturers Association Standard, the British Standard, the Japan Industrial Standard and Underwriters Laboratories Inc. Standard, as applicable.

All the major companies in the group have attained International Standards Organization (‘‘ISO’’) 9002 international standards for quality management and assurance standards in the manufacture of electric wire and cable. In September 1994, Sigma Cable received an ISO 9002 certificate from the Singapore Institute of Standards and Industrial Research. Charoong Thai received its ISO 9002 certification in September 1996. Siam Pacific and Pacific Thai, the Company’s two major subsidiaries in Thailand, both achieved ISO 9002 certification in May 1997. The certifications mean that the companies have in place quality assurance systems and the capability to consistently manufacture products of quality.

The Company’s telecommunications cable and power cable products are primarily sold in the domestic markets of the countries where they are manufactured, whereas most of the enameled wire manufactured by the Company is exported to take advantage of Pacific Thai’s tax status exempting it from paying import duties on raw materials used in the manufacture of export product. The following table sets forth the Company’s sales revenues by geographic area for the periods indicated together with their respective percentage share of total sales revenue for such periods:


	Year ended December 31, (dollar figures ($) are in thousands of US$)
	2003					2004					2005					2006
	$		%			$		%			$		%			$		%
Manufactured Products:
Thailand		62,984		29.7	%		82,039		27.9	%		100,683		29.9	%		142,500		30.4	%
Singapore		12,514		5.9	%		16,887		5.8	%		14,968		4.4	%		29,440		6.3	%
Australia		22,058		10.4	%		30,491		10.4	%		34,831		10.3	%		49,134		10.5	%
China		60,606		28.7	%		91,243		31.0	%		102,797		30.5	%		148,502		31.7	%
Export		34,131		16.2	%		48,447		16.4	%		48,237		14.3	%		69,704		14.9	%
Total		192,293		90.9	%		269,107		91.5	%		301,516		89.4	%		439,280		93.8	%
Distributed Products⁽¹⁾		15,187		7.2	%		15,493		5.2	%		20,055		5.9	%		12,416		2.7	%
SDI Project Engineering⁽²⁾		3,919		1.9	%		9,656		3.3	%		15,691		4.7	%		16,421		3.5	%
Total net sales		211,399		100.0	%		294,256		100.0	%		337,262		100.0	%		468,117		100.0	%

Sales within Thailand and Singapore are made directly by the sales department of the Company’s local subsidiaries in accordance with terms and pricing set by the local subsidiaries. The local subsidiaries are also responsible for sales planning, marketing strategy and customer liaison. The Company’s sales staff is knowledgeable about the Company’s products and frequently must render technical assistance, consulting services and repair and maintenance services to the Company’s customers. In order to ensure quality service and maintain sensitivity to market conditions, the Company does not conduct sales through independent sales agents on a commission basis but uses its own sales employees located at the operating subsidiaries.

As copper constitutes the costliest component of the Company’s wire and cable products, the price of the Company’s products depends primarily upon the price of copper. In order to minimize the risk of copper price fluctuations, the Company attempts to determine the prices of its products based on the prevailing market price of copper. However, the Company may be affected, to a degree, in the short term by significant fluctuations in the price of copper.

Payment methods for the Company’s products vary with markets and customers. The majority of sales by the Company of its manufactured products require payment within 90 days, but may vary depending on the customer and payment record. Sales pursuant to a successful project tender or sales to governmental or public utilities are conducted in accordance with the tender or other applicable regulations. In connection with the distribution of medium and high voltage power cable manufactured by PEWC, the Company is required to pay PEWC 90% of the cost of the products either within 30 days of receipt of the product or, in the case of SDI products, upon installation, with the remaining 10% to be paid within one year. In connection with the purchase of copper rod, the Company is required to pay PEWC the cost of the copper rod within 30 days from obtaining the products from PEWC. For the export market, payment is usually made by prior delivery of an irrevocable letter of credit. Neither the Company nor its local subsidiaries offer financing for purchases of the Company’s products. The Company sells its products in the local currency of the country of sale. Company employees engaged in sales and marketing are paid a salary and may also receive a bonus based on performance.

Products are marketed under the respective names of each company. For instance, products manufactured by Siam Pacific are marketed under the ‘‘Siam Pacific’’ and ‘‘PTEWC’’ brands, both registered trademarks in Thailand; products manufactured by Sigma Cable are sold under the ‘‘Sigma Cable’’ brand.

The Company produces and sells telecommunications cable, enameled wire and power cable in Thailand. Sales of telecommunications cables, the Company’s leading product in Thailand, are conducted either by tender for participation in large scale telecommunications projects of the TOT Corporation Ple. (‘‘TOT’’), or directly to subcontractors of TT&T and True Corporation Ple., the two private telephone line contractors which would be licensed by TOT with regard to particular projects. Power cable (and a limited quantity of telecommunications cable) is generally sold to construction firms or contractors for use in infrastructure, commercial and residential construction projects. The Company generally sells enameled wire directly to manufacturers of electric motors for use in various consumer appliances. Enameled wire purchasers tend to be smaller businesses than those that purchase telecommunications and power cable. A small quantity of power and telecommunications cable and enameled wire is sold to general electrical products supply companies which then resell to end users.

The Company produces and sells low voltage power cable in Singapore. In addition, the Company sells a wide range of wire and cable products produced by PEWC. Power cables manufactured by the Company and PEWC are primarily sold to SP Powerassets, a quasi-public entity responsible for power delivery in Singapore, and to a large number of private contractors and construction firms. The Company also offers project engineering services for the SDI of medium and high voltage power cable to power transmission projects in Singapore.

Sales of Company manufactured products in 2005 and 2006, respectively, accounted for 29.5% and 50.5% of the Company’s net sales in Singapore; in 2005, sales of Distributed Products accounted for 39.6% with the remaining 30.9% comprised of SDI project engineering services, and in 2006, sales of Distributed Products accounted for 21.3% with the remaining 28.2% comprised of SDI project engineering services. In 2005, sales to SP Powerassets alone accounted for approximately 61.7% of the Company’s total sales in Singapore and 9.3% of the Company’s total aggregate sales. In 2006, sales to SP Powerassets alone accounted for approximately 54.2% of the Company’s total sales in Singapore and 6.7% of the Company’s total aggregate sales. Additionally, sales of SDI project engineering services to SP Powerassets in 2005 and 2006 accounted for all of the Company’s SDI sales. Approximately 46.4% of the sales to SP Powerassets in 2005 and 37.0% in 2006 were sales of Distributed Products, which sales have a low profit margin. Such sales are not made under a continuing contract, but pursuant to purchase orders placed from time to time with the Company by SP Powerassets. Although SP Powerassets is an important customer of the Company, neither the loss of Distributed Product sales to SP Powerassets, nor the loss of manufactured product sales to SP Powerassets, which the Company expects would be replaced by sales to other customers, would likely have a material adverse effect on the Company’s results of operations. Although the Company does not believe that it could easily replace its SDI sales to SP Powerassets by sales to other customers, SDI sales presently account for only 3.5% of the Company’s sales.

The Company produces and sells copper-based telecommunication cable, fiber optic cables and enameled wire in China. The Company’s China operations are conducted through seven business entities. Copper-based telecommunication cables and fiber optic cables are generally sold to the national, provincial or local offices of the fixed-line and mobile telecommunications network operators or sub-contactors of such agencies. The Company generally sells enameled wire directly to manufacturers of electric motors for use in various consumer appliances.

The Company’s main export markets are Hong Kong, Vietnam, India, China, Malaysia and Indonesia. Export sales are conducted by local agents or distributors of the Company in accordance with terms and prices negotiated between the local agent and the Company at the time of sale. In

Thailand, the Company’s principal export is enameled wire. In Singapore, the Company’s principal export is power cable. The Company does not actively pursue an export business in Singapore, but benefits from Singapore’s position as a trading center and makes export sales in response to buyer inquiries and solicitations. Total export sales accounted for 14.3% and 14.9% of net sales in 2005 and 2006, respectively.

The wire and cable industry in the Asia Pacific region is highly competitive. The Company’s competitors include a large number of independent domestic and foreign suppliers. Certain competitors in each of the Company’s markets have substantially greater manufacturing, sales, research and financial resources than the Company. The Company and other wire and cable producers increasingly compete on the basis of product quality and performance, reliability of supply, customer service and price. To the extent that one or more of the Company’s competitors is more successful with respect to the primary competitive factors, the Company’s business could be adversely affected.

The wire and cable industry in Thailand is highly competitive. In its various product lines, the Company competes with a total of approximately 30 local wire and cable manufacturers and, to a lesser extent, with foreign producers for sales in Thailand of telecommunications cable, power cable and enameled wire. Siam Pacific and Charoong Thai are two of the five largest wire and cable producers in Thailand and their principal competitors are the three other largest producers in Thailand. These five largest producers are the only producers of telecommunications cable approved by the Thai Industrial Standards Institute and, therefore, the only cable producers whose products may be used in government-commissioned projects. Stringent governmental approval processes, tariffs and other import restrictions have limited competition in the Thailand market from foreign wire and cable producers. The Company also experiences significant competition from a number of smaller producers with regard to sales of enameled wire products.

The Company principally competes with four other major wire and cable manufacturers in Singapore. Although the Company believes it is the largest manufacturer of low voltage power cable in Singapore, it experiences significant competition from other local producers.

There are no tariff or other barriers against foreign competition in the local Singapore market and potential competitors are free to enter the industry. However, because of high capital costs, the Company believes it is unlikely that there will be new domestic entrants to the wire and cable industry in Singapore in the near future.

Currently, besides APEC there are two major wire and cable producers in Australia: Olex Cables (owned by Pacific Dunlop) and Pirelli Cables, with factories in the states of Victoria and New South Wales respectively. Both are APEC’s principal competitors. In addition, General Cables is a major participant in the market. During fiscal years 2005 and 2006, APEC was the only power cable producer in Queensland and therefore sought to take advantage of other competitors importing into Queensland. APEC has also opened sales offices with warehousing facilities in Sydney, Melbourne and Perth in order to attract and service the customers in those regions. Foreign competition barriers exist with import duties and the more stringent Australian cable specifications standards. Free Trade Agreements have recently been signed with Singapore and Thailand.

PEWS manufactures enameled wire in the Shenzhen Special Economic Zone in Guangdong Province for electronic, video and audio products for the South China market and for export. CCH is

the trading arm of PEWS. PEWS is one of the largest enameled wire manufacturers amongst the six manufacturers in Shenzhen. It supplies mainly to transformer, motor and coil manufacturers in and around Shenzhen. It faces competition principally from overseas imports and local manufacturers.

Shanghai Yayang is the only major enameled wire producer in Shanghai and it supplies mainly to transformer, motor and coil manufacturers in Shanghai. It faces competition principally from overseas imports and manufacturers from other provinces.

SPFO is one of the largest manufacturers of fiber optic cables in Shandong Province and it supplies mainly to government controlled and licensed telecommunications network operators such as China Netcom, China Telecom, China Mobile, China Railcom, China Unicom and China Powercom. It faces competition principally from approximately twenty of the larger fiber optic cable manufacturers in China.

The Company exported approximately 16.0% and 15.9% of its manufactured products in 2005 and 2006, respectively. These products are principally sold through independent suppliers in competition with domestic and foreign manufacturers.

Since the Asian currency and financial crisis which began in mid-1997, confidence has gradually returned to countries in the Asia Pacific region. The financial and currency markets have significantly stabilized with financial and economic reforms instituted by the local governments with assistance from the International Monetary Fund. Overall, the economies of most countries in the Asia Pacific region have shown continued growth and, in general, their respective currencies have strengthened in recent years as against the U.S. dollar.

Economic growth in 2004 decreased to 6.1% from 6.7% growth recorded in 2003 as a result of modest decreases in private investment, domestic consumption and exports. Thailand GDP grew by 5.0% and 4.5% in 2006 and 2005 respectively. The World Bank projected Thai economic growth in 2007 to be approximately 4.3% followed by 4.6% in 2008. GDP figures were obtained from the World Bank website.

A substantial portion of the Company’s Thai operations, which accounted for approximately 44.2% and 45.3% of the Company’s net sales in 2005 and 2006, respectively, consists of the manufacture of telecommunications and power cable and sales of those products for use in large-scale telecommunications projects and various construction projects in Thailand. The volume of sales of these products tends to correlate with the general level of economic activity in Thailand. As a result, the performance of the Company’s Thai operations depends in part on the general state of the Thai economy. Infrastructure development and related construction projects in Thailand depend significantly upon government sponsored initiatives. In recent years, the level of government involvement in infrastructure development has tended to track increases or contractions in Thailand’s gross domestic product (‘‘GDP’’). Overall, the construction industry and infrastructure projects have slowed considerably, thereby affecting local sales, placing competitive pressure on prices and prompting the Company to rationalize Thai operations and actively seek overseas export markets.

Sales of the Company’s telecommunication products in Thailand have depended to a significant degree on the substantial investment in and development of the telecommunications sector by the Thai government. In particular, the Company’s sales of manufactured products are affected by the dollar value of contracts awarded by the government for telecommunications and other infrastructure projects.

Historically, control of the telecommunications sector in Thailand, including the right to grant concessions for the installation and operation of telecommunications services, has rested with state owned enterprises. There are currently three public agencies responsible for communications in Thailand: TOT, which controls domestic telephone service, the CAT Telecom Plc. (‘‘CAT’’), which handles postal and international telephone service, and the Thailand Post Co., Ltd. (a state enterprise), which controls and regulates the use of frequencies for radio communication stations and satellite communication networks. Telecommunications services in Thailand have traditionally been developed and expanded through grants by TOT and CAT of concessions to private operators to install and operate telecom projects on a build-transfer-operate basis, where the government enterprise involved would maintain control over the award of the concession and receive a profit share from the operations of the project.

In Thailand the prevailing historical trend has been that economic growth would stimulate rapid growth in the demand for electric power, and annual rates of growth in electricity demand would outpace annual economic growth rates. Despite the rapid growth in electricity demand, electricity consumption in Thailand remains low by international standards. The Company believes that, in the medium to longer term, there will be an increased demand for power supply which will lead to increased demand for the Company’s power cable products from both developers of power production facilities and contractors installing power supply lines.

The Singapore government reported that the economy grew 7.7% and 8.2% in 2007 and 2006 respectively. The economy expanded by 6.4% in 2005 and 8.8% in 2004. The growth was partially contributed by Singapore government efforts to re-set priorities and to attract and retain foreign investments. Much of the economy’s growth in 2006 came from increased exports of electronics, pharmaceuticals and chemicals. The Singapore government has projected lower growth of 4.0% to 6.0% in 2008 due to the expected U.S. economy slowdown.

The Singapore government has established targets to increase the population from the current 4.6 million in 2007 to approximately 6 million by the end of 2020. This planned growth in population is expected to result in an increase in demand for residential property and construction.

The economy of China differs from that of most developed free-market economies in a number of respects, including structure, degree of government involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate of inflation and balance of payments position. In recent years, the PRC government has implemented economic reform measures which emphasize decentralization, utilization of market forces and the development of foreign investment projects, of which SPFO and Shanghai Yayang are examples.

The Chinese economy is reported to have expanded by 10.7% and 10.2% in 2006 and 2005 respectively, as a result of fiscal stimulus and robust external demand. Exports and imports continue to surge. Fixed-asset investment, a crucial component of China’s economic growth, rose during the period partly as a result of increased public expenditure on infrastructure projects and technology upgrades of state-owned entities. The World Bank projected China economic growth in 2007 to be approximately 11.3% followed by 9.6% in 2008.

The Company’s Thai operations are conducted by Siam Pacific, which produces telecommunications cable, power cable and enameled wire for the domestic market, Pacific Thai, a specialized producer of enameled wire for the export market and Charoong Thai, which manufactures power telecommunications cables and, through its subsidiaries, provides telecommunication and network services. As of December 31, 2005, the Company owned effective 52.43% interests in Siam Pacific, Pacific Thai and Charoong Thai. By 2006, the Company’s effective ownership interest in those three entities had been reduced to 50.39%, with the decrease in the Company’s percentage ownership being attributable to the exercise of warrants or conversion of convertible securities by third parties. The Company’s present intention is to maintain majority ownership of the voting securities of Charoong Thai.

Siam Pacific was established in 1988 as a joint venture between PEWC and Ital-Thai, which is the largest diversified construction company in Thailand and is principally engaged in the design, engineering, construction and project management of large-scale civil engineering and telecommunications projects in Thailand. Capitalizing on PEWC’s wire and cable manufacturing expertise and Ital-Thai’s significant presence in the local market, the company was able to establish its presence in this market and gain knowledge of business opportunities in Thailand.

Pacific Thai was established in 1989 and is a wholly owned subsidiary of Siam Pacific. Pacific Thai produces enameled wire for export only and has a special tax status which exempts it from import duties on raw materials used in export manufacturing. This special tax status must be renewed each year.

Charoong Thai is a public company listed on the Stock Exchange of Thailand (‘‘SET’’). It manufactures aluminum and copper electric wire, medium and high voltage power cable and telecommunications cable. It has subsidiaries and affiliates in the businesses of optic fiber cable manufacturing and telecommunication and network services. Charoong Thai was established in Thailand in 1967 as a limited public company. The board of directors of Charoong Thai may authorize the issuance of additional shares of common stock of Charoong Thai. The Company has preemptive rights to purchase an amount of additional shares equal to its pro rata share of the additional authorized shares, less amounts reserved for directors, officers and employees. In the event the board of Charoong Thai decides to cause it to issue those additional shares, the Company may decide not to exercise this right in which case the Company’s interest may be diluted.

Siam Pacific and Charoong Thai are two of the five largest telecommunications and power cable and wire manufacturers in Thailand and are two of the five government-approved suppliers of telecommunications cable for major public telecommunications projects.

As part of its restructuring plan, the Company has merged its Thai operations, which has generated cost savings while improving overall efficiency. The Company believes the synergistic effect of merging these operations would produce significantly savings in overhead cost and would centralize decision making and resource allocation for the Thai operations.

The transaction was completed on July 2, 2002 when Charoong Thai issued 177,500,000 new shares at Baht 5 per share, representing 49.92% of its enlarged base of 355,660,000 paid-up shares. The new shares were exchanged for Siam Pacific’s shares at a swap ratio of 1 Siam Pacific share for every 26.5 of Charoong Thai’s newly issued shares. Immediately after the completion of this transaction, the shareholders of the new enlarged Charoong Thai Company consisted of the Company (68.42%), Ital-Thai (16.90%) and Bangkok Insurance (5.31%). The rest of the shares are publicly traded on the SET.

The Company’s Singapore operations are conducted primarily through its 98.3%-owned subsidiary, Sigma Cable. The Company believes that Sigma Cable is the largest producer of low voltage power

cable products in Singapore. Sigma Cable manufactures and sells a range of low voltage power cable products, used mainly in infrastructure projects and commercial and residential developments. Sigma Cable is also the exclusive distributor in Singapore of copper rod and medium and high voltage wire and cable manufactured by PEWC.

Sigma Cable also has project engineering operations in Singapore to supply, deliver and install (‘‘SDI’’) primarily medium and high voltage cable to power transmission projects. While the Company currently obtains its supply of medium and high voltage power cable for its SDI operations from PEWC, other suppliers are also available if necessary. The Company anticipates that there will be increasing demand for medium and high voltage power cable and related turnkey installation projects in Singapore.

The Company owns Sigma-Epan, a primarily Singapore-based group of companies, which manufactured specialty cables and assembled cable harnesses for the electronics, computer, building automation, audio and communication industries. Sigma-Epan had manufacturing operations in Singapore and Malaysia. It achieved ISO 9002 certification for its quality management system in 1990. Its customers were largely multinational original equipment manufacturers and its export markets included Malaysia, the Philippines, Indonesia, Thailand, Australia, New Zealand, China and the USA. Sigma-Epan ceased operations in May 2007.

The Company has an effective 98.53% ownership interest in APEC, an Australian wire and cable distributor, which commenced operations at its power cable manufacturing facility in Queensland near Brisbane, Australia in 1997. The new facility produces low voltage power cable with a targeted production capacity of 2,000 tons per year.

APEC has historically sold its production output to distributors and major wholesalers that have been primarily dependent upon imports from other countries. In 1998, it established a sales office with warehousing facilities in Sydney, New South Wales to attract and service customers in this region of Australia. In 2000, it established another sales office with warehousing facilities in Melbourne, Victoria. In 2002, a sales office in Perth was established. APEC bids for supply contracts in state and national power development projects in Australia.

Until 2006, the Company owned a 94.31% interest in NPC. NPC manufactured a range of telecommunications cable and LAN electronic cables in Yinjiang Town, Zhejiang Province, China. NPC began commercial production of high quality telecommunications cable in December 1996. Total production capacity of the NPC operations was approximately 800,000 pkm per year.

NPC’s primary customers were the government controlled and regulated telecommunications networks operators, in particular their provincial and local offices in eastern China and major subcontractors bidding for government contracts.

The term of the NPC joint venture was 50 years commencing from December 31, 1993, the date the joint venture received its business license. The joint venture agreement permitted early termination with the consent of all the joint venture partners or following a serious breach by one of the joint venture partners of the terms of the joint venture contract. The joint venture agreement provided that the partners share in the profits in proportion to their equity interests in the joint venture. In 2006, the Company terminated the NPC joint venture due to lack of profitability, unsatisfactory management practices, and the lack of qualified executives to assume management responsibility following termination of the then senior managers, and the lack of promising prospects for the business in the short to medium term.

The Company also has a 53.9% effective interest in Shanghai Yayang, a company in Shanghai, China. Shanghai Yayang is a joint venture company manufacturing enameled wire which was formed in 1998, and is a subsidiary of Pacific Thai. Shanghai Yayang manufactures enameled wire with a diameter of between 0.05mm and 2.5mm.

SPFO is a joint venture company in Yanggu County, Shandong Province, China. SPFO was established to manufacture fiber optic cables for the China market. The Company owns a 51% interest in SPFO with the remaining interest owned by the joint-venture partner, Shandong Yanggu Cable Company, an established manufacturer in Shandong Province that produces a wide range of cable products and is considered one of the leading cable producers in China. The Company has invested a total of $2.8 million in SPFO.

The Company owns a 25% interest in Shandong Rubber Cable Company, Ltd. (‘‘SRC’’), which manufactures rubber cable for the China market. The remaining 75% is owned by Shandong Yanggu.

On August 18, 2001, a joint-venture agreement was signed with Shandong Yanggu to establish Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. (‘‘SHP’’) for the manufacture of optic fibers. The Company has invested in excess of $5.0 million for a 49% interest in SHP, with the remaining interest in SHP being held by Shandong Yanggu. The projected production rate was initially set at 900,000km of optic fibers annually. Due to weak market outlook, the actual commencement of operations has been put on hold.

On March 22, 2002, the Company acquired two companies, namely, Crown Century Holdings Limited (‘‘CCH’’) and its wholly-owned subsidiary, Pacific Electric Wire & Cable (Shenzhen) Co., Ltd. (‘‘PEWS’’) from PEWC, the then majority shareholder of the Company. The acquisition was in exchange for 3,097,436 new shares of the Company issued to PEWC. PEWS manufactures enameled wire for electronic, video and audio products for the South China market and for export. CCH is the trading arm of PEWS. The operations of PEWS and CCH have been profitable since 1999 and have contributed to the profits of the Company in 2005 and 2006.

The Company’s manufactured products are produced at facilities on premises owned or leased by Siam Pacific, Pacific Thai, Charoong Thai, Sigma Cable, Sigma-Epan (manufacturing operations were terminated in 2007), APEC, NPC (manufacturing operations were terminated in 2006), Shanghai Yayang, SPFO and PEWS.

As of December 31, 2005 and December 31, 2006, the summary status of the Company’s facilities and operations was as follows:

Siam Pacific owns a 7.45 acre production facility near Bangkok, Thailand, located on a 26.79 acre site that it also owns. The production facility is mortgaged to Bangkok Bank as security for a $9.0 million line of credit. Pacific Thai operates a separate 92,800 square meter production facility located at the same site which it leases from Siam Pacific.

Charoong Thai owns a 24.7 acre production facility in Chachoengsao province, near Bangkok, Thailand. The production facility is located on a 57.9 acre site which Charoong Thai also owns. Neither the production facility nor the land is mortgaged.

Sigma Cable operates at a production facility on a 19,373 square meter site in Singapore leased from the Jurong Town Corporation (‘‘JTC’’) for 30 years from September 16, 2000 to September 16, 2030. JTC is a government-linked corporation and is Singapore’s largest industrial landlord.

Sigma-Epan leased an office space from Sigma Cable in Singapore and operated two factory units in Johore Bahru and Penang, both in Malaysia. Both manufacturing operations were terminated as of 2007.

APEC owns a 6,735 square meter manufacturing facility on a 39,000 square meter land in Brisbane, Australia, which is mortgaged to Westpac Banking Corporation of Australia as security for a bank facility of approximately Australian $10 million.

NPC operated on 10.9 acres of state-owned land in Ningbo, Yinjiang, Zhejian Province, China, with a factory area of 3.3 acres. A leasehold right of industrial land use for the land was granted for 50 years. Manufacturing operations at NPC were terminated in 2006. NPC continues to hold the leasehold right of the land.

Shanghai Yayang operates a factory, partially mortgaged to a finance company, located in an area of approximately 5,000 square meters of state-owned land in an industrial district in Fengxian, Shanghai.

SPFO operates in a purpose-built factory building on a leasehold state-owned land in Yanggu, Shandong Province, China.

PEWS operates on 36,000 square meters of state-owned land with built-up area 20,367 square meters in Long Gang, Shenzhen, China. A leasehold right of industrial land use for the land has been granted for 50 years. The facility is mortgaged to Agricultural Bank of China as security for a Rmb 14 million bank facility granted in 2003.

The Company’s primary operating facilities as of December 31, 2005 and December 31, 2006 are briefly described below:


Location	Company	Products
Bangkok, Thailand	Siam Pacific	Telecommunications cable, power cable, enameled wire
Bangkok, Thailand	Pacific Thai	Enameled wire
Bangkok, Thailand	Charoong Thai	Telecommunications cable, power cable
Ningbo, China	NPC	Telecommunications cable, LAN cable (operations terminated in 2006)
Shanghai, China	Shanghai Yayang	Enameled wire
Yanggu, China	SPFO	Fiber optic cable
Shenzhen, China	PEWS	Enameled wire
Singapore	Sigma Cable	Power cable, SDI project engineering, distributed products
Singapore and Malaysia	Sigma-Epan	Electronic cable (operations terminated in 2007)
Brisbane, Australia	APEC	Power cable

All of the Company’s facilities in Bangkok, Singapore, Brisbane and China use production processes and equipment of international standard imported from Europe, the United States, Taiwan, and Japan.

The following discussion should be read in conjunction with the annual consolidated financial statements, including the notes to those financial statements, which are included with this Annual Report. Because more than 90% of the Company’s revenues are derived from its manufactured products segment, the following discussion is not presented on a segment basis.

Management’s discussion and analysis of financial condition and results of operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Inventories are valued at the lower of cost or market value. Cost is determined using the first-in, first-out or weighted average method. In assessing the ultimate realization of inventories, we are required to make judgments as to future market requirements compared with current inventory levels. Revisions to our allowance for inventories may be required if actual market requirements differ from our estimates.

The management at the respective subsidiaries conducts a thorough review of the inventory in all of its product lines on a regular basis. Provisions for inventories are made to reduce excess inventories to their estimated net realizable values, as necessary. The subsidiaries will take into consideration their best estimates of product sales prices, copper prices and customer demand patterns. It is at least reasonably possible that the estimates used by the subsidiaries to determine their provisions for inventory losses will be materially different from the actual amounts or results. The subsidiaries will also evaluate inventory on a regular basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Inventory is written down for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions.

Valuations are required under accounting principles generally accepted in the United States to determine the carrying value of various assets. Our most significant assets that require management to prepare or obtain valuations are goodwill and deferred income taxes. Management must identify whether events have occurred that may impact the carrying value of these assets and make assumptions regarding future events, such as profitability. Differences between the assumptions used to prepare these valuations and actual results could materially impact the carrying amount of these assets and net earnings.

determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

In 2004, the Company recorded an impairment charge of $0.1 million related to the unrealized loss in value of a long-term investment in a privately-held company. In 2005, the impairment of investment consisted of an impairment of $3.0 million in Loxley Pacific Co., Ltd. (‘‘LoxPac’’) due to limited business prospects of its investments, and an impairment of $0.2 million in SHP due to oversupply of products in the market at Shandong and temporary suspension of construction of the production line.

Sales represent the invoiced value of goods sold, net of value added tax and returns, commission income earned on distribution activities, and service fee income on installation activities. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The specific recognition criteria summarized in the next succeeding paragraph must also be met before revenue is recognized.

The Company recognizes revenue from the sale of goods and distribution activities upon passage of title to the customer which coincides with their delivery and acceptance. This method of revenue recognition is in accordance with Staff Accounting Bulletin, SAB 104 — ‘‘Revenue Recognition in Financial Statements.’’

A portion of our revenue is generated from installation activities which are recognized using the percentage-of-completion method. Recognized revenues and profit are subject to revisions as the activity progresses to completion.

We allocate revenue from installation and sale of cables contained in a single arrangement, or in related arrangements with the same customer, based on their relative fair values. The allocation of the fair value to the delivered elements is limited to the amount that is not contingent on future delivery of services or subject to customer-specific return or refund privileges. The amounts of revenue recognized is impacted by our judgments as to whether an arrangement includes multiple elements. Changes to the elements in an arrangement could affect the timing of the revenue recognition.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for valuation allowance, in the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

We evaluate the carrying value of our long-lived assets, consisting primarily of property plant and equipment, whenever certain events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. In 2004, the Company recorded an impairment change of $0.1 million related to the unrealized loss in value of a long-term investment in a privately-held company. In 2002 and 2006, the Company recorded impairment charges of $1.6 million and $0.2 million, respectively, related to the impairment of certain property, plant and equipment of NPC.

These impairment charges were recorded to reduce the carrying value of the identified assets to fair value. Fair values were derived using a variety of methodologies, including cash flow analysis, estimates of sales proceeds and independent appraisals. Where cash flow analyses were used to estimate fair values, key assumptions employed included estimates of future growth, estimates of gross margins and estimates of the impact of inflation. Changes in these estimates could have a material adverse effect on the assessment of our long-lived assets.

The Company is a minority shareholder of Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. (‘‘SHP’’). Under Rule 3-09 of Regulation S-X promulgated by the SEC, the losses sustained by the Company from its SHP investment in 2004 require the inclusion of SHP’s separate audited financial statements in this Annual Report. The SHP financial statements are included as Exhibit 19.2 to this Annual Report.

The Company is a minority shareholder of Loxley Pacific Company Limited (‘‘LoxPac’’). Under Rule 3-09 of Regulation S-X promulgated by the SEC, the losses sustained by the Company from its LoxPac investment in 2004 and 2005 require the inclusion of LoxPac’s separate audited financial statements for 2004 and 2005 in this Annual Report. LoxPac did not use PCAOB-registered accountants in the preparation of its financial statements, and as a minority shareholder, the Company cannot compel LoxPac to re-audit its financial records. The Company is thus unable to include audited financial statements for LoxPac in this Annual Report.

In February 2006, FASB Statement No. 155 — ‘‘Accounting for Certain Hybrid Financial Instruments (‘‘SFAS 155’’) – an Amendment of FASB Statements No. 133 and 140,’’ was issued. This statement provides companies with relief from having to separately determine the fair value of an embedded derivative that would otherwise be required to be bifurcated from its host contract in accordance with SFAS 133 by allowing companies to make an irrevocable election to measure a hybrid financial instrument at fair value in its entirety, with changes in fair value recognized in earnings. The election may be made on an instrument-by-instrument basis and can be made only when a hybrid financial instrument is initially recognized or undergoes a remeasurement event. Statement No. 155 also requires that interests in securitized financial assets be evaluated to identify whether they are freestanding derivatives or hybrid financial instruments containing an embedded derivative that requires bifurcation. SFAS 155 is effective for all financial instruments acquired, issued, or subject to a remeasurement event occurring in fiscal years beginning after September 15, 2006. The impact of SFAS 155 will depend on the future issuance or remeasurement of and the nature of any hybrid financial instruments held by the Company after the effective date, but management does not currently expect SFAS 155 to have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

In July 2006, the FASB issued FIN No. 48 — ‘‘Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109’’ (‘‘FIN 48’’). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS 109 — ‘‘Accounting for Income Taxes.’’ FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We are currently evaluating the potential impact, if any, that the adoption of FIN 48 will have on our consolidated financial statements.

In September 2006, FASB issued Statement No. 157 — ‘‘Fair Value Measurements’’ (‘‘SFAS 157’’), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements. SFAS 157 becomes effective for us on January 1, 2008. Upon adoption, the provisions of SFAS 157 are to be applied prospectively with limited exceptions.

In September 2006, FASB Statement No. 158 — ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R)’’ (‘‘SFAS 158’’), was issued. This statement requires an employer that sponsors one or more defined benefit pension or other postretirement plans to recognize an asset or liability for the overfunded or underfunded status of its postretirement benefit plans in its balance sheet for years ending after December 15, 2006. The funded status is measured as the difference between the fair value of the plan’s assets and its benefit obligation. The statement also requires an employer to measure plan assets and benefit obligations as of the date of the employer’s statement of financial position. SFAS 158 is effective for fiscal years ending after December 15, 2006, except for the requirement to measure plan assets and benefit obligations as of the statement of financial position date, which is effective for fiscal years ending after December 15, 2008. Transition for the recognition provisions is entirely prospective. We are currently evaluating the potential impact, if any, that the adoption of SFAS 158 will have on our consolidated financial statements.

In September 2006, the FASB ratified EITF Issue No. 06-1 — ‘‘Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider’’ (‘‘EITF 06-1’’). This guidance requires the application of EITF Issue No. 01-9 — ‘‘Accounting for Consideration Given by a Vendor to a Customer’’ (‘‘EITF 01-9’’), when consideration is given to a reseller or manufacturer for benefit to the service provider’s end-customer. EITF 01-9 requires the consideration given to be recorded as a liability at the time of the sale of the equipment and also provides guidance for the classification of the expense. EITF 06-1 is effective for the first annual reporting period beginning after June 15, 2007. We are currently evaluating the potential impact that adoption of EITF 06-1 will have on our consolidated financial statements.

In September 2006, Securities and Exchange Commission Staff Accounting Bulletin No. 108 codified as SAB Topic 1.N, ‘‘Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements’’ (‘‘SAB 108’’) was issued. This guidance states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement. The guidance also provides transition guidance for correcting errors existing in prior years. SAB 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. We are currently evaluating the potential impact, if any, that the adoption of SAB 108 will have on our consolidated financial statements.

In February 2007, the FASB issued Statement No. 159 – ‘‘The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115’’ (‘‘SFAS 159’’). SFAS 159 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We do not believe the adoption of SFAS 159 will have significant impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160 — ‘‘Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51’’ (‘‘SFAS 160’’). SFAS No. 160 establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, SFAS No. 160 requires expanded disclosures in the consolidated financial statements. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company is currently assessing the potential impact of SFAS No. 160 on its financial statements.

This discussion should be read in conjunction with the information contained in the Consolidated Financial Statements and notes thereto (the ‘‘Financial Statements’’) presented in Item 18 of this Annual Report.

The following table sets forth a summary statement of income for the periods indicated (dollar ($) amounts in thousands of US$):


	2003				2004				2005				2006
Net Sales:
Manufactured products:
Telecommunications wire and cable		$	33,640			$	35,713			$	32,171			$	49,069
Power cable			58,450				55,577				101,333				147,726
Enameled wire			95,541				172,870				162,483				237,097
Electronic cable			4,662				4,947				5,529				5,388
Total manufactured products			192,293				269,107				301,516				439,280
SDI project engineering			3,919				9,656				15,691				16,421
Distributed Products			15,187				15,493				20,055				12,416
Total net sales			211,399				294,256				337,262				468,117
Gross profit:
Manufactured products:
Telecommunications wire and cable			8,631				3,109				1,600				11,092
Power cable			11,224				10,709				18,465				24,647
Enameled wire			12,295				23,367				16,401				21,484
Electronic cable			555				561				82				369
Total manufactured products			32,705				37,746				36,548				57,592
SDI project engineering			92				258				(375	)			(284	)
Distributed Products			491				868				634				1,107
Total gross profit			33,288				38,872				36,807				58,415
Gross profit margin:
Manufactured products
Telecommunications wire and cable			25.3	%			8.7	%			5.0	%			22.6	%
Power cable			19.2	%			19.3	%			18.2	%			16.7	%
Enameled wire			12.9	%			13.5	%			10.1	%			9.1	%
Electronic cable			11.9	%			11.3	%			1.5	%			6.8	%
Total manufactured products			16.9	%			14.0	%			12.1	%			13.1	%
SDI Project engineering			2.3	%			2.7	%			(2.4	)%			(1.7	)%
Distributed Products			3.2	%			5.6	%			3.2	%			8.9	%
Total gross margin			15.7	%			13.2	%			10.9	%			12.5	%

Results of operations are determined primarily by market demand and government infrastructure projects, market selling prices of our products, our ability to manufacture high quality products efficiently in quantities sufficient to meet demand and to control production and operating costs. Our results are also influenced by a number of factors, including currency stability in the countries in which our operations are located, competition and the cost of raw materials, especially copper, which accounted for approximately 60% to 70% of the cost of sales.

In order to minimize the impact of copper price fluctuations, we attempt to ‘‘peg’’ the prices of our products to the prevailing market price of copper and pass changes in the cost of copper through to customers as much as possible. In certain circumstances, however, we remain affected by fluctuations in the price of copper. For example, the price of telecommunications cable sold for use in public projects in Thailand is determined semi-annually and is based upon the average spot market price of copper on the LME during the six-month period commencing on January 1 and July 1 prior to the month of order. Thus, a recent rise or decline in copper prices may not be fully reflected under this pricing scheme for several months.

Average copper prices per metric ton have increased by 73.3% from $3,835 in 2005 to $6,645 in 2006. The higher cost of copper has contributed to a higher selling price of our products in 2006 and has contributed to sales increase of $131 million in 2006, representing an increase of 38.8% over sales in 2005. Gross profit margins for manufactured products in 2006 were on average at 13.1% compared to 12.1% in 2005.

Copper prices indicated in this report are quoted from the London Metal Exchange (LME) index. The 2006, 2005 and 2004 copper prices are as follows:

The rates of year 2006 GDP growth for Thailand, Singapore and China were 5.0%, 7.9% and 10.7%, respectively. The 2005 GDP growth rates for Thailand, Singapore and China were 4.5%, 6.6% and 10.2%, respectively. GDP figures were obtained from the World Bank website. Our performance is largely influenced by the level of growth in the telecommunication and power infrastructure, construction and electronic goods manufacturing sectors. We continue to see growth in these industrial sectors following the sustained growth in the general economies of the respective countries and strong governments’ expenditures on infrastructure.

The Company showed net profit of $13.0 million in 2006, compared to net losses of $5.0 million in 2005 due largely to increases in sales, gross profit margins and exchange gains, and lower impairment of investments. Overall net sales increased by 38.8% due to a copper price increase and higher demand for our products due to sterling economic growth in the region. Revenue from manufactured products increased by 45.8% but was offset by a decrease in SDI project engineering and Distributed Products by 19.3% in 2006 compared to 2005. Overall gross profit margins increased from 10.9% in 2005 to 12.5% in 2006, mainly due to an increase in the profit margin in telecommunication wire and cable products. Selling, general and administrative expenses have increased by 7.4%, mainly due to increases in the provision for doubtful accounts and inventory, and professional fees.

Our net results in 2006 were aided by positive contributions from exchange gain and gain on liquidation of subsidiary, with offset by lower impairment of investment. An exchange gain of $5.5 million was recorded in 2006 largely due to the appreciation of the Thai Baht.

Sales of manufactured product increased by 45.8% from $301 million in 2005 to $439 million in 2006, contributing to an overall sales increase of 38.8%. Sales in enameled wire exhibited the strongest increase of 46.0% due to the strong demand from appliance manufacturers especially in China and higher selling prices reflecting the rise of copper prices as a percentage of overall sales. Sales of Distributed Products and revenue from SDI project engineering in Singapore decreased in 2006 due to decreased demand and offers of tenders from SP Powerassets.

The following table shows the percentage share in net sales of the respective operations with respect to our total sales in 2006.

Gross profit for 2006 was $58.0 million, representing an increase of 55.5% compared to $37.3 million for 2005 in line with increased sales and increased gross profit margins. Gross profit contributed by sales of manufactured products was $57.6 million in 2006 compared to $36.5 million in 2005.

Overall gross profit margins increased from 10.9% in 2005 to 12.5% in 2006 due to increased margin in telecommunication wire and cable products. Gross profit margin for manufactured products increased from 12.1% in 2005 to 13.1% in 2006 due to higher contribution margins from telecommunication wire and cable.

Selling, general and administrative expenses increased by $2.0 million or 7.4% in 2006, due to higher provisions for doubtful accounts and inventory, and professional fees. Higher provisions in doubtful accounts and inventory were in line with the increased accounts receivables and inventory resulting from increased sales.

In July 1997, the flotation of the Thai Baht caused the currency to fall in value against the U.S. dollar and triggered declines in other regional currencies, such as the Singapore dollar and Australian dollar. The Thai Baht generally appreciated against the U.S. dollar during the course of 1998 and largely stabilized in 1999. However, from mid-2000, the Thai economy began to decelerate as a result of weak domestic demand, coupled with a major fiscal expansion program espoused by the newly elected government, which contributed to a weakening of the Thai Baht. In the past several years, the global weakening of the U.S. dollar against many other currencies has resulted in a strengthening of the Baht against the U.S. dollar. The exchange differences in the income statements arose largely as a result of these movements in the Thai Baht exchange rate and, to a lesser extent, the movements in the other operating currencies. The exchange rates as of December 31, 2006 and December 31, 2005, based on the Noon Buying Rate, were as follows:

Based on the above rates, the revaluation of assets and liabilities denominated in U.S. dollars or other foreign currencies in the Company resulted in $5.5 million exchange gain in 2006.

We use Thai Baht forward foreign exchange contracts to reduce our exposure to foreign currency risks for liabilities denominated in foreign currencies. A forward foreign exchange contract obligates us and our subsidiaries to exchange predetermined amounts of specified foreign exchange currencies at specified exchange rates or to make an equivalent U.S. dollar payment equal to the value of such

exchange. Realized and unrealized gains and losses on forward foreign exchange contracts are included in operations as foreign exchange gains or losses.

In 2005, as in 2006, the share of gain in equity investees was largely related to a share of operating profits of Shandong Pacific Rubber Cable Co., Ltd (‘‘SPRC’’).

In 2005, the impairment of investment consisted of an impairment of $3.0 million in Loxley Pacific Co., Ltd. (‘‘LoxPac’’) due to limited business prospects of its investments, and an impairment of $0.2 million in SHP due to oversupply of products in the market at Shandong and temporary suspension of construction of the production line.

The loss on sale of investment in 2005 and 2006 was largely due to the disposal of a portion of our investment in Charoong Thai.

In 2006, the gain on liquidation of subsidiary of $1.8 million resulted from the liquidation of CTW (Hong Kong) Limited.

In 2006, our overall income tax charge has increased in line with the increased chargeable income with an overall tax rate on chargeable income at 31.5%.

Additional details regarding tax laws and income taxes of the Company including deferred tax liabilities and assets in 2005 and 2006 are disclosed in Note 12 of Item 18: Financial Statements.

Average copper prices per metric ton have increased by 26.9% from $3,023 in 2004 to $3,835 in 2005. The increase in copper prices contributed to an increase in sales value in 2005 compared to the prior year. Gross profit margins for manufactured products in 2005 were on average at 12.1% compared to 14.0% in 2004.

Copper prices indicated in this report are quoted from the London Metal Exchange (LME) index. The 2005, 2004 and 2003 copper prices are as follows:

The rates of year 2005 GDP growth for Thailand, Singapore and China were 4.5%, 6.6% and 10.2% respectively. The 2004 GDP growth rates for Thailand, Singapore and China were 6.3%, 8.4% and 9.1% respectively. Our performance is largely influenced by the level of growth in the telecommunication and power infrastructure, construction and electronic goods manufacturing sectors. We are beginning to see the return of growth in these industrial sectors following the recovery in the general economies of the respective countries and increases in governments’ expenditures on infrastructure.

The Company showed net losses of $5.0 million in 2005 compared to net losses of $2.5 million in 2004 largely on account of lower gross profit margins and higher net exchange loss, interest expense and impairment of investments. Overall net sales increased by 14.6% due to an increase in revenue from manufactured products by 11.9% and from SDI project engineering and Distributed Products by 42.1% compared to 2004. An increase in copper prices also contributed to the increases in overall sales value. Overall gross profit margins decreased from 13.2% in 2004 to 10.9% in 2005 mainly due to a decrease in the profit margin in telecommunication wire and cable products and electronic cable products. Selling, general and administrative expenses have decreased mainly due to decreases in provision for doubtful accounts.

Our net results in 2005 were affected by negative contributions from exchange loss, higher net interest expense and impairment of investments. An exchange loss of $3.1 million was recorded in 2005 largely due to the depreciation of the Thai Baht.

Sales of manufactured product increased by 11.9% from $269 million in 2004 to $301 million in 2005, resulting in an overall sales increase of 14.6%. The rise in copper prices also contributed to higher selling prices. Sales in power cable exhibited the strongest increase of 82.3% due to the strong demand from government agencies and contractors especially in Thailand. Sales of Distributed Products and revenue from SDI project engineering in Singapore increased in 2005 due to increased demand and offers of tenders from SP Powerassets.

The following table shows the percentage share in net sales of the respective operations with respect to our total sales in 2005.

Gross profit for 2005 was $36.8 million, representing a decrease of 5.3% compared to $38.9 million for 2004. Gross profit contributed by sales of manufactured products was $36.5 million in 2005 compared to $37.7 million in 2004.

Overall gross profit margins decreased from 13.2% in 2004 to 10.9% in 2005 due to decreased margin in telecommunication wire and cable products and electronic cable products. Gross profit margin for manufactured products decreased from 14.0% in 2004 to 12.1% in 2005 due to the higher cost of raw material.

Selling, general and administrative expenses have decreased by $2.1 million in 2005, largely due to lower provision for doubtful accounts.

In July 1997, the flotation of the Thai Baht caused the currency to fall in value against the U.S. dollar and triggered declines in other regional currencies, such as the Singapore dollar and Australian dollar. The Thai Baht generally appreciated against the U.S. dollar during the course of 1998 and largely stabilized in 1999. However, from mid-2000, the Thai economy began to decelerate as a result of weak domestic demand, coupled with a major fiscal expansion program espoused by the newly elected government, which contributed to a weakening of the Thai Baht. In the past several years, the global weakening of the U.S. dollar against many other currencies has resulted in a strengthening of the Baht against the U.S. dollar. The exchange differences in the income statements arose largely as a result of these movements in the Thai Baht exchange rate and, to a lesser extent, the movements in the other operating currencies. The exchange rates as of December 31, 2005 and December 31, 2004, based on the Noon Buying Rate, were as follows:

Based on the above rates, the revaluation of assets and liabilities denominated in U.S. dollars or other foreign currencies in the companies resulted in $3.1 million exchange losses in 2005.

In 2004, investee loss relates to LoxPac, BCN, SPHC, SHP and Shandong Pacific Rubber Cable Co., Ltd. (‘‘SPRC’’). In 2005, the share of gain in equity investees was largely due to a share of operating profits of SPRC.

The impairment of investment in 2005 consisted of an impairment of $3.0 million in Loxley Pacific Co., Ltd. (‘‘LoxPac’’) due to limited business prospects of its investments, and an impairment of $0.2 million in SHP due to oversupply of products in the market at Shandong and temporary suspension of construction of the production line.

The losses on sale of investment in 2004 and 2005 were largely due to the disposal of a portion of our investment in Charoong Thai.

In 2005, our overall income tax charge decreased partly as a result of the decrease in estimated PRC tax on CCH profits.

Additional details regarding tax laws and income taxes of the Company including deferred tax liabilities and assets in 2004 and 2005 are disclosed in Note 12 of Item 18: Financial Statements.

Results of operations are determined primarily by our ability to manufacture high quality products efficiently in quantities sufficient to meet demand and to control production and operating costs. Our results are also influenced by a number of factors, including currency stability in the countries in which our operations are located, competition and the cost of raw materials, especially copper, which accounted for approximately 50% to 60% of the cost of sales.

Average copper prices per metric ton have increased by 69.9% from $1,779 in 2003 to $3,023 in 2004. The higher cost of copper resulted in lower gross profit margins for our products in 2004 than in previous years. Gross profit margins for manufactured products in 2004 were on average at 14.0% compared to 16.9% in 2003.

Copper prices indicated in this report are quoted from the London Metal Exchange (LME) index. The 2004, 2003 and 2002 copper prices are as follows:

The rates of year 2004 GDP growth for Thailand, Singapore and China were 6.3%, 8.4% and 9.1% respectively. The 2003 GDP growth rates for Thailand, Singapore and China were 6.7%, 1.1% and 9.1% respectively. Our performance is largely influenced by the level of growth in the telecommunication and power infrastructure, construction and electronic goods manufacturing sectors. We are beginning to see the return of growth in these industrial sectors following the recovery in the general economies of the respective countries and increases in governments’ budget spending on infrastructure.

The Company showed net losses of $2.5 million in 2004, compared to net profit of $10.0 million in 2003. Overall net sales increased by 39.2% due to an increase in revenue from manufactured products by 39.9% and from SDI project engineering and Distributed Products by 31.6% compared to 2003. Overall gross profit margins have decreased from 15.7% in 2003 to 13.2% in 2004 mainly due to decrease in profit margin in telecommunication wire and cable products. Selling, general and administrative expenses have increased mainly due to increases in provision for doubtful accounts and impairment of investment, and professional fees.

Our net results in 2003 were aided by positive contributions from exchange gain, lower net interest expense and share of net gain of equity investees. An exchange gain of $4.2 million was recorded in 2003 largely due to the appreciation of the Thai Baht and the Australian dollar.

Sales of manufactured product increased by 40% from $192 million in 2003 to $269 million in 2004, resulting in an overall sales increase of 40%. Sales in enameled wire exhibited the strongest increase of 80.9% due to the strong demand from appliance manufacturers especially in China and higher selling prices reflecting the rise of copper prices. Sales of Distributed Products and revenue from SDI project engineering in Singapore increased in 2004 due to increased demand and offers of tenders from SP Powerassets.

The following shows the percentage share in net sales of the respective operations with respect to our total sales in 2004.

In 2004, Sigma Cable recorded revenue of $9.7 million under project engineering turnkey contracts awarded by SP Powerassets. The projects call for the supply and installation of 66kV (kilo-volt) high-voltage power cables along various distinct routes. The Company will continue to tender for future projects.

Gross profit for 2004 was $38.9 million, representing an increase of 17.2% compared to $33.2 million for 2003. Gross profit contributed by sales of manufactured products was $37.7 million in 2004 compared to $32.7 million in 2003.

Overall gross profit margins have decreased from 15.7% in 2003 to 13.2% in 2004 due to decreased margin in telecommunication wire and cable products. Gross profit margin for manufactured products decreased from 17.0% in 2003 to 14.0% in 2004 due to the higher cost of raw material.

Selling, general and administrative expenses have increased by $8.3 million in 2004, due to provision for doubtful accounts and inventory, and professional fees. An impairment charge of $134,000 related to the unrealized loss in value of a long-term investment in a privately held company.

the movements in the other operating currencies. The exchange rates as of December 31, 2004 and December 31, 2003, based on the Noon Buying Rate, were as follows:

Based on the above rates, the revaluation of assets and liabilities denominated in U.S. dollars or other foreign currencies in the companies resulted in $0.2 million exchange gain in 2004.

In 2003, the share of gain in equity investees was largely related to share of operating profits of Loxley Pacific Co., Ltd. (‘‘LoxPac’’) and the recovery of certain receivables from Newcall Group Limited (now known as Blue Chip New Zealand limited (‘‘BCN’’)). In 2004, investee loss was related to LoxPac, BCN, SPHC, SHP and Shandong Pacific Rubber Cable Co., Ltd. (‘‘SPRC’’). The share of loss of equity interests in 2004 consists of the impairment of goodwill of $3,134,000 in LoxPac and impairment of $1,358,000 in SHP, taken upon determination of a market oversupply at Shandong and temporary suspension of construction of the production lines.

The loss on sale of investment in 2003 and 2004 was largely due to the disposal of a portion of our investment in Charoong Thai.

In 2004, our overall income tax charge decreased partly as a result of the decrease in estimated PRC tax on CCH income and Australian taxes on APEC profits.

Additional details regarding tax laws and income taxes of the Company including deferred tax liabilities and assets in 2003 and 2004 are disclosed in Note 12 of Item 18: Financial Statements.

Net proceeds from the initial public offering of Common Shares on March 26, 1997 were $33.3 million. The proceeds have been used to finance a significant portion of the cost of our development. The following are the major investments and purchases in 2003, 2004, 2005 and 2006:

In 2003, the Company injected $1.7 million in Shanghai Yayang through its subsidiary, Pacific Thai, thereby increasing the Company’s interest in Shanghai Yayang from 62.39% to 63.49%. In 2004 and 2006, the Company, through its subsidiary, Charoong Thai, made additional capital contributions of $0.5 million and $1 million, respectively, into Shanghai Yayang. The additional investment was in view of improved sales and operating performance and the need for capacity expansion as part of the Company’s operational strategy. The Company and its joint venture partner, Shandong Yanggu, have also injected $0.3 million each in SPFO. To date, the Company has invested a total of $2.8 million with a 51.0% interest in SPFO. The Company has also contributed a $0.2 million capital injection into SHP.

Total purchases of property, plant and equipment totaled $11.1 million in 2002, $5.0 million in 2003, $4.3 million in 2004, $4.4 million in 2005, and $5.2 million in 2006. Purchases relate mainly to the capacity expansion of certain subsidiaries in Thailand and China, namely CTW, Shanghai Yayang and SPFO. The remaining purchases were for replacement of old equipment.

We met our working capital requirements from cash provided by operations and both short-term and long-term borrowings. Net cash used for operating activities for 2006 was $42.3 million, compared to $20.2 million generated in 2005 and $18.1 million used in 2004. Net cash generated in investing activities in 2006 was $2.6 million, compared to $18.7 million used in 2005 and $5.2 million used in 2004, and largely was used on purchasing property, plant, and equipment and decreased in restricted short-term bank deposits. Net cash generated from financing activities amounted to $41.8 million in 2006 largely from the increase of bank loans.

The Company maintains several working capital and overdraft credit facilities with various commercial bank groups and financial institutions. Under line of credit arrangements for short-term debt with the Company’s bankers, the Company may borrow up to approximately $111 million on such terms as the Company and the banks may mutually agree upon. These arrangements do not have termination dates but are reviewed annually for renewal. As of December 31, 2006, the unused portion of the credit lines was approximately $60 million which included unused letters of credit amounting to $24 million. Letters of credit are issued for the account of the Company during the ordinary course of business by major financial institutions as required by certain vendor contracts. As of December 31, 2006, the Company had open letters of credit totaling $19 million. Liabilities relating to the letters of credit are included in current liabilities.

Our main source of liquidity in the near future continues to be the net cash provided by our operating activities. We continue to have sufficient liquidity to meet our anticipated working capital, capital expenditures, general corporate requirements, and other short-term and long-term obligations as they come due. We may further enhance our liquidity in the future, as needs arise, by establishing additional lines of credit, with the support of one or more of our principal shareholders if necessary and available.

The following table set forth our obligations and commitments to make future payments under contracts and other commitments.

For more details on financial commitments and contingencies, please refer to Exhibit 18.1 ‘‘Asia Pacific Wire & Cable Corporation Limited – Audited Financial Statements,’’ beginning on page F-1.

We do not consider inflation to have had a material impact on our results of operations during the periods covered.

We do not consider the Company to have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

As of December 31, 2005 and December 31, 2006, the Bye-laws provided for a classified board consisting of Class A Directors and Class B Directors. As of December 31, 2005, there were three Class A Directors and three Class B directors. As of December 31, 2006, there were three Class A Directors and five Class B Directors. Each Director is entitled to one vote, and approval of any matter requires a simple majority assuming a quorum is present. However, any matter then submitted to the Board of Directors for a vote required the approval of at least one Class A Director. In 2007, the shareholders approved an amendment to the Bye-laws of the Company which eliminated the provision for a classified board. Accordingly, at present, there is only one class of directorships and no one or more directors possess any veto power over matters presented to the Board or any other special or enhanced voting rights.

The following table sets forth certain information concerning the directors and executive officers of the Company as of December 31, 2005. You are advised that the following table is presented for historical purposes and it does not list the current directors of the Company, who are named further on in this Section 6.1 of our Annual Report. All directors are subject to annual election by the shareholders of the Company.

The following table sets forth certain information concerning the directors and executive officers of the Company as of December 31, 2006. You are advised that the following table is presented for historical purposes and it does not list the current directors of the Company, who are named further on in this Section 6.1 of our Annual Report. All directors are subject to annual election by the shareholders of the Company.

Certain officers and directors of the Company are also officers and directors of PEWC and/or PEWC affiliates or AMC or AMC affiliates, as described below. A brief professional summary for each member of the Board of Directors as of December 31, 2005 and/or December 31, 2006 is as follows:

Mr. Ryoji Furukawa is a member of the Board of Directors of the Company. Mr. Furukawa also serves as a Director and the Chairman of Asset Managers (China) Company, Ltd. Mr. Furukawa became a director of the Company in 2004.

Mr. Eric Chi Chiu Yip is a member of the Board of Directors of the Company. Mr. Yip also serves as Chief Executive Officer of Asset Managers (China) Company Limited. Mr. Yip became a director of the Company in 2004.

Mr. Wellen Sham is a member of the Board of Directors of the Company. He also serves as Chairman of Sino-JP and Sino JP Assets Management. Mr. Sham became a Director of the Company in 2004.

Mr. Michael C. Lee is a member of the Company’s Board of Directors, as well Chief Executive Officer of PEWC. Mr. Lee also serves as Chairman of PUSA. Mr. Lee became a Director of the Company in 2004.

Mr. Yuan Chun Tang is a member of the Board of Directors of the Company. He also serves as Chairman of PEWC. Mr. Yuan became a Director of the Company in 2004 and was appointed Chairman of the Company in 2005.

Mr. Ching Rong Shue is a member of the Company’s Board of Directors. He also serves as Vice President of PEWC. Mr. Shue became a Director of the Company in 2006.

Mr. Gai Poo Lee is a member of the Company’s Board of Directors. He also serves as Vice President of PEWC. Mr. Lee became a director of the Company in 2006.

Mr. Fang Hsiung Cheng is a member of the Company’s Board of Directors. He also serves as Assistant Vice President of PEWC. Mr. Cheng became a director of the Company in 2006.

Mr. Jimmy Tsay is a member of the Company’s Board of Directors. He is an independent director. He also is a professor in and chair of the Accounting Department at National Taiwan University. Mr. Tsay became a director of the Company in 2005.

Notwithstanding the relationships with Sino-JP, AMC or with PEWC or with any of their respective affiliates, the above named individuals, in their capacities as directors and officers of the Company, are subject to fiduciary duties to the Company.

The above tables do not reflect changes in Board composition during the course of the years 2005 and 2006, but only list the Board members as of year end. Independent director Tim Wong resigned from the Board on March 18, 2005, followed by Charles Xue, who resigned on March 22, 2005. They were replaced on March 24, 2005 by Ulyos Maa and Jimmy Tsay. Thereafter, Jack Sun, Andy Cheng and David Sun resigned from the Board on October 14, 2005. Independent director Ulyos Maa also resigned on October 14, 2005. Christopher Cheng was appointed on April 6, 2006 to replace Mr. Maa, along with three other directors, Ching Rong Shue, Gai Poo Lee and Fang-Hsiung Cheng. On June 29, 2006, Jimmy Tsay resigned from the Board, followed by Christopher Cheng on July 3, 2006. On June 28, 2007, Eric Chi Chiu Yip, Wellen Sham and Ryoji Furukawa resigned from the Board. On the same date, Andy Cheng, Jack Sun and David Sun were re-appointed to the Board.

At the 2007 AGM, shareholders of the Company voted to change from a classified to an unclassified Board, with a total of ten members composed of eight shareholder-elected directors and two casual vacancies to be filled after the meeting. As of the date of the filing of this Annual Report, the Board consists of ten members. The following eight members were elected by shareholders at the 2007 AGM: Michael Lee, Andy C.C. Cheng, David T. Sun, Jack T. Sun, Gai Poo Lee, Ching Rong Shue, Fang-Hsiung Cheng and Yuan Chun Tang. Two independent directors, Anson Chan and Yichin Lee, were appointed to the casual vacancy positions by the Board on September 28, 2007.

Actions may be taken by a quorum of directors (which consists of at least two directors) present at a board meeting. The Bye-Laws of the Company provide that any one director may call a board meeting.

The audit committee of the Board of Directors primarily functions to assist the Board in its oversight of: (i) the reliability and integrity of accounting policies and financial reporting and disclosure practices and (ii) the establishment and maintenance of processes to ensure that there is

compliance with all applicable laws, regulations and company policy and an adequate system of internal control, management of business risks and safeguard of assets.

Two independent directors, Mr. Charles Xue and Mr. Tim Wong, served on the audit committee until their resignation in 2005. On March 24, 2005, two new independent directors, Mr. Ulyos Maa and Mr. Jimmy Tsay, were appointed to the Board and to the audit committee. Mr. Maa resigned on October 14, 2005, and was replaced on the audit committee by Mr. Christopher Cheng, who was appointed on April 6, 2006. Mr. Tsay and Mr. Cheng served on the committee until Mr. Tsay’s resignation on June 29, 2006, which was followed by Mr. Cheng’s resignation on July 3, 2006. The Company did not have an audit committee for the remainder of 2006.

As the Company is traded on the Pink Sheets, it is not required to have an audit committee that meets the requirements of Regulation 10A-3 of the Exchange Act. In the absence of an audit committee, the full Board of Directors may fulfill the functions of an audit committee pursuant to Section 3(a)(58) of the Exchange Act. For the fiscal year 2006, and until the appointment of a new audit committee on September 28, 2007, the full Board of Directors fulfilled the functions of an audit committee.

On September 28, 2007, the Company filled two casual vacancies on the Board by appointing Mr. Anson Chan and Dr. Yichin Lee to be independent directors of the Company and to constitute the audit committee of the Board. As of the date of the filing of this Annual Report, the audit committee is composed of Mr. Chan and Dr. Lee, with Mr. Chan serving as the committee’s chairman.

The Board first created the remuneration committee in 2003 to assist it in determining the compensation to be paid to the executive directors of the Company. The first remuneration committee was comprised of two independent directors, Mr. Charles Xue and Mr. Tim Wong, who served on the committee until their resignation in 2005. Mr. Jimmy Tsay, another independent director, was appointed to the remuneration committee on the same date, and served until his resignation on June 29, 2006. As of the date of the filing of this Annual Report, the Board has not appointed new directors to the remuneration committee.

The aggregate amount of compensation paid by the Company to all of the Company’s directors and executive officers, as a group, for services in all capacities during 2005 and 2006 was approximately $1.4 million per annum. As of December 31, 2005 and December 31, 2006, our directors and executive officers beneficially owned 10,000 Common Shares representing approximately 0.072% of the outstanding Common Shares.

The fee for the independent directors is $20,000 per year and the fee payable to directors who are executive officers of the Company is $10,000 per year, together with, in each case, reimbursement of reasonable travel expenses for attendance of meetings of the Board of Directors.

Presently, there is no group policy on bonus or profit-sharing plan or stock options. However, the Company’s subsidiaries have their respective bonus or profit-sharing plans based on individual performance and subsidiaries’ profitability for the fiscal year, which are generally in accordance with the industry practice and market conditions in the respective countries.

Certain relevant information regarding the Company’s employees as of December 31, 2005 and December 31, 2006 is described in this Section 6.5. The Company employed a total of approximately 1,860, 1,950 and 1,960 employees in 2004, 2005 and 2006, respectively, of which about 18% were administrative and management personnel. Approximately 54% of employees are in Thailand, 32% in China, 9% in Singapore and 5% in Australia. Production workers are usually organized into two 12-hour shifts or three 8-hour shifts to allow continuous factory operation.

The Company offers a range of employee benefits, which it believes are comparable to industry practice in its local markets. Such benefits include performance-based pay incentives, medical benefits, vacation, pension, housing for a small number of workers in Singapore and in Thailand, and a small housing supplement to other workers. The Company also provides training programs for its personnel designed to improve worker productivity and occupational safety.

Approximately 60% of the employees of Sigma Cable are members of the United Workers of Electronics & Electrical Industries, an employees’ union in Singapore. Under the terms of a collective agreement, signed in June 2003, the Company is required to negotiate salary and wage increases yearly. All other worker benefits and employment terms are included in the collective agreement. None of the employees of Siam Pacific, Pacific Thai, Charoong Thai or APEC are members of a union.

The Company has never experienced a strike or other disruption due to labor disputes. The Company considers its employee relations to be good and has not experienced difficulties attracting and retaining qualified employees. In Singapore, employee turnover is approximately 8% of total employees annually. In Thailand, employee turnover is approximately 3% of total employees annually.

As of December 31, 2004, Sino-JP Fund, a company incorporated under the laws of the Cayman Islands, was the owner of 10,074,102 Common Shares, representing approximately 72.84% of the issued and outstanding Common Shares. Pacific Electric Wire & Cable Corporation was the owner, indirectly, of 356,757 Common Shares, representing approximately 2.56% of the issued and outstanding Common Shares. The remaining Common Shares were held by investors who purchased in the public market. See — ‘‘Recent Developments, Section 4.1.2.’’

In July 2004, the Company and PEWC entered into a Settlement Agreement with Set Top International Inc. (‘‘Set Top’’), pursuant to which it was agreed that Set Top would be paid $25,000,000 in exchange for the release of all claims of an ownership interest in 10,074,102 Common Shares and the dismissal by all parties of all claims in litigation proceedings against each other, which included actions in New York, Singapore and Bermuda (the ‘‘Set Top Settlement Agreement’’). In addition, Set Top agreed to withdraw all of its claims in the bankruptcy proceedings of Pacific USA Holdings Ltd. (‘‘PUSA’’), a Dallas based subsidiary of PEWC.

Under a Share Purchase Agreement dated September 10, 2004 by PEWC and Asset Managers Co., Ltd. (‘‘AMC’’), AMC agreed to purchase the 10,074,102 Common Shares from Set Top for purchase consideration of $25,000,000 (the ‘‘2004 Share Purchase Agreement’’). In addition, AMC entered into an Option Agreement dated September 10, 2004 (the ‘‘2004 Option Agreement’’) granting to PEWC an option (the ‘‘Repurchase Option’’) to purchase 7,307,948 Common Shares (the ‘‘Repurchase Shares’’), representing approximately 52.84% of the issued and outstanding Common Shares.

Until the implementation of the Set Top Settlement Agreement, PEWC owned indirectly 10,430,769 shares of the Company. Following the implementation of the Set Top Settlement Agreement and the closing of the 2004 Share Purchase Agreement, Sino-JP owned 10,074,012 Common Shares of the Company, representing approximately 72.84% of the issued and outstanding Common Shares, and PEWC owned indirectly 356,757 shares of the Company, representing approximately 2.56% of the issued and outstanding Common Shares.

On September 14, 2005, PEWC exercised the Repurchase Option and reacquired the Repurchase Shares for an aggregate purchase price of $18,861,813.78, or $2.581 per share, plus a guaranteed return. Exercising the Repurchase Option required approval of the PEWC Banking Group, which imposed certain conditions on PEWC. One condition imposed by the PEWC Banking Group was that PEWC enter into a letter of undertaking (‘‘the ‘‘PEWC Letter of Undertaking’’) which provided that, among other conditions, PEWC enter into a trust agreement with the PEWC Banking Group (the

‘‘PEWC Trust Agreement’’), under which the Repurchase Shares were registered in Bermuda in the name of Chiao Tung Bank Trust Department Trust Assets (‘‘CTB’’), although PEWC retained beneficial ownership of the Repurchase Shares unless and until there occurred an event of default under the PEWC Trust Agreement. In May 2006 the PEWC Banking Group determined that PEWC had fulfilled or was in a position to fulfill the requirements with respect to the PEWC Trust Agreement. Therefore, on June 6, 2006, CTB, on behalf of the PEWC Banking Group, delivered a letter instructing termination of the PEWC Trust Agreement and authorizing the registration of the repurchase Shares on behalf of PEWC without any pledge or encumbrance of the PEWC Banking Group. See — ‘‘Risk Factors: Change of Control, Section 3.3.1’’; ‘‘Recent Developments, Section 4.1.2.’’

The following table sets forth certain information regarding beneficial ownership of the Company’s capital stock as of December 31, 2005 and December 31, 2006 by (i) all persons who are known to the Company to own beneficially more than five percent of the Common Shares of the Company and (ii) the officers and directors of the Company as a group. The voting rights attaching to the Common Shares below are the same as those attaching to all other Common Shares.

As of December 31, 2005 and December 31, 2006, the Company’s largest short-term loan was $1.5 million borrowed from Moon View Venture Limited, a subsidiary of PEWC. The loan is unsecured. As of December 31, 2005 and December 31, 2006, the only long-term loan was from PEWC in the amount of $5.9 million and $0.9 million, respectively. As of December 31, 2005, the loan was unsecured and consisted of $2.9 million being interest-free while the remaining portion bore interest at LIBOR plus 1%. As of December 31, 2006, the loan was unsecured and interest-free. Interest has been paid quarterly. The loan is repayable in 2008.

Additional details regarding related party balances as of December 31, 2005 and December 31, 2006 and related party transactions during 2005 and 2006 are disclosed in Note 17 of Item 18: Financial Statements.

Pacific Electric Wire & Cable Co., Ltd. & Asia Pacific Wire & Cable Corp., Ltd. v. Set Top International, Case No. 03 Civ. 9623 (JFK) (AJP) (the ‘‘New York Action’’)

On December 4, 2003, PEWC and the Company (collectively ‘‘Plaintiffs’’) commenced an action in the United States District Court for the Southern District of New York (the ‘‘Southern District’’) against the following parties: Set Top, Kinbong Holdings Limited (‘‘Kinbong’’), Tom Ching-Yun Tung, Frank Wei-Feng Lin, Tai-Sheng Lien, Fu-Chuan Tsai, Fu-Nu Tsai, Yuan-Chun Hsu, Jack Takacs and Robert Everett Wolin (collectively ‘‘Defendants’’). The Complaint alleged 12 causes of action, including fraud and conspiracy to commit fraud; violation of section 13(d) of the Securities Exchange Act; RICO violations under 18 USC § 1962; and breach of fiduciary duty.

The case involved an alleged fraud perpetuated over a period of years by certain of the Defendants against Plaintiffs. Prior to the allegedly fraudulent transactions, PEWC owned (indirectly) a 75.42% interest in the Company. As a result of the transactions, PEWC’s controlling interest in the Company was purportedly transferred to Defendant Set Top.

The Southern District action did not progress to the discovery phase as the parties sought to agree to the terms of a settlement agreement on several occasions.

On July 2, 2004, the Company, PEWC and Set Top entered into a Settlement Agreement (the ‘‘Settlement Agreement’’) pursuant to which PEWC agreed to pay Set Top $25 million (the ‘‘Settlement Amount’’) by August 30, 2004 (subject to extension) to purchase all of Set Top’s interest in the Company’s shares. In the event that PEWC failed to pay the Settlement Amount to Set Top by August 30, 2004 (subject to extension), under the Settlement Agreement the ownership of 10,074,102 shares of the Company would pass to Set Top.

Pursuant to the Settlement Agreement, the Company, PEWC and Set Top agreed to withdraw all claims in all litigation proceedings against each other, including the actions in New York, Singapore and Bermuda, and Set Top agreed to withdraw all of its claims in the PUSA bankruptcy proceedings. The parties have filed stipulations of discontinuance and/or dismissal for each of those actions.

In order to implement the terms of the Settlement Agreement, PEWC and Asset Managers Co., Ltd. (‘‘AMC’’) entered into a Share Purchase Agreement dated as of September 10, 2004 (the ‘‘2004 Share Purchase Agreement’’), pursuant to which AMC agreed to pay to Set Top the sum of $25,000,000 in exchange for all right, title and interest of Set Top in 10,074,102 shares of APWC (the ‘‘Subject Shares’’). Following the closing of the 2004 Share Purchase Agreement, AMC designated Sino-JP Fund Co., Ltd. (‘‘Sino-JP’’) as an assignee of the Subject Shares and Sino-JP was registered as the record owner of the Subject Shares with the Company’s register. As of June 28, 2007, Sino-JP sold all of its Common Shares, the directors and officers designated by it submitted their resignations and Sino-JP ceased to have any interest in the Company. See — ‘‘Recent Developments, Section 4.1.2.’’

Subsequent to the 2004 Share Purchase Agreement, a number of disputes arose between Sino-JP and PEWC regarding the governance of the Company and other matters. Litigation was commenced in Bermuda, in which the Company was named a party, and in Hong Kong, in which the Company was not named a party. On June 28, 2007, the Company entered into a comprehensive settlement and release agreement with Sino-JP (the ‘‘Settlement Agreement’’), which dismissed and released all claims between the parties and which put an end to all related litigation. PEWC also entered into a settlement and release agreement with Sino-JP that terminated all disputes and litigation between those parties. On the same date, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership, acquired the Sino-JP Shares (the ‘‘SOF Acquisition’’) and entered into a shareholders agreement with the Company and PEWC. Upon the closing of that acquisition, all of the directors and officers designated by Sino-JP submitted their resignations and Sino-JP ceased to have any interest in the Company. As part of the Settlement Agreement, the Company agreed to indemnify all of those Sino-JP designated directors and officers (the ‘‘Sino-JP Indemnified Persons’’) for all acts or omissions taken in their capacity as a director or officer to the maximum extent permitted under the memorandum of association and the Bye-laws of the Company and the Bermuda Companies Act (the ‘‘Companies Act’’). See — ‘‘Recent Developments, Section 4.1.2.’’

In June 2005, Highness Electrical Engineering Pte Ltd (‘‘Highness Electrical’’) commenced action in The High Court of The Republic of Singapore (the ‘‘High Court’’) against Sigma Cable claiming damages arising from an alleged breach of a contract. The parties entered into a contract on December 17, 2003 for the supply by Sigma to Highness Electrical of various types of electrical cables from December 2003 to December 31, 2005. By early February 2005, Sigma still had not delivered goods ordered several months prior. As a result, on February 3, 2005, Highness Electrical claimed Sigma Cable had repudiated the contract. On March 30, 2005, Sigma Cable agreed to supply electrical cables at the prices originally agreed to. However, in June, Highness Electrical instituted an action to recover damages for the loss it had suffered as a result of having to pay higher prices for electrical

cable. In June 2006, the High Court ruled that Sigma Cable had repudiated the contract and ordered that the assessment of damages be done by the Registrar.

Sigma Cable appealed the High Court’s verdict, but the determination that Sigma Cable was liable for damages has been upheld on appeal. In February 2008, the Supreme Court assessed damages of approximately $886,000. Sigma Cable is currently appealing this determination of damages. However, Sigma Cable has taken a write-down of its accounts receivable in 2005 in the amount of $886,000 in order to account for this adverse judgment.

To date, the Company, a Bermuda company formed in 1996, has not paid any dividends. While the Company has no present intention to pay dividends, should it decide in the future to do so, as a holding company the Company’s ability to pay dividends, as well as to meet its other obligations, will depend upon the amount of distributions, if any, received from the Company’s operating subsidiaries and other holdings and investments. The Company’s operating subsidiaries and other holdings and investments, from time to time, may be subject to restrictions on their ability to make distributions to the Company, including as a result of restrictive covenants contained in loan agreements, restrictions on the conversion of local currency earnings into U.S. dollars or other hard currency and other regulatory restrictions. The foregoing restrictions may also affect the Company’s ability to fund operations of one subsidiary with dividends and other payments received from another subsidiary.

From March 26, 1997 through December 31, 2001, the Company’s Common Shares were listed and traded on the New York Stock Exchange (the ‘‘NYSE’’) under the symbol ‘‘AWC.’’ Prior to such listing, there was no public market for the Company’s equity securities.

The Company’s Common Shares were subsequently delisted from the NYSE in the first quarter of 2002 and were traded on the Over-the-Counter Bulletin Board (the ‘‘OTC BB’’), which is an electronic quotation service for trading of shares of OTC securities among market makers who are NASD members. As a foreign private issuer, the Company is required to file its annual report on Form 20-F with the SEC within six months following the close of its fiscal year. The Company was not in a position to make the filing of its 2004 annual report on a timely basis. After the expiration of an automatic grace period, on August 29, 2005 the OTC BB delisted the Company for failure to remain current in the filing of its periodic reports. The Company is currently traded on the Pink Sheets under the symbol ‘‘AWRCF.’’ The Company intends to diligently pursue a relisting on the OTC BB or a national exchange as soon as possible. See — ‘‘Risk Factors – OTCB BB Delisting; Potential Illiquidity of Common Shares, Section 3.3.1’’; see — ‘‘Recent Developments, Section 4.1.2.’’

The Common Shares are not listed on any other exchanges or otherwise publicly traded within or outside the United States.

The high and low sales price for Common Shares on the OTC BB (from February 2002 when the Company re-established a public trading market for its Common Shares on the OTC BB) for each quarterly period from the first quarter of 2002 to the last quarter of 2006 are as follows:


	Price per Share ($)
	High		Low
2002
First Quarter		0.73		0.32
Second Quarter		0.90		0.48
Third Quarter		0.65		0.29
Fourth Quarter		1.55		0.51
2003
First Quarter		1.06		0.83
Second Quarter		1.60		0.75
Third Quarter		2.74		1.40
Fourth Quarter		3.60		2.15
2004
First Quarter		3.10		2.25
Second Quarter		2.90		1.90
Third Quarter		3.49		2.20
Fourth Quarter		4.75		2.90
2005
First Quarter		4.80		3.75
Second Quarter		4.00		2.20
Third Quarter		2.55		1.20
Fourth Quarter		2.23		1.40
2006
First Quarter		1.60		0.81
Second Quarter		1.60		0.83
Third Quarter		4.00		0.99
Fourth Quarter		2.95		2.15

As of the date of the filing of this Annual Report, our Common Shares are quoted and traded on the Pink Sheets operated by Pink Sheets LLC, under the symbol ‘‘AWRCF.’’

For a detailed description of the Company’s principal activities, see ‘‘History and Development of the Company, Section 4.1.’’ The Company’s Bye-laws were amended on December 16, 2004 to establish a classified Board of Directors consisting of up to three Class A Directors and up to seven Class B Directors. On September 7, 2007, the Company’s Bye-Laws were amended again to delete the provisions providing for a classified Board of Directors and to provide that a quorum shall consist of a majority of the members of the Board of Directors then in office. The Company’s Bye-laws, as so amended, were filed with the annual report of the Company on Form 20-F for the fiscal year ended December 31, 2004.

The Company was incorporated in Bermuda on September 19, 1996 under the Companies Act. The rights of our shareholders are governed by Bermuda law and our memorandum of association and Bye-laws.

The following discussion of our Common Shares, and the laws governing the rights of our shareholders, is based upon the advice of Appleby, our Bermuda counsel.

Our authorized share capital of $200,000 consists of 20,000,000 Common Shares, par value $0.01 per share, of which, as of December 31, 2005 and December 31, 2006 and as of the date of the filing of this Annual Report, there were and are 13,830,769 Common Shares issued and outstanding.

The holders of Common Shares will receive such dividends, if any, as may be declared by the board of directors out of funds legally available for such purposes. We may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for believing that:

The following is a summary of provisions of Bermuda law and our organizational documents, including the Bye-laws. We refer you to our memorandum of association and Bye-laws, copies of which have been filed with the SEC. You are urged to read these documents for a complete understanding of the terms of the memorandum of association and Bye-laws.

Our authorized capital consists of one class of Common Shares. Under our Bye-laws, our Board of Directors has the power to issue any authorized and unissued shares on such terms and conditions

as it may determine. Any shares or class of shares may be issued with such preferred, deferred, qualified or other special rights or any restrictions with regard to such matters, whether in regard to dividend, voting, special rights, return of capital or otherwise, as we may from time to time by resolution of the shareholders prescribe, or in the absence of such shareholder direction, as the Board of Directors may determine.

Generally, under Bermuda law and our Bye-laws, questions brought before a general meeting are decided by a simple majority vote of shareholders present or represented by proxy. Matters will be decided by way of votes cast by way of show of hands unless a poll is demanded.

If a poll is demanded, each shareholder who is entitled to vote and who is present in person or by proxy has one vote for each Common Share entitled to vote on such question. A poll may only be demanded under the Bye-laws by:

Unless the Board of Directors otherwise determines, no shareholder shall be entitled to vote at any general meeting unless all calls or other sums presently payable by that shareholder in respect of all shares held by such shareholder have been paid.

Under Bermuda law, a company may declare and pay dividends unless there are reasonable grounds for believing that the company is, or would, after the payment, be unable to pay its liabilities as they become due or that the realizable value of the company’s assets would thereby be less than the aggregate of its liabilities and issued share capital and share premium accounts.

Under our Bye-laws, each share is entitled to a dividend if, as and when dividends are declared by the Board of Directors. With the sanction of a shareholders resolution, the Board of Directors may determine that any dividend may be paid in cash or by distribution of specific assets, including paid-up shares or debentures of any other company. The Board of Directors may also pay any fixed cash dividend which is payable on any of our Common Shares half-yearly or on other dates, whenever our position, in the opinion of the Board of Directors, justifies such payment.

Dividends, if any, on our Common Shares will be at the discretion of our Board of Directors, and will depend on our future operations and earnings, capital requirements, surplus and general financial conditions as our Board of Directors may deem relevant.

Under Bermuda law, we may purchase our own Common Shares out of the capital paid up on the Common Shares in question or out of funds that would otherwise be available for dividend or distribution or out of the proceeds of a fresh issue of Common Shares made for the purposes of the purchase. We may not purchase our shares if, on the date on which the purchase is to be effected, there are reasonable grounds for believing that the Company is, or after the purchase would be, unable to pay its liabilities as they become due.

However, to the extent that any premium is payable on the purchase, the premium must be provided out of the funds of the Company that would otherwise be available for dividend or

distribution or out of a Company’s share premium account. Any Common Shares purchased by the Company are treated as cancelled and the amount of the Company’s issued capital is diminished by the nominal value of the shares accordingly but shall not be taken as reducing the amount of the Company’s authorized share capital.

Our Bye-laws generally do not provide the holders of our Common Shares preemptive rights in relation to any issues of Common Shares by us or any transfer of our shares.

However, the Company has in the Shareholders Agreement granted to SOF preemptive rights in the event of any issuance of additional equity securities (or securities convertible into or exchangeable for equity securities) by the Company, such that SOF may subscribe for additional securities in order to maintain its then percentage ownership interest in the issued and outstanding equity securities of the Company. See — ‘‘Obligations under Shareholders Agreement Section 3.3.7.’’

We may issue more than one class of shares and more than one series of shares in each class. If we have more than one class of shares, the rights attached to any class of shares may be altered or abrogated either:

The Bye-laws provide that a quorum for such a meeting shall be two persons present in person or by proxy holding shares of the relevant class. The Bye-laws specify that the creation or issue of shares ranking on parity with existing shares will not, subject to any statement to the contrary in the terms of issue of these shares or rights attached to those shares, vary the special rights attached to existing shares.

Subject to the ‘‘Transfer Restrictions’’ section below, a shareholder may transfer title to all or any of his shares by completing an instrument of transfer in the usual common form or in such other form as the Board of Directors may approve. The form of transfer is required to be signed by or on behalf of the transferor and also the transferee where any share is not fully paid.

The Board of Directors may in its absolute discretion and without assigning any reason refuse to register the transfer of any share that is not fully paid.

The Board of Directors may refuse to register an instrument of transfer of a share unless it:

Our Common Shares are no longer listed on an ‘‘appointed stock exchange’’ and, therefore, do not qualify for a ‘‘blanket’’ authorization for free transferability from the Bermuda Monetary Authority for all transfers of our Common Shares between persons who are not resident in Bermuda for exchange control purposes. The Bermuda Monetary Authority has informed us that it has no

objection to the continued free transferability of our Common Shares on the same basis as when the Company was listed on the NYSE except that the Bermuda Monetary Authority has requested it be informed of any shareholders holding five percent or more of the Common Shares in issue.

The Company, together with PEWC and SOF Investments, L.P., has entered into a shareholders agreement dated as of June 28, 2007 (the ‘‘Shareholders Agreement’’) which provides, among other things, for certain transfer restrictions, notice requirements and tag-along rights in the event PEWC wishes to transfer any of its Common Shares in certain types of transactions. The Shareholders Agreement is binding only upon the three parties to that agreement. See — ‘‘Recent Developments, Section 4.1.2.’’

In the event of the death of a shareholder, the survivor or survivors, where the deceased shareholder was a joint holder, and the estate representative, where he was sole holder, shall be the only persons recognized by us as having any title to the shares of the deceased. ‘‘Estate representative’’ means the person to whom probate or letters of administration has or have been granted in Bermuda, or failing any such person, such other person as the Board of Directors may in its absolute discretion determine to be the person recognized by us for this purpose.

Under the Companies Act, a director who has an interest in a material contract or a material proposed contract, or a 10% or more interest (directly or indirectly) in an entity that is interested in a contract or proposed contract or arrangement with us, is obligated to declare the nature of such interest at the first opportunity at a meeting of the Board of Directors, or by writing to the Board of Directors. If the director has complied with the relevant sections of the Companies Act and the Bye-laws with respect to the disclosure of his interest, the director may vote at a meeting of the Board of Directors or a committee thereof on a contract, transaction or arrangement in which that director is interested and he will be taken into account in ascertaining whether a quorum is present.

Under Bermuda law, in the event of liquidation, dissolution or winding-up of a company, after satisfaction in full of all claims of creditors and subject to the preferential rights accorded to any series of preferred stock, the proceeds of such liquidation, dissolution or winding-up are distributed among the holders of shares in accordance with a company’s bye-laws.

Under our Bye-laws, if we are wound up, the liquidator may, pursuant to a resolution of the shareholders and any approval required by the Companies Act, divide among the shareholders in cash or other assets the whole or part of our assets, whether they shall consist of property of the same kind or not and may for such purposes set such values as he deems fair upon any property to be divided and may determine how such division shall be carried out as between the shareholders.

Under Bermuda law, a company is required to convene at least one general meeting per calendar year. The directors of a company, notwithstanding anything in its Bye-laws, shall, on the requisition of the shareholders holding at the date of the deposit of the requisition not less than one-tenth of the paid-up capital of the company carrying the right of vote, duly convene a special general meeting.

The Bye-laws provide that the Board of Directors may, whenever it thinks fit, convene a special general meeting. Bermuda law requires that shareholders be given at least five days’ notice of a meeting of the Company. Our Bye-laws extend this period to provide that not less than 20 days’ written notice of a general meeting must be given to those shareholders entitled to receive such notice. The accidental omission to give notice to or nonreceipt of a notice of a meeting by any person does not invalidate the proceedings of a meeting.

Our Bye-laws state that no business can be transacted at a general meeting unless a quorum of at least two shareholders representing a majority of the issued shares of the Company are present in person or by proxy and entitled to vote.

Under our Bye-laws, notice to any shareholders may be delivered either personally or by sending it through the post, by airmail where applicable, in a pre-paid letter addressed to the shareholder at his address as appearing in the share register or by delivering it to, or leaving it at, such registered address. A notice of a general meeting is deemed to be duly given to the shareholder if it is sent to him by cable, telex or telecopier. Any such notice shall be deemed to have been served twenty-four (24) hours after its dispatch in the case of cable, telex or telecopier and seven (7) days after dispatch in the case of notice through the post.

Under Bermuda law, members of the general public have the right to inspect the public documents of a company available at the office of the Bermuda Registrar of Companies. These documents include the memorandum of association and any amendment to the memorandum of association.

Under Bermuda law, the minutes of shareholder meetings will be open for inspection by any shareholder or director without charge for not less than 2 hours during business hours each day, subject to any reasonable restrictions that we may impose. The shareholders shall be entitled to receive a copy of every balance sheet and statement of income and expenditure before a general meeting as required under the Bye-laws.

The register of shareholders of a company is required to be open for inspection between 10:00 a.m. and 12:00 noon each working day without charge and to members of the general public on the payment of a fee. A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. We have established a branch register with our transfer agent, Computershare Limited.

Under Bermuda law, a company is required to keep at its registered office a register of its directors and officers that is open for inspection for not less than two hours in each day by members of the public without charge. Under our Bye-laws, the register of directors and officers are available for inspection by the public between 10:00 a.m. and 12:00 noon every working day. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.

The Bye-laws provide that the number of directors will be such number not less than two, as our shareholders by resolution may from time to time determine. A director will serve until his successor is appointed or his prior removal in the manner provided by the Companies Act or the Bye-laws.

At an annual general meeting of shareholders held on December 16, 2004, the Company amended its Bye-laws to establish a classified board consisting of up to three Class A Directors and up to seven Class B Directors. Each Class A Director and each Class B Director had one vote on any resolution that becomes before the Board of Directors, and except as specified in the Bye-laws, a simple majority of votes cast by the combined Board of Directors (both Class A and Class B) was sufficient for the adoption of any resolution; provided, however, no resolution could be adopted without the approval of at least one of the Class A Directors. At an annual general meeting of shareholders held on September 7, 2007, the Company further amended its Bye-laws to delete the provisions establishing a classified board. As of the date of the filing of this Annual Report, the Company has only one class of Directors, with each Director having equal voting power.

At the annual general meeting held on September 7, 2007, the shareholders of the Company approved resolutions establishing the number of directorships at ten members. At that meeting, eight members of the Board of Directors were elected, with two seats then reserved as casual vacancies. See — ‘‘Recent Developments, Section 4.1.2.’’

The shareholders may by resolution determine that one or more vacancies in the Board of Directors shall be deemed casual vacancies for the purposes of the Bye-laws. The Board, so long as a quorum of directors remains in office, shall have the power at any time and from time to time to appoint any individual to be a director so as to fill a casual vacancy. The shareholders may approve the appointment of alternate directors or may authorize the Board to appoint them. Directors may also appoint their own alternates.

We may, in a special general meeting called for this purpose, remove a director, provided notice of such meeting is served upon the director concerned not less than fourteen days before the meeting and he shall be entitled to be heard at that meeting.

Bermuda law provides that the memorandum of association of a company may be amended by resolution passed at a general meeting of which due notice has been given. An amendment to a memorandum of association does not require the consent of the Minister of Finance save for specific circumstances, for example, the adopting of any authority to carry on restricted business activities.

are entitled to object to amendments to its memorandum of association, and have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda Supreme Court. An application for an annulment of an amendment of the memorandum of association must be made within twenty-one days after the date on which the resolution amending the memorandum of association is passed and may be made on behalf of the persons entitled to make the application by one or more of their number as they may appoint in writing for the purpose.

Our Bye-laws may be amended in the manner provided for in the Companies Act, which provides that the directors may amend the Bye-laws, provided that any such amendment shall be effective only to the extent approved by the shareholders.

The Companies Act provides that, subject to the terms of a company’s bye-laws, the merger or consolidation of a Bermuda company with another company requires a merger or consolidation agreement which must be approved by the board of directors and at a meeting of the shareholders by seventy-five percent of the shareholders present and entitled to vote at such meeting in respect of which the quorum shall be two persons holding or representing by proxy at least one-third of the issued shares of the company.

Under Bermuda law, in the event of a merger or consolidation of a Bermuda company, a shareholder who did not vote in favor of the transaction and who is not satisfied that fair value has been offered for the shares, may apply to a Bermuda court within one month of notice of the meeting of shareholders to appraise the fair value of those shares.

Class actions and derivative actions are generally not available to shareholders under Bermuda law. A shareholder may commence an action in the name of a company to remedy a wrong done to the company where the act complained of is alleged to be beyond the corporate power of the company, or is illegal or would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requiring the approval of a greater percentage of the company’s shareholders than those who actually approved it.

When one or more shareholders believes the affairs of a company are being conducted in a manner which is prejudicial to the interest of some of the shareholders, a Bermuda court, upon petition, may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.

Our branch transfer agent and registrar is Computershare Limited, located at 525 Washington Boulevard, Jersey City, NJ 07310. In addition to a register held by our branch transfer agent, a register of holders of the shares is maintained by the principal registrar and transfer agent, Appleby Management (Bermuda) Ltd. in Bermuda located at Argyle House, 41A Cedar Avenue, Hamilton HM 12, Bermuda.

The Companies Act requires every officer, including directors, of a company in exercising powers and discharging duties, to act honestly in good faith with a view to the best interests of the company, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The Companies Act further provides that any provision whether in the bye-laws of a company or in any contract between the company and any officer or any person employed by the company as auditor exempting such officer or person from liability, or indemnifying him against, any liability which by virtue of any rule of law would otherwise attach to him, in respect of any fraud or dishonesty of which he may be guilty in relation to the company, shall be void.

Every director, officer, resident representative and committee member shall be indemnified out of our funds against all civil liabilities, loss, damage or expense including liabilities under contract, tort and statute or any applicable foreign law or regulation and all reasonable legal and other costs and expenses properly payable, incurred or suffered by him as director, officer, resident representative or committee member; provided that the indemnity contained in the bye-laws will not extend to any matter which would render it void under the Companies Act as discussed above.

We have been designated by the Bermuda Monetary Authority as a non-resident under the Exchange Control Act of 1972 (the ‘‘Exchange Control Act’’). This designation allows us to engage in transactions in currencies other than the Bermuda dollar.

The transfer of Common Shares between persons regarded as resident outside Bermuda for exchange control purposes and the issue of Common Shares to such persons may be effected without specific consent under the Exchange Control Act and regulations thereunder, provided that the Bermuda Monetary Authority is promptly notified of all instances in which the Company becomes

aware that a new shareholder has obtained five percent or more of the Company’s shares. Any issues of shares, and any transfers of Common Shares to any person regarded as resident in Bermuda for exchange control purposes, require specific prior approval from the Bermuda Monetary Authority under the Exchange Control Act.

Notwithstanding the recording of any special capacity, we are not bound to investigate or incur any responsibility in respect of the proper administration of any such estate or trust.

We will take no notice of any trust applicable to any of our Common Shares whether or not we had notice of such trust.

As an ‘‘exempted company,’’ we are exempt from Bermuda laws which restrict the percentage of share capital that may be held by non-Bermudians. However, as an exempted company we may not participate in certain designated business transactions, which we do not consider relevant to our present or planned business activities.

The Company engages in transactions in the ordinary course of business with PEWC, including the purchase of certain raw materials and the distribution of PEWC products in various countries in the Asia Pacific region. The Company and PEWC are parties to a composite services agreement dated November 7, 1996 (the ‘‘Composite Services Agreement’’), which the Company has renewed annually, at its option. The Composite Services Agreement contains provisions that define the relationship and the conduct of the respective businesses of the Company and PEWC and confers certain preferential benefits on the Company. Pursuant to the Composite Services Agreement:

To the extent that transactions occur in the future between the Company and PEWC or affiliates of PEWC other than under the Composite Services Agreement, such transactions will be entered into on an arm’s length basis on terms no less favorable than those available from unaffiliated third parties.

The Company and PEWC are parties to an indemnification agreement dated November 6, 1996 (the ‘‘Indemnification Agreement’’), pursuant to which PEWC agreed to indemnify the Company (including the Company’s directors, officers, employees and agents) against any cost, expense, loss, liability or damage arising out of any claim asserted or threatened to be asserted by any third party as a result of certain actions taken or failed to be taken by PEWC or its subsidiaries (other than the Company) prior to March 1997 with respect to Sigma Cable, Sino-Sin, APEC, Siam Pacific, Siam Pacific Holding Company, Pacific Thai, Charoong Thai and NPC, following the exercise by the Company of its option to purchase, directly or indirectly, each of them (collectively, the ‘‘Transferred Businesses’’). PEWC has a duty to indemnify the Company if such cost, expense, loss, liability or damage arises out of claims resulting from the actions or inactions of PEWC or its subsidiaries, with respect to the Transferred Businesses, to the extent such action or failure to act was not in compliance with applicable laws and regulations or obligations to third parties and, with respect to Charoong Thai, is limited to situations of which PEWC had knowledge.

The Company believes that all of its operations are in compliance with, and in certain circumstances exceed, all applicable environmental laws and regulations in Thailand, Singapore, Australia and China. The Company has not been subject to any legal, regulatory or other action alleging violations or breaches of environmental standards. While the Company does not believe that the nature of its operations creates environmental hazards, no assurance can be given that new environmental laws or regulations in Thailand, Singapore, Australia, China or elsewhere, will not, in the future, require changes in the Company’s production processes or otherwise adversely affect the Company’s operations and financial condition.

The Company maintains insurance policies covering certain buildings, machinery and equipment against specified amounts of damage or loss caused by fire, flooding, other natural disasters and burglary and theft. The Company does not carry insurance for consequential loss arising from business interruptions or political disturbances and does not carry product liability insurance. The Company believes that it maintains insurance coverage commensurate with the nature of and risks associated with its business.

PEWC has provided credit support to the Company and its subsidiaries through the provision of direct loans, credit terms in inter-company trade balances between PEWC and the operating subsidiaries and corporate guarantees for trade and credit facilities from banks and financial institutions for the purposes of financing working capital, capital expenditures, acquisitions and expansion programs. There can be no assurance that PEWC will provide support in the future.

The following is a summary of certain tax consequences of the acquisition, ownership and disposition of Common Shares based on the tax laws of the United States and Bermuda. Such summary is subject to changes in United States and Bermuda law, including changes that could have retroactive effect. The following summary does not take into account the individual circumstances of an investor, nor does it purport to be a complete technical analysis or examination of all potential tax effects relevant to a decision to purchase Common Shares, including without limitation, the tax laws of the various states within the United States.

The following is a summary of certain United States federal income tax consequences of the acquisition, ownership and disposition of Common Shares by a U.S. Holder (as defined below) and a Non-U.S. Holder (as defined below). The summary does not purport to be a comprehensive description of all possible tax considerations that may be relevant to a decision to purchase Common Shares. This summary is based upon the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), regulations promulgated under the Code by the U.S. Treasury Department (the ‘‘Treasury’’) (including proposed and temporary regulations), rulings, current administrative interpretations and official pronouncements of the Internal Revenue Service (the ‘‘IRS’’), and judicial decisions, all as currently in effect and all of which are subject to differing interpretations or to change, possibly with retroactive effect. Such change could materially and adversely affect the tax consequences described below. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. Further, this summary does not discuss any foreign, state or local tax consequences.

In particular, this summary deals only with Common Shares held as capital assets and does not address the United States tax treatment of U.S. Holders and Non-U.S. Holders that are subject to special treatment under the Code, such as dealers in stocks, securities, or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, financial institutions, insurance companies, tax-exempt entities, real estate investment trusts, regulated investment companies, qualified retirement plans, individual retirement accounts, and other tax deferred accounts, expatriates of the United States, persons subject to the alternative minimum tax, persons holding shares as part of a hedging or conversion transaction or a straddle, or other integrated transaction, persons who acquired Common Shares pursuant to the exercise of any employee stock option or otherwise as compensation for services, or persons whose functional currency is not the United States dollar or who own (directly, indirectly or by attribution) 10% or more of the stock of the Company. Consequently, prospective purchasers who are U.S. Holders or Non-U.S. Holders are advised to satisfy themselves as to the overall United States federal, state, local and foreign tax consequences of their acquisition of, ownership and disposition of Common Shares by consulting their own tax advisors.

As used herein, the term ‘‘U.S. Holder’’ means a beneficial owner of Common Shares that is (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized in the United States or under the laws of the United States or any state (or the District of Columbia), (iii) an estate, the income of which is subject to United States federal income tax regardless of its source, or (iv) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more ‘‘United States persons’’ (as defined in Section 7701(a)(30) of the Code) has the authority to control all substantial decisions of the trust.

The term ‘‘Non-U.S. Holder’’ means a beneficial owner of Common Shares that is not a U.S. Holder. As described in ‘‘Taxation of Non-U.S. Holders’’ below, the consequences to a Non-U.S. Holder may differ substantially from the tax consequences to a U.S. Holder.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of Common Shares, the U.S. federal income tax consequences to a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. A holder of Common Shares that is a partnership and the partners in such partnership should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of Common Shares.

The discussion in ‘‘Taxation of Dividends’’ and ‘‘Taxation of Capital Gains’’ below assumes that the Company will not be treated as a passive foreign investment company (‘‘PFIC’’) for U.S. federal income tax purposes. For a discussion of the rules that apply if the Company is treated as a PFIC, see the discussion in ‘‘Passive Foreign Investment Company’’ below.

A U.S. Holder receiving a distribution with respect to Common Shares generally will be required to include such distribution in gross income (as ordinary income subject to regular, and not reduced, tax rates) on the day received as foreign-source dividend income to the extent such distribution is paid from the Company’s current or accumulated earnings and profits (as determined under United States federal income tax principles). Such dividends will not be eligible for the dividends received deduction (generally allowed to certain United States corporations in respect of dividends received from United States corporations). U.S. Holders that are corporations and directly own 10% or more of the voting stock of the Company may be entitled to claim a foreign tax credit for United States federal income tax purposes in respect of foreign taxes paid by the Company and certain subsidiaries.

The Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27, 117 Stat. 752) (the ‘‘2003 Act’’) was enacted on May 28, 2003. Subject to certain limitations, the 2003 Act generally provides that a dividend paid to an individual U.S. shareholder from either a domestic corporation or a ‘‘qualified foreign corporation’’ is subject to tax at the reduced rates applicable to certain capital gains (15%; 5% for taxpayers in the lower bracket; 0% for lower bracket taxpayers in 2008). A qualified foreign corporation includes certain foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary of the Treasury determines is satisfactory for purposes of this provision and which includes an exchange of information program. In addition, a foreign corporation not otherwise treated as a qualified foreign corporation is so treated with respect to any dividend it pays if the stock with respect to which it pays such dividend is readily tradable on an established securities market in the United States.

In the absence of a comprehensive income tax treaty between the United States and Bermuda, the Company will not be treated as a ‘‘qualified foreign corporation’’ under the treaty test. So long as the Company is not a PFIC (as discussed below), dividends paid by the Company to individual shareholders would qualify for these reduced rates if its stock was treated as readily tradable on an established securities market in the United States.

In Notice 2003-71, 2003-2 C.B. 922, the IRS determined that common or ordinary stock, or an American depositary receipt in respect of such stock, is considered readily tradable on an established securities market in the United States if it is listed on a national securities exchange that is registered under Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or on the Nasdaq Stock Market. As stated in the SEC’s Annual Report for 2002, registered national exchanges as of September 30, 2002 include the American Stock Exchange, the Boston Stock Exchange, the Cincinnati Stock Exchange, the Chicago Stock Exchange, the NYSE, the Philadelphia Stock Exchange, and the Pacific Exchange, Inc.

The notice further provided, however, that the Treasury and the IRS were continuing to consider, for subsequent years, the treatment of dividends with respect to stock listed only in a manner that did

not meet this definition, such as on the OTC Bulletin Board or on the electronic Pink Sheets. In particular, the notice indicated that the Treasury and the IRS were considering whether or to what extent treatment of stock that was listed only in such manner as ‘‘readily tradable on an established securities market in the United States’’ should be conditioned on the satisfaction of parameters regarding minimum trading volume, minimum number of market makers, maintenance and publication of historical trade or quotation data, issuer reporting requirements under SEC or exchange rules, or issuer disclosure or determinations regarding PFIC status. The IRS has not yet provided further guidance on whether or in what circumstances, a company like the Company, which is traded on the electronic Pink Sheets, will be treated as a qualified foreign corporation. Should the Company be relisted on a registered national exchange, any dividends paid by the Company should qualify for the reduced rates referred to above.

To the extent any distribution exceeds the current and accumulated earnings and profits of the Company for a taxable year, the distribution will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted tax basis in the Common Shares with respect to which the distribution is made, causing a reduction in the adjusted basis of the Common Shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the U.S. Holder on a subsequent disposition of the Common Shares). To the extent such distribution exceeds the U.S. Holder’s adjusted tax basis in the Common Shares, such excess will be treated as capital gain.

A U.S. Holder will recognize taxable gain or loss on any sale, exchange or other disposition of Common Shares (including a liquidation, dissolution or as a result of a non-pro rata redemption of Common Shares that qualified for treatment as a sale or exchange for United States federal income tax purposes) in an amount equal to the difference between the amount realized for the Common Shares and the U.S. Holder’s adjusted tax basis in the Common Shares. Such gain or loss generally will be treated as capital gain or loss and will be long-term capital gain or loss if the Common Shares have been held for more than one year on the date of the sale, exchange or other disposition thereof, and will be short-term capital gain or loss if the Common Shares have been held for one year or less on the date of the sale or exchange thereof. Any gain recognized by a U.S. Holder generally will be treated as United States source income. In general, an individual’s long-term capital gains are subject to U.S. federal income tax at a marginal rate of 15%, or 5% in the case of individuals in the 10% or 15% income tax brackets. (If an individual is subject to the ‘‘alternative minimum tax’’, the maximum effective tax rate on long-term capital gains will be 26% to 28%).

Long-term capital gains of corporations generally are subject to the U.S. federal income tax at a current maximum marginal rate of 35%. Short-term capital gain generally is taxable at ordinary income rates. Although capital gains of corporations currently are taxed at the same rates as ordinary income, the distinction between capital gain and ordinary income or loss is relevant for purposes of, among other things, limitations on the deductibility of capital losses. Corporations may deduct capital losses only to the extent of capital gains and generally may carry back capital losses to each of the preceding three years and carry forward capital losses to each of the succeeding five years. Individuals may deduct capital losses to the extent of capital gains plus up to $3,000 ($1,500 for married individuals filing separate returns) and may carry forward long-term capital losses indefinitely.

In general, information reporting requirements may be applicable to dividend payments (or other taxable distributions) made in respect of Common Shares to non-corporate U.S. Holders, and ‘‘backup withholding’’ at the rate of 28% will apply to such payments (i) if the holder or beneficial owner fails to provide a taxpayer identification number in the manner required by U.S. law and applicable regulations, (ii) if the IRS notifies the payor that the taxpayer identification number furnished by the holder or beneficial owner is incorrect, (iii) if there has been notification from the IRS of a failure by the holder or beneficial owner to report all interest or dividends required to be shown on its United States federal income tax returns or (iv) in certain circumstances, if the holder or beneficial

owner fails to comply with applicable certification requirements. In general, payment of the proceeds from a sale of Common Shares to or through a United States office of a broker is subject to both United States backup withholding and information reporting unless the holder or beneficial owner establishes an exemption. U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9. Amounts withheld under the backup withholding rules may be credited against a holder’s tax liability, and a holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS. Payment of the proceeds from the sale of Common Shares effected outside the United States by a foreign office of certain United States connected brokers will not be subject to backup withholding tax but will be subject to information reporting requirements unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. Holder and has no actual knowledge to the contrary, or the beneficial owner otherwise establishes an exemption.

In general, the Company will be treated as a PFIC for United States federal income tax purposes for any taxable year if either (i) at least 75% of the gross income of the Company is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of the Company’s assets is attributable to assets that produce or are held for the production of passive income. The Company believes, based on its current operations and assets, that it is not a PFIC and does not expect to become a PFIC in the future. This conclusion is a factual determination based on, among other things, a valuation of the Company’s assets, which will likely change from time to time.

If the Company were a PFIC for any taxable year during which a U.S. Holder held Common Shares, the U.S. Holder would be subject to special tax rules with respect to (i) any ‘‘excess distribution’’ by the Company to the U.S. Holder (generally any distribution received by the U.S. Holder in a taxable year that is greater than 125% of the average annual distribution received by the U.S. Holder in the three preceding taxable years, or the U.S. Holder’s holding period for the Common Shares, if shorter) and (ii) any gain realized on the sale or other disposition (including a pledge) of Common Shares.

Under these special tax rules, (i) the excess distribution or gain would be allocated ratably over the U.S. Holder’s holding period for the Common Shares, (ii) the amount allocated to the U.S. Holder’s current taxable year and to any period prior to the first taxable year in which the Company was a PFIC would be includible as ordinary income in the U.S. Holder’s current taxable year and (iii) the amount allocated to a prior year during which the Company was a PFIC would be subject to tax at the highest tax rate in effect for that year, and an interest charge would also be imposed with respect to the resulting tax attributable to each such prior year. The interest charge is computed using the applicable rates imposed on underpayments of United States federal income tax for the relevant periods.

The above rules will not apply if a ‘‘mark-to-market’’ election is available and a U.S. Holder validly makes such an election by filing a properly completed IRS Form 8621. If such election were made, a U.S. Holder generally would be required to take into account the difference, if any, between the fair market value and its adjusted tax basis in the Common Shares at the end of each taxable year as ordinary income or ordinary loss (to the extent of any net mark-to-market gains previously included in income). A U.S. Holder’s tax basis in the Common Shares would be adjusted to reflect any such income or loss amount. In addition, any gain from a sale, exchange or other disposition of the Common Shares would be treated as ordinary income, and any loss would be treated as ordinary loss (to the extent of any net mark-to-market gains previously included in income). A mark-to-market election is available to a U.S. Holder only if the Common Shares are considered ‘‘marketable stock’’ for these purposes. Generally, shares of a PFIC will be considered marketable stock if they are ‘‘regularly traded’’ on a ‘‘qualified exchange’’ within the meaning of applicable U.S. Treasury regulations. A class of shares is regularly traded during any calendar year during which such class of shares is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. A ‘‘qualified exchange’’ is defined to include a national securities exchange registered with the SEC or

certain foreign exchanges. Stock of the Company is not currently traded on a national securities exchange or a qualifying foreign exchange. Accordingly, the mark-to-market election under these rules will not currently be available.

The special tax rules described above will also not apply to a U.S. Holder if the U.S. Holder elects to have the Company treated as a ‘‘qualified electing fund’’ (a ‘‘QEF election’’) and the Company provides certain information to U.S. Holders. If the Company is treated as a PFIC, it will notify the U.S. Holders and provide such holders with the information necessary to make an effective QEF election, including information as to the procedures for making such an election. The QEF election is made on a shareholder-by-shareholder basis and can ordinarily be revoked only with the consent of the IRS.

A U.S. Holder that makes a valid QEF election will be currently taxable on its pro rata share of the Company’s ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year that the Company is classified as a PFIC, regardless of whether distributions are received. Thus, the U.S. Holder may recognize taxable income without receiving any cash to pay its tax liability with respect to such income. The U.S. Holder’s basis in the Common Shares will be increased to reflect taxed but undistributed income. Distributions of income that have been previously taxed will result in a corresponding reduction of basis in the Common Shares and will not be taxed again as a distribution to the U.S. Holder.

A U.S. Holder owning Common Shares during any year that the Company is a PFIC must file IRS Form 8621. U.S. Holders should consult their tax advisors concerning the United States federal income tax consequences of holding Common Shares and of making a mark-to-market or QEF election if the Company is treated as a PFIC in the future.

A non-U.S. corporation generally will be a controlled foreign corporation (a ‘‘CFC’’) for U.S. tax purposes if United States shareholders collectively own more than 50 percent of the total combined voting power or total value of the corporation’s stock on any day during any taxable year. For this purpose, United States shareholders are limited to those U.S. persons who own, directly, indirectly or constructively, 10 percent or more of the total combined voting power of all classes of stock of the non-U.S. corporation. The Company should not currently qualify as a CFC.

Subject to the discussion in ‘‘Backup Withholding’’ below, Non-U.S. Holders generally will not be subject to U.S. federal income tax, including withholding tax, on distributions received on Common Shares, unless the distributions are effectively connected with a trade or business conducted in the United States (and, if an applicable income tax treaty so requires, attributable to a permanent establishment maintained in the United States).

If distributions are effectively connected with a U.S. trade or business (and, if applicable, attributable to a U.S. permanent establishment), Non-U.S. Holders generally will be subject to tax on such distributions in the same manner as U.S. Holders, as described in ‘‘Taxation of U.S. Holders – Taxation of Dividends’’ above. In addition, any such distributions received by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional ‘‘branch profits tax’’ at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

Subject to the discussion in ‘‘Backup Withholding’’ below, Non-U.S. Holders generally will not be subject to U.S. federal income tax, including withholding tax, on any gain recognized on a sale or other taxable disposition of Common Shares, unless (i) the gain is effectively connected with a trade

or business conducted in the United States (and, if an applicable income tax treaty so requires, attributable to a permanent establishment maintained in the United States), or (ii) a Non-U.S. Holder is an individual and is present in the United States for at least 183 days in the taxable year of the disposition, and certain other conditions are present.

If a Non-U.S. Holder meets the test in clause (i) above, such Non-U.S. Holder generally will be subject to tax on any gain that is effectively connected with his conduct of a trade or business in the United States in the same manner as a U.S. Holder, as described in ‘‘Taxation of U.S. Holders – Taxation of Capital Gains’’ above. Effectively connected gain realized by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional ‘‘branch profits tax’’ at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

If a Non-U.S. Holder meets the test in clause (ii) above, such Non-U.S. Holder generally will be subject to tax at a 30% rate on the amount by which his U.S. source capital gain exceeds his U.S. source capital loss.

Payments to Non-U.S. Holders of distributions on, or proceeds from the disposition of, Common Shares are generally exempt from information reporting and backup withholding. However, a Non-U.S. Holder may be required to establish that exemption by providing certification of non-U.S. status on an appropriate IRS Form W-8.

Backup withholding is not an additional tax. Amounts withheld as backup withholding from a payment to a Non-U.S. Holder may be credited against his U.S. federal income tax liability and a Non-U.S. Holder may obtain a refund of any excess amounts withheld by filing the appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

In the opinion of Appleby, the following discussion correctly describes certain tax consequences of the ownership of Common Shares under Bermuda law.

Under current Bermuda law, there are no taxes on profits, income or dividends nor is there any capital gains tax. Furthermore, the Company has received from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966, as amended, an undertaking that, in the event that Bermuda enacts any legislation imposing tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax shall not be applicable to the Company or to any of its operations, or the shares, debentures or other obligations of the Company, until March 28, 2016. This undertaking does not, however, prevent the imposition of any such tax or duty on such persons as are ordinarily resident in Bermuda and holding such shares, debentures or obligations of the Company or of property taxes on Company-owned real property or leasehold interests in Bermuda.

As an exempted company, the Company must pay to the Bermuda government an annual registration fee calculated on a sliding-scale basis by reference to its assessable capital, that is, its authorized share capital plus any share premium.

There is no stamp duty or other transfer tax payable upon the transfer of shares in the Company by shareholders.

We are required to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), applicable to a foreign private issuer. We are required to file annually a Form 20-F no later than six months after the close of our fiscal year, which is December 31st. Any time the Company is delinquent in filing timely any periodic reports, including an

Annual Report on 20-F, with the SEC, that delinquency may adversely affect the Company’s status on any exchange or quotation service on which its shares are listed or quoted and the Company may not be entitled to use certain abbreviated registration statements with the SEC in connection with the registration of any of its securities. We have been delinquent in filing the Annual Report. As a result, the Company has been delisted and is currently traded on the Pink Sheets. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

Our reports and other information, when so filed, may be inspected and copied (at prescribed rates) at the public reference facilities maintained by the Securities and Exchange Commission (the ‘‘SEC’’) at Judiciary Plaza, 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. In addition, the SEC maintains a web site that contains information filed electronically with the SEC, which can be accessed over the Internet at http://www.sec.gov.

We have filed all our reports electronically since November 4, 2002. Such reports can be accessed over the Internet at http://www.sec.gov.

In addition, we post certain information regarding the Company and its operations on our website located at: www.apwcc.com. Summary information regarding the Company posted on our website should not be considered to be a substitute for, or a restatement of, the more complete information regarding the Company, its results of operations and financial condition set forth in this Annual Report or other documents or information which we may file with the SEC.

Our exposure to financial market risks derives primarily from the changes in foreign exchange rates, interest rate, and the commodity price of our primary raw material, copper.

Changes in currency exchange rates influence the Company’s results of operations. The Company’s principal operations and sales are located in Thailand, Singapore and China and a substantial portion of its revenues are denominated in Baht, Singapore dollars or Chinese Renminbi. Nearly all of the raw materials for these operations are imported and paid for in U.S. dollars and a substantial portion of the Company’s future capital expenditures are expected to be in U.S. dollars. The Company requires a significant amount of U.S. dollars for its ongoing equipment upgrade and maintenance programs. Although the Company’s reporting currency is U.S. dollars, the functional currency of its Singapore operations, which accounted for approximately 15.0% and 12.5% of Company sales (including sales of Distributed Products) in 2005 and 2006, respectively, is the Singapore dollar, the functional currency of its Thai operations, which accounted for approximately 44.2% and 45.3% of Company sales in 2005 and 2006, respectively, is the Baht, and the functional currency of its Chinese operations, which accounted for approximately 30.5% and 31.7% of Company sales in 2005 and 2006, respectively, is the Renminbi. Accordingly, any devaluation of the Baht, or the Singapore dollar or the Chinese Renminbi against the U.S. dollar increases the effective cost of foreign manufacturing equipment and the amount of foreign currency denominated expenses and liabilities and has an adverse impact on the operations of the Company.

We have entered into derivative financial instruments on a selective basis throughout the year to mitigate foreign currency fluctuation risks arising from operating activities. The application of these instruments is primarily for currency hedging purposes and not for trading purposes. The Company uses Thai Baht forward foreign exchange contracts to reduce its exposure to foreign currency risk for liabilities denominated in foreign currency. A forward foreign exchange contract obligates the Company to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent U.S. dollar payment equal to the value of such exchange. Realized and unrealized gains and losses on foreign exchange contracts are included in income as foreign exchange gains or losses.

The Company entered into forward exchange contracts with a notional value of approximately $1.8 million that matured in March and April 2007.

The Company’s exposure to market rate risk for changes in interest rates relates primarily to the Company’s bank loans and overdrafts, long-term debt and interest-bearing long-term loans from PEWC. The Company maintains a mixture of both fixed and floating debt instruments. Interest paid totaled $3.7 million in 2005 and $5.6 million in 2006.

The following table provides information about the Company’s debt instruments as of December 31, 2005 and December 31, 2006 that are sensitive to changes in interest rates.

We have cash flow and earnings exposure due to market interest rate changes for our floating debt obligations. We manage the exposure to financial market risk by performing ongoing evaluations of our debt portfolios and restructuring our financial instruments accordingly to provide the optimum interest structure. At our current level of indebtedness, a half percentage point change in interest rates would affect our interest payments by approximately $0.5 million annually.

Copper is the principal raw material we use, accounting for approximately 60% and 70% of the cost of sales in 2005 and 2006, respectively. We purchase copper at prices based on the average prevailing international spot market prices on the London Metal Exchange (the ‘‘LME’’) for copper for the one month prior to purchase. The price of copper is influenced heavily by global supply and demand as well as speculative trading. As with other costs of production, changes in the price of copper may affect our cost of sales. Whether this has a material impact on our operating margins and financial results depends primarily on our ability to adjust charges to our customers, such that increases and decreases in the price of copper are fully reflected in those charges. The purchase price of our products is based in part on the cost of copper used to manufacture those products. In addition, in the ordinary course of business we maintain inventories of raw materials and finished products reasonably necessary for the conduct of our business. These inventories typically reflect the cost of copper prevailing in the market at the time we purchase. Most of our sales of manufactured products reflect copper prices prevailing at the time the products are ordered. A long-term decrease in the price of copper would require the Company to revalue the value of its inventory at periodic intervals to the then net realizable value, which could be below cost. Copper prices have been subject to considerable volatility and it is not always possible to manage our copper purchases and inventory so as to neutralize the impact of copper price volatility. Accordingly, significant volatility in copper prices could have an adverse effect on our operations. No assurance can be given that such volatility will not continue to recur.

Item 14: Material Modifications to the Rights of Security Holders and Use of Proceeds

In 2004, we retained an internationally recognized consulting firm, to review and evaluate the effectiveness of our disclosure controls and procedures and to assist the Company in establishing satisfactory disclosure controls and procedures. The consulting firm concluded that our disclosure controls and procedures were not satisfactory in a number of respects to ensure that material information relating to us was made known to them or to senior management by others within our Company. In particular, the following material weaknesses were identified:

The Company is committed to improving the efficacy and reliability of its system of internal controls. We are developing new procedures to enhance internal controls over financial reporting, and we are establishing an internal audit department at the Company headquarters which would establish the rules for internal control procedures and would supervise operating and financial audits. Other measures taken include engaging external consultants to advise on risk control and internal audit functions and to assist in achieving compliance with applicable regulatory requirements, sending staff for training on U.S. GAAP accounting, employing more staff progressively to strengthen the accounting, finance and internal audit departments, implementing credit control policies at certain subsidiaries, and commencing the process of documenting policies and procedures governing the Company’s accounting policies, internal control and code of conduct.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. The certifications provided as part of this Annual Report by our Chief Executive Officer and by our Chief Financial Officer are subject to and qualified by the disclosures and discussion in this Report on the absence of adequate disclosure controls and procedures. See — ‘‘Risk Factors: Inadequate Disclosure Controls and Procedures, Section 3.3.4.’’

This Annual Report does not contain a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to the application of a transition period established by the Securities and Exchange Commission.

As of December 31, 2005 and December 31, 2006, the Company did not have an audit committee. As the Common Shares are traded in the Pink Sheets, the Company is not required to have an audit

committee that meets the requirements of, nor is it required to have an audit committee financial expert as contemplated by, Regulation 10A-3 under the Exchange Act. During those periods of time when the Company did not have any independent directors, our full Board of Directors fulfilled the functions of an audit committee pursuant to Section 3(a)(58) of the Exchange Act. On September 28, 2007, our Board appointed Mr. Anson Chan and Dr. Yichin Lee as independent directors to fill the two casual vacancies on the Board, and to constitute the members of the audit committee, with Mr. Chan serving as the audit committee’s chairman.

The audit committee was responsible for coordinating the preparation of this Annual Report.

On April 26, 2005, the Company adopted an audit committee Charter, which sets forth the powers and responsibilities of the audit committee of the Company. A copy of the Charter is on file with the SEC.

On April 26, 2005 the Company adopted a code of ethics applicable to its Chief Executive Officer and senior financial officers. A copy of the Company’s code of ethics is on file with the SEC.

The aggregate fees billed for each of the fiscal years 2005 and 2006 for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements totaled $0.5 million and $0.6 million, respectively.

There were no fees for the fiscal years 2005 and 2006 for assurance and audit-related services by the principal accountant.

The aggregate fees billed for the fiscal years 2005 and 2006 for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning total approximately $6,000 for each year. These fees were for services including tax planning, compliance and general advice.

There were no other fees for the fiscal years 2005 and 2006 for services, other than those services described in the preceding paragraphs of this Item 16C, rendered by the principal accountant.

The engagement of the accountant to render audit or non-audit services is entered into pursuant to pre-approval policies and procedures established in the Charter of the audit committee of the Company, all services described in this Item 16C were approved by the audit committee holding office at the time of the engagement, which was the full Board of Directors. The services described in this Item 16C were approved also by the current audit committee after its appointment by the Board on September 28, 2007.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

During 2005 and 2006, there were no purchases by the issuer or any ‘‘affiliated purchaser’’ for the purposes of this Item.

The Company has elected to provide the financial statements and related information specified in Item 18 in lieu of Item 17.


1.1			Memorandum of Association of Asia Pacific Wire & Cable Corporation Limited (incorporated by reference to Exhibit 1.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on June 21, 2001).
1.2			Amended and Restated Bye-Laws of Asia Pacific Wire & Cable Corporation Limited (incorporated by reference to Exhibit 1.2 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
3.1			Shareholders’ Agreement dated June 28, 2007 (incorporated by reference to Exhibit 3.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
4.1			Composite Services Agreement (incorporated by reference to Exhibit 3.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on June 21, 2001).
4.2			Indemnification Agreement dated November 6, 1996 (incorporated by reference to Exhibit 10.2 of the Company’s Form F-1 filed with the Securities and Exchange Commission on November 13, 1996).


4.3			Agreement for the Sale and Purchase of (i) Shares in Crown Century Holdings Limited and (ii) Shareholder’s Loan (incorporated by reference to Exhibit 5.1 of the Company’s Form 20-F filed with the Securities and Exchange Commission on July 1, 2002).
4.4			Settlement Agreement between Set Top International Inc. (Party A) and Pacific Electric Wire and Cable Co., Ltd. and Asia Pacific Wire and Cable Corporation Ltd. (Party B) (Translation) (incorporated by reference to Exhibit 4.4 of the Company’s Form 20-F filed with the Securities and Exchange Commission on July 7, 2004).
4.5			Settlement Agreement between Asia Pacific Wire & Cable Corporation, Ltd. and Sino-JP Fund Co., Ltd. (incorporated by reference to Exhibit 4.5 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
4.6			Termination Agreement between Pacific Electric Wire & Cable Co., Ltd. and Chiao Tung Bank (incorporated by reference to Exhibit 4.6 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
8			List of significant subsidiaries (see Note 1 to the consolidated financial statements).
11			Code of Ethics (incorporated by reference to Exhibit 11 of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).
12.1			Certification of Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act.
12.2			Certification of Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act.
13.1			Certification by Chief Executive Officer of periodic financial report pursuant to 18 U.S.C. Section 1350, as mandated by Section 906 of the Sarbanes-Oxley Act.
13.2			Certification by Chief Financial Officer of periodic financial report pursuant to 18 U.S.C. Section 1350, as mandated by Section 906 of the Sarbanes-Oxley Act.
15(a)			Audit Committee Charter (incorporated by reference to Exhibit 15(a) of the Company’s Form 20-F filed with the Securities and Exchange Commission on November 9, 2007).

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.


			Page
Report of independent registered public accounting firm			F-2
Report of independent registered public accounting firm			F-3
Consolidated balance sheets as of December 31, 2004, 2005 and 2006			F-4
Consolidated statements of operations for the years ended December 31, 2003, 2004, 2005 and 2006			F-6
Consolidated statements of shareholders’ equity for the years ended December 31, 2003, 2004, 2005 and 2006			F-7
Consolidated statements of cash flows for the years ended December 31, 2003, 2004, 2005 and 2006			F-8
Notes to consolidated financial statements			F-9

To the Board of Directors and Shareholders of
Asia Pacific Wire & Cable Corporation Limited

We have audited the accompanying consolidated balance sheet of Asia Pacific Wire & Cable Corporation Limited and subsidiaries (the ‘‘Company’’) as of December 31, 2004, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the two years in the period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Asia Pacific Wire & Cable Corporation Limited and subsidiaries as of December 31, 2004, and the consolidated results of their operations and their cash flows for the two years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

We have audited the accompanying consolidated balance sheets of Asia Pacific Wire & Cable Corporation Limited and subsidiaries (the ‘‘Company’’) as of December 31, 2006 and 2005, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Asia Pacific Wire & Cable Corporation Limited and subsidiaries as of December 31, 2006 and 2005, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.


	December 31,
	2004				2005				2006
ASSETS
Current assets:
Cash and cash equivalents		$	18,504			$	20,748			$	24,664
Unrestricted short-term bank deposits (note 5)			5,915				9,482				2,003
Restricted short-term bank deposits (note 5)			8,169				11,264				13,587
Accounts receivable, net of allowance for doubtful accounts of $8,516, $8,383 and $9,290 as at December 31, 2004, 2005 and 2006, respectively (note 11)			78,766				78,965				120,422
Amounts due from related parties (note 17)			4,444				4,562				8,534
Inventories, net of allowance for inventories of $3,450, $2,142 and $3,806 as at December 31, 2004, 2005 and 2006, respectively (note 11)
Distributed products			1,503				1,636				3,390
Finished products			27,109				26,451				45,624
Products in process			12,415				12,333				22,576
Raw materials and supplies			21,368				18,593				37,423
			62,395				59,013				109,013
Investments (note 7)			2,076				1,384				232
Deferred tax assets (note 12)			2,576				301				490
Prepaid expenses			3,400				4,280				10,612
Other current assets			2,402				1,588				1,995
Total current assets			188,647				191,587				291,552
Property, plant and equipment:
Land			4,451				4,023				4,514
Land use rights			2,108				2,161				2,624
Buildings			38,908				37,191				42,375
Machinery and equipment			89,943				88,126				101,938
Motor vehicles			2,941				2,787				3,433
Office equipment			7,348				7,663				9,209
			145,699				141,951				164,093
Accumulated depreciation and amortization			(80,896	)			(85,100	)			(106,749	)
			64,803				56,851				57,344
Other assets:
Long term investments (note 7)			668				579				533
Investment in equity investees (note 21)			7,788				4,165				4,238
Goodwill (note 6)			8,324				8,324				8,801
Other assets			108				248				58
Deferred tax assets (note 12)			95				1,184				2,039
			16,983				14,500				15,669
Total assets		$	270,433			$	262,938			$	364,565

The accompanying notes are an integral part of these consolidated financial statements.


	December 31,
	2004				2005				2006
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank loans and overdrafts (note 8)		$	48,002			$	49,165			$	95,986
Accounts payable			23,799				20,011				31,114
Accrued expenses			3,763				5,423				7,522
Amounts due to related parties (note 17)			21,984				25,508				33,306
Short-term loans from related parties (note 17)			1,732				1,732				2,632
Income tax liabilities (Note 12)			3,333				3,266				8,308
Current portion of long-term debt (note 9)			1,710				—				1,577
Deferred tax liabilities (note 12)			493				323				516
Other current liabilities			3,679				5,809				2,507
Total current liabilities			108,495				111,237				183,468
Long-term debt, less current portion (note 9)			—				1,615				—
Long-term debt from related parties, less current portion (note 17)			5,945				5,926				—
Other liabilities			217				166				387
Deferred tax liabilities (note 12)			1,640				300				728
Total liabilities			116,297				119,244				184,583
Minority interest			46,990				46,072				61,217
Commitments and contingencies (notes 14 and 16)
Shareholders’ equity (note 10):
Common stock, $0.01 par value:
Authorized shares – 20,000,000 shares Issued and outstanding shares – 13,830,769 in 2004, 2005 and 2006			138				138				138
Additional paid-in capital			111,541				111,541				111,541
Retained earnings			18,508				13,551				26,524
Accumulated other comprehensive loss (note 13)			(23,041	)			(27,608	)			(19,438	)
Total shareholders’ equity			107,146				97,622				118,765
Total liabilities and shareholders’ equity		$	270,433			$	262,938			$	364,565

The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US Dollars, except share data)


	Year ended December 31,
	2003				2004				2005				2006
Net sales
Manufactured products		$	192,293			$	269,107			$	301,516			$	439,280
Distributed products			15,187				15,493				20,055				12,416
Sales, delivery and installation of wires and cables			3,919				9,656				15,691				16,421
			211,399				294,256				337,262				468,117
Costs of sales (purchases from related parties amounted to $53,141 in 2003, $56,402 in 2004, $55,620 in 2005 and $74,346 in 2006)
Manufactured products			(159,588	)			(231,361	)			(264,968	)			(381,688	)
Distributed products			(14,696	)			(14,625	)			(19,421	)			(11,309	)
Sales, delivery and installation of wires and cables			(3,827	)			(9,398	)			(16,066	)			(16,705	)
			(178,111	)			(255,384	)			(300,455	)			(409,702	)
Gross profit			33,288				38,872				36,807				58,415
Selling, general and administrative expenses			(19,585	)			(25,203	)			(25,536	)			(26,195	)
Provision for doubtful debts			(894	)			(3,664	)			(1,017	)			(1,221	)
Provision for inventories			—				—				(201	)			(1,121	)
Impairment of long-lived assets			—				—				—				(196	)
Income from operations			12,809				10,005				10,053				29,682
Exchange gain (loss)			4,161				233				(3,137	)			5,464
Interest income			285				225				680				705
Interest expense			(1,407	)			(2,250	)			(3,427	)			(5,886	)
Share of net gain (loss) of equity investees			1,475				(4,224	)			170				73
Impairment of investments			—				(134	)			(3,223	)			(86	)
Loss on sale of investments			(885	)			(1,161	)			(259	)			(729	)
Gain on liquidation of subsidiary	−						—				—				1,801
Other income			1,122				925				829				1,536
Income before income taxes and minority interests			17,560				3,619				1,686				32,560
Income taxes (note 12)			(2,477	)			(4,716	)			(3,860	)			(10,257	)
Minority interests			(5,083	)			(1,427	)			(2,783	)			(9,330	)
Net income (loss)		$	10,000			$	(2,524	)		$	(4,957	)		$	12,973
Basic and diluted income (loss) per share		$	0.72			$	(0.18	)		$	(0.36	)		$	0.94
Basic and diluted weighted average common shares outstanding			13,830,769				13,830,769				13,830,769				13,830,769

The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands of US Dollars, except share data)


	Common stock			Additional paid-in capital			Retained earnings				Accumulated other comprehensive income (loss)				Total
Balance at January 1, 2003		$	138		$	111,541		$	11,032			$	(30,664	)		$	92,047
Net income for 2003			—			—			10,000				—				10,000
Currency translation adjustment			—			—			—				4,754				4,754
Gains realized on disposal of available-for-sale securities			—			—			—				(89	)			(89	)
Unrealized gains on available-for-sale securities – net of income tax of $15			—			—			—				464				464
Comprehensive income																	15,129
Balance at December 31, 2003			138			111,541			21,032				(25,535	)			107,176
Net loss for 2004			—			—			(2,524	)			—				(2,524	)
Currency translation adjustment			—			—			—				1,583				1,583
Unrealized gains on available-for-sale securities – net of income tax of $1			—			—			—				911				911
Comprehensive loss																	(30	)
Balance at December 31, 2004			138			111,541			18,508				(23,041	)			107,146
Net loss for 2005			—			—			(4,957	)			—				(4,957	)
Currency translation adjustment			—			—			—				(4,062	)			(4,062	)
Unrealized loss on available-for-sale securities – net of income tax of $286			—			—			—				(505	)			(505	)
Comprehensive loss																	(9,524	)
Balance at December 31, 2005			138			111,541			13,551				(27,608	)			97,622
Net income for 2006			—			—			12,973				—				12,973
Currency translation adjustment			—			—			—				9,822				9,822
Less: reclassification adjustment for realized translation gain for liquidation of subsidiary included in net income, net of income tax of $556			—			—			—				(1,245	)			(1,245	)
Gain realized on sale of available-for-sale securities – net of income tax of $258			—			—			—				(343	)			(343	)
Unrealized loss on available-for-sales securities – net of income tax of $92			—			—			—				(64	)			(64	)
Comprehensive income																	21,143
Balance at December 31, 2006		$	138		$	111,541		$	26,524			$	(19,438	)		$	118,765

The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US Dollars, except share data)


	Year ended December 31,
	2003				2004				2005				2006
Operating activities:
Net income (loss)		$	10,000			$	(2,524	)		$	(4,957	)		$	12,973
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gain) loss on disposal of property, plant and equipment			(1,336	)			41				386				(136	)
Depreciation			9,217				8,295				9,429				8,989
Deferred income taxes			(2,110	)			126				(324	)			(423	)
Provision for doubtful accounts			902				3,528				1,017				1,221
Provision for slow-moving inventories			77				1,439				346				2,017
Share of net (gain) loss of equity investees			(1,475	)			4,224				(170	)			(73	)
Impairment of long lived assets			—				—				—				196
Impairment of investments			—				134				3,223				86
Loss on sale of investments			885				1,161				259				729
Gain on liquidation of subsidiary			—				—				—				(1,801	)
Minority interests			5,083				1,427				2,783				9,330
Foreign currency translation adjustment			(1,405	)			(1,967	)			5,211				(1,192	)
Changes in operating assets and liabilities net of acquisitions of business:
Accounts receivable			(2,637	)			(22,578	)			(3,357	)			(35,809	)
Inventories			(6,253	)			(18,138	)			3,037				(52,017	)
Other current assets			547				(3,017	)			(66	)			(6,739	)
Amounts due to related parties			8,030				(1,868	)			3,405				3,827
Accounts payable, accrued expenses and other liabilities			4,733				11,582				6				15,892
Net cash provided by (used in) operating activities			24,258				(18,135	)			20,228				(42,930	)
Investing activities:
Decrease in restricted short-term bank deposits			(2,488	)			(4,523	)			(10,925	)			(1,056	)
(Decrease) increase in unrestricted short-term bank deposits			(4,697	)			2,019				(3,867	)			8,619
Investment in equity investees			(183	)			(60	)			—				—
Purchases of property, plant and equipment			(4,877	)			(4,269	)			(4,478	)			(5,202	)
Proceeds from disposal of property, plant and equipment			2,147				123				743				574
Acquisition of additional investment in subsidiary			(1,091	)			—				—				(477	)
Proceeds from disposal of investments			6,013				839				—				626
Disposal of other assets			81				638				—				190
Purchases of other assets			(218	)			—				(140	)			—
Net cash (used in) provided by investing activities			(5,313	)			(5,233	)			(18,667	)			3,274
Financing activities:
Borrowings of loans from related parties			(288	)			(231	)			—				—
Repayments of long-term debt			(1,750	)			(1,879	)			(19	)			(5,026	)
Repayments of bank loans			(65,884	)			(13,801	)			(10,806	)			(19,048	)
Increase in bank loans			51,060				39,815				12,506				65,516
Net (decrease) increase in overdrafts			(57	)			467				(537	)			354
Net cash (used in) provided by financing activities			(16,919	)			24,371				1,144				41,796
Effect of exchange rate changes on cash and cash equivalents			787				257				(461	)			1,776
Net increase in cash and cash equivalents			2,813				1,260				2,244				3,916
Cash and cash equivalents at beginning of year			14,431				17,244				18,504				20,748
Cash and cash equivalents at end of year		$	17,244			$	18,504			$	20,748			$	24,664

The accompanying notes are an integral part of these consolidated financial statements.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Asia Pacific Wire & Cable Corporation Limited (the ‘‘Company’’), which is a subsidiary of Pacific Electric Wire & Cable Co., Ltd. (‘‘PEWC’’), a Taiwanese company, was incorporated as an exempted company in Bermuda on September 19, 1996 under the Companies Act 1981 of Bermuda (as amended) for the purpose of acting as a holding company. The Company is principally engaged in owning operating companies engaged in the electronic cable, power cable, telecommunication cable and enameled wire industry.

The Company’s operating subsidiaries (the ‘‘Operating Subsidiaries’’) are engaged in the manufacturing and distribution of telecommunications, power cable and enameled wire products in Singapore, Thailand, Australia, the People’s Republic of China (‘‘PRC’’) and other markets in the Asia Pacific region. Major customers of the Operating Subsidiaries include government organizations, electric contracting firms, electrical dealers, and wire and cable factories.

As previously disclosed in the Company’s 2004 Financial Statements, PEWC and Swiss Re entered into an Amended and Restated Letter of Credit and Reimbursement Agreement (the ‘‘LC Agreement’’), pursuant to which Swiss Re issued a letter of credit to satisfy certain credit and loan obligations of PEWC’s subsidiary, Pacific USA Holdings Corp. (‘‘PUSA’’), to PUSA’s lenders. Under the LC Agreement, Swiss Re issued a Standby Letter of Credit in favor of Standard Chartered Bank, Hong Kong Branch (‘‘Standard’’), in the total amount of $124 million (the ‘‘Letter of Credit’’), conditioned upon the closing of a $120 million transaction between PUSA and Standard. As a condition to obtaining the letter of credit, in February 2002, PUSA, PEWC and Swiss Re finalized a Pledge Agreement (‘‘Pledge Agreement’’), pursuant to which PUSA pledged to Swiss Re shares representing approximately 53% of the equity of the Company (the ‘‘Pledged Shares’’), together with certain shares of other related entities. At that time PEWC was the ultimate beneficial owner of approximately 75.4% of the equity interest in the Company through its subsidiaries, Kinbong Holdings Limited (‘‘Kinbong’’) and PUSA.

As also previously disclosed in the 2004 financial statements, in December 2002, PUSA filed a voluntary petition for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Because of the bankruptcy filing, in December 2002, Swiss Re paid to Standard $90.6 million under the terms of the Letter of Credit as a result of which Swiss Re became entitled, under the terms of the Pledge Agreement, to foreclose on the Pledged Shares of the Company.

Following an internal investigation, it was discovered by the Boards of both PEWC and the Company that an ex-director of PEWC (‘‘ex-director’’), without the authorization of either Board, had separately negotiated a transaction whereby the Pledged Shares of the Company held by PUSA and the shares of the Company held by Kinbong would be transferred to Set Top International Inc. (‘‘Set Top’’), a British Virgins Islands company. The terms of the transaction were initially withheld from and, subsequently, misrepresented to the Boards of PEWC and the Company by the ex-director, together with certain of his associates.

The Boards of both PEWC and the Company concluded that the ex-director had an undisclosed interest in, or control position over, Set Top, and that the terms he agreed to with Set Top were significantly less favorable to the companies than those that would have been available in a bona fide transaction with an unaffiliated party.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

On December 4, 2003, PEWC and the Company commenced an action in the United States District Court for the Southern District of New York (the ‘‘Southern District’’) against the following parties: Set Top, Kinbong, Tom Ching-Yun Tung, Frank Wei-Feng Lin, Tai-Sheng Lien, Fu-Chuan Tsai, Fu-Nu Tsai, Yuan-Chun Hsu, Jack Takacs and Robert Everett Wolin (collectively ‘‘Defendants’’). The Complaint alleged various causes of action, including fraud and conspiracy to commit fraud; violation of section 13(d) of the Securities Exchange Act; RICO violations under 18 USC § 1962; and breach of fiduciary duty.

The Southern District action did not progress to the discovery phase as the parties sought to agree to the terms of a settlement agreement. On July 2, 2004, the Company, PEWC and Set Top entered into a Settlement Agreement (the ‘‘Settlement Agreement’’) pursuant to which PEWC agreed to pay Set Top $25 million (the ‘‘Settlement Amount’’).

In order to implement the terms of the Settlement Agreement, PEWC, Set Top and Asset Managers Co., Ltd. (‘‘AMC’’) entered into a Share Purchase Agreement and a related Option Agreement dated on September 15, 2004, pursuant to which AMC agreed to pay to Set Top $25 million in exchange for all right, title and interest of Set Top in 10,074,102 shares of APWC. Following the closing of the 2004 Share Purchase Agreement, AMC designated Sino-JP Fund Co., Ltd. (‘‘Sino-JP’’) as an assignee of the Subject Shares and Sino-JP was registered as the record owner of the Subject Shares with the Company’s register.

As of December 31, 2004, Sino-JP held 10,074,102 shares, representing approximately 72.84% of the outstanding shares of Common Stock of the Company.

On September 14, 2005, PEWC exercised the repurchase option under the Option Agreement and reacquired 7,307,948 shares of the Common Stock, representing 52.84% of the total issued and outstanding Common Stock. As a result of the reacquisition by PEWC of majority control, PEWC indirectly held as of that date 7,664,615 shares of Common Stock, representing 55.4% of the total issued and outstanding shares of Common Stock and Sino-JP now held 2,766,154 shares of the Common Stock, representing 20% of the total issued and outstanding shares of Common Stock (the ‘‘Sino-JP Shares’’).

On June 28, 2007, the Company entered into a comprehensive settlement and release agreement with Sino-JP, which dismissed and released all claims between the parties and which put to an end to all related litigation. The 55% majority shareholder of the Company, PEWC, also entered into a settlement and release agreement with Sino-JP that terminated all disputes and litigation between those parties.

On June 29, 2007, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership controlled by MSD Capital, L.P. acquired the Sino-JP Shares and entered into a shareholders’ agreement with the Company and PEWC. The shares acquired constituted 20% of the issued and outstanding shares of the Company.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


	Percentage of Equity interest
Place of incorporation and operations	2004			2005			2006
The British Virgin Islands
Asia Pacific Wire & Cable General Holdings Ltd		100	%		100	%		100	%
PRC (APWC) Holding Ltd.		100	%		100	%		100	%
Samray Inc.		100	%		100	%		100	%
Siam (APWC) Holdings Ltd.		100	%		100	%		100	%
Moon View Ltd.		100	%		100	%		100	%
Trigent Investment Holdings Limited		100	%		100	%		100	%
Crown Century Holdings Ltd.		100	%		100	%		100	%
Singapore
Sigma Cable Company (Private) Limited (‘‘Sigma Cable’’)		98.3	%		98.3	%		98.3	%
Sino-Sin Trading Pte. Ltd. (‘‘Sino-Sin’’)		100	%		100	%		100	%
Sigma-Epan International Pte Ltd. (‘‘Sigma-Epan’’)		100	%		100	%		100	%
Singvale Pte Ltd (‘‘Singvale’’)		100	%		100	%		100	%
The People’s Republic of China
Ningbo Pacific Cable Co., Ltd. (‘‘Ningbo Pacific’’)		94.31	%		94.31	%		94.31	%
Shanghai Yayang Electric Co., Ltd. (‘‘Shanghai Yayang’’)		56.73	%		56.36	%		53.9	%
Shandong Pacific Fiber Optics Co.Ltd (‘‘SPFO’’)		51	%		51	%		51	%
Pacific Electric Wire & Cable (Shenzhen) Co., Ltd (‘‘PEWS’’)		100	%		100	%		100	%
Hong Kong
Crown Century Holdings Limited (‘‘CCH’’)		100	%		100	%		100	%
Australia
Australia Pacific Electric Cable Pty Limited (‘‘APEC’’)		98.53	%		98.53	%		98.53	%
Thailand
Charoong Thai Wire and Cable Public Company Limited (‘‘Charoong Thai’’)		52.83	%		52.43	%		50.39	%
Siam Pacific Electric Wire & Cable Company Limited (‘‘Siam-Pacific’’)		52.83	%		52.43	%		50.39	%
Pacific-Thai Electric Wire & Cable Company Limited (‘‘Pacific-Thai’’)		52.83	%		52.43	%		50.39	%
Hard Lek Limited (‘‘Hard Lek’’)		73.98	%		73.98	%		73.98	%
APWC (Thailand) Co., Ltd		95.66	%		95.66	%		95.66	%
PEWC (Thailand) Co., Ltd		95.66	%		95.66	%		95.66	%
Myanmar
Myanmar Sigma Cable Co., Ltd. (Not active)		78.59	%		78.59	%		78.59	%

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


	Percentage of Equity interest
Place of incorporation and operations	2004			2005			2006
The People’s Republic of China
Shandong Huayu Pacific Fibre Optics Communications Co., Ltd. (‘‘Shandong Huayu’’)		48.73	%		48.73	%		48.73	%
Shandong Pacific Rubber Cable Co., Ltd. (‘‘SPRC’’)		25.00	%		25.00	%		25.00	%
Thailand
Siam Pacific Holding Company Limited (‘‘SPHC’’)		49.00	%		49.00	%		49.00	%
Loxley Pacific Co., Ltd. (‘‘Lox Pac’’)		21.86	%		21.76	%		21.26	%
Thai Professional Telecom Network Co., Ltd (‘‘Thai Professional’’)*		15.84	%		15.84	%		15.84	%

Charoong Thai is listed on the Stock Exchange of Thailand and is engaged in the manufacturing of wire and cable products for the power and telecommunications industries in Thailand.

Acquisitions accounted for as purchases and disposals undertaken by the Company during the years ended December 31, 2004, 2005 and 2006 include the following:

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The Company was listed on the New York Stock Exchange in March 1997. On December 24, 2001, the staff of the New York Stock Exchange (‘‘NYSE’’) announced that it had determined that the trading of the common stock of APWC should be suspended prior to December 31, 2001. The decision was reached in view of the fact that the Company had fallen below NYSE’s continued listing standards regarding: average global market capitalization over a consecutive 30 trading-day period of not less than $15; and average closing price of a security of not less than $0.001 over a consecutive 30 trading-day period. Following the delisting of the Company’s common stock on the NYSE, the Company’s common stock was traded under the ticker AWRCF, on the Over-the-Counter Bulletin Board (‘‘OTC BB’’), operated by NASD, Inc. After the Company failed to timely file its annual report on Form 20-F for the 2004 fiscal year, the Company was delisted from the OTC BB in August 2005 and since that time its shares of common stock have been quoted on the ‘‘pink sheets’’ market by Pink Sheets LLC, a privately owned company that provides pricing and financial information for over-the-counter securities. Notwithstanding the above developments, the Company continues to be subject to the reporting requirements under the Securities Exchange Act of 1934.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (‘‘US GAAP’’). The basis of accounting differs from that used in the statutory financial statements of the Company’s subsidiaries and equity investee companies, which are prepared in accordance with the accounting principles generally accepted in

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

their respective countries of incorporation. In the opinion of management, the consolidated financial statements have reflected all costs incurred by the Company and its subsidiaries in operating the business.

All dollar amounts in the financial statements and in the notes herein are U.S. dollars (‘‘US$’’) unless otherwise designated.

Certain comparative amounts in prior financial statements have been reclassified to conform with the current year’s presentation. Such reclassification had no affect on net income (loss).

The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated on consolidation. The Company’s investments for which its ownership exceeds 20%, but which are not majority-owned or controlled, are accounted for using the equity method if the Company has the ability to exercise significant influence over the companies’ operating and financial policies. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Inventories are valued at the lower of cost or market value. Cost is determined using the first-in, first-out or weighted average method.

If the expected sales price less completion costs and costs to execute sales (net realizable value) is lower than the carrying amount, a write-down is recognized for the amount by which the carrying amount exceeds its net realizable value.

Due to changing market conditions in the wire & cable industry, in 2005 and 2006 management conducted a thorough review of the inventory in all of it product lines. As a result, a provision for inventory losses of $201 and $1,121 were charged against operations in 2005 and 2006, respectively, to

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

write down inventory to its net realizable value. This was based on the Company’s best estimates of product sales prices and customer demand patterns, and its plans to transition its products. It is at least reasonably possible that the estimate used by the Company to determine its provision for inventory losses will be materially different from the actual amount or results. These differences could result in materially higher than expected inventory provisions, which could have a materially adverse effect on the Company’s results of operations and financial condition in the near term.

The Company accounts for income taxes using the liability method in accordance with FASB Statement No. 109 — Accounting for Income Taxes. Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted rates that will be in effect when the differences are expected to reverse. A valuation allowance is established if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Property, plant and equipment are stated at cost less depreciation and any impairment losses. Asset leases qualifying as capital leases are also included in property, plant and equipment. Major renewals and improvements are capitalized and minor replacements, maintenance, and repairs are charged to current operations as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the respective lease term, whichever is shorter. No depreciation is charged for construction in progress and machinery and equipment under installation. Depreciation is provided as follows:

Depreciation for 2003, 2004, 2005 and 2006 amounted to $9,217, $8,295, $9,429 and $8,989, respectively.

When property and equipment are retired, sold or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in operations. The useful lives and residual values if not insignificant are reassessed annually.

Goodwill represents the excess of the cost of purchased business over the fair value of the underlying net assets.

Goodwill, including goodwill associated with equity method investments, is not amortized, but tested for impairment at least annually or more frequently if circumstances indicate that impairment may exist. The Company identifies potential goodwill impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company determines fair value using a discounted cash flow approach. If the fair value of a reporting unit exceeds its carrying amount,

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, the amount of goodwill impairment loss, if any, must be measured. The Company measures the amount of goodwill impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized as an operating expense.

FASB Statement No. 142, ‘‘Goodwill and Other Intangible Assets’’, defines a reporting unit as an operating segment or one level below an operating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. Upon adoption of Statement 142 on January 1, 2002, the Company allocated the whole amount of goodwill to the manufactured products segment.

The impairment assessment was made as of December 31, 2003, 2004, 2005 and 2006, and no impairment was indicated. Total goodwill was $8,324, $8,324 and $8,801 as of December 31, 2004, 2005 and 2006, respectively.

Management determines the appropriate classification of its investment at the time of purchase and re-evaluates such designation as of each balance sheet date.

Equity securities are classified as available-for-sale, as the Company does not trade in these securities, but rather are held as longer term investments due to business relationships with the entities. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in a separate component of shareholders’ equity. The amortized cost of held-to-maturity debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income. Realized gains and losses and declines in values judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income.

Investments in which the Company does not have a controlling interest or an ownership voting interest to exert significant influence, and which are not publicly traded are accounted for at cost.

A judgmental aspect of accounting for investments (including investments in equity investees) involves determining whether an other-than-temporary decline in value of the investment has been sustained. If it has been determined that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value, by a charge to earnings. Such evaluation is dependent on the specific facts and circumstances. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

In 2004, the Company recorded an impairment charge of $134 related to the unrealized loss in value of a long-term investment in a privately-held company. In 2005, the Company recorded an impairment charge of $3,223 related to investment in certain equity investees.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Recoverability of an asset is measured by comparison of the carrying amount of the asset to the net undiscounted future cash flow expected to be generated from the assets. If the future undiscounted cash flows are not sufficient to recover the carrying value of the asset, the asset’s carrying value is adjusted to fair value. The Company estimates fair value based on discounted future cash flow.

In 2006, the Company recorded an impairment charge of $196 related to the impairment of certain property, plant and equipment of Ningbo, included in the manufactured products segment.

These impairment charges were recorded to reduce the carrying value of the identified assets to fair value. Fair values were derived using a variety of methodologies, including cash flow analysis, estimates of sales proceeds and independent appraisals. Where cash flow analyses were used to estimate fair values, key assumptions employed, included estimates of future growth, estimates of gross margins and estimates of the impact of inflation. The charges were primarily the result of management’s revised outlook due to the prolonged unfavourable market conditions.

Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectibility of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

Sales represents the invoiced value of goods sold, net of value added tax and returns, commission income earned on distribution activities, and service fee income on installation activities. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized.

The Company recognizes revenue from installation activities using the percentage-of-completion method, based on the customer certification of the distance of cable laid with respect to the estimated

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

total contract revenue, and in accordance with Statement of Position (SOP) 81-1, ‘‘Accounting for the Performance of Construction-Type and Certain Production-Type Contracts’’ issued by the American Institute of Certified Public Accountants.

When elements such as installation and sale of cables are contained in a single arrangement, or in related arrangements with the same customer, the Company allocates revenue to each element based on its relative fair value. The allocation of the fair value to the delivered elements is limited to the amount that is not contingent on future delivery of services or subject to customer-specified return or refund privileges.

The Company adopted EITF No. 00-21, ‘‘Accounting for Revenue Arrangements with Multiple Deliverables’’ (‘‘EITF 00-21’’) in 2003. The impact of adopting EITF 00-21 was not material to the financial statements in 2003, 2004, 2005 and 2006.

The Company provides for the estimated cost of product warranties based on the warranty policy and historical experience, and accrues for specific items at the time their existence is known and the amounts are determinable. Historical warranty liability and related costs have not been significant to the Company’s operations.

The Company’s functional currency is generally the United States dollar and the consolidated financial statements have been presented in United States dollars.

The financial statements of the Company’s subsidiaries where the local currency is the functional currency have been translated into United States dollars in accordance with FASB Statement No. 52, ‘‘Foreign Currency Translation.’’ All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Statement of operations amounts have been translated using the exchange rates in effect during the year. The gains and losses resulting from the changes in exchange rates from year to year have been reported separately as a component of shareholders’ equity.

Foreign currency transactions are recorded at the applicable rates of exchange in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Exchange differences are dealt with in the consolidated statements of operations.

The Company’s subsidiaries use forward foreign exchange contracts to reduce their exposure to foreign currency risk for liabilities denominated in foreign currency. A forward foreign exchange contract obligates the Company to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent US dollar payment equal to the value of such exchange. Realized and unrealized gains and losses on foreign exchange contracts are included in income as foreign exchange gains or losses.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The Company recognizes all derivative financial instruments in the consolidated financial statements at fair value regardless of the purposes or intent for holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in shareholders’ equity as a component of comprehensive income depending on whether the derivative financial instruments qualify for hedge accounting, and if so, whether they qualify as a fair value or cash flow hedge.

Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair value of the hedged items that relate to the hedged risks. Changes in fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive income net of deferred taxes. Changes in fair value of derivatives used as hedges of the net investment in foreign operations are reported in other comprehensive income as part of the cumulative translation adjustment. Changes in fair values of derivatives not qualifying as hedges are reported in income.

As of December 31, 2003, 2004, 2005 and 2006, the Company has entered into forward exchange contracts with notional values of $100, $4,333, $nil and $1,842, respectively. The forward exchange contracts matured in January, February, March, May, June 2005 and March, April 2007. The fair values of the forward exchange contracts as at December 31, 2003, 2004, 2005 and 2006 were $1, $90, $nil and $81, respectively, which is included in other assets. These forward exchange contracts are qualified for hedge accounting in accordance with FASB Statement No. 133 ‘‘Accounting for Certain Derivative Instruments and Certain Hedging Activities’’.

At the time a subsidiary sells its stock to unrelated parties at a price in excess of its book value, the Company’s net investment in that subsidiary increases. If at that time, the subsidiary is not a newly-formed, non-operating entity, nor a research and development, start-up or development stage company, nor is there question as to the subsidiary’s ability to continue in existence, the Company records the increase as a non-operating gain in the Consolidated Statements of Operations. Otherwise, the increase is reflected in ‘‘effect of subsidiaries’ equity transactions’’ in the Company’s Consolidated Statements of Shareholders’ Equity.

Basic and diluted earnings (loss) per share is calculated in accordance with FASB Statement No. 128, ‘‘Earnings Per Share.’’ There are no potentially dilutive equity instrument.

In February 2006, FASB Statement No. 155, ‘‘Accounting for Certain Hybrid Financial Instruments’’ (‘‘SFAS 155’’) — an Amendment of FASB Statements No. 133 and 140, was issued. This statement provides companies with relief from having to separately determine the fair value of an embedded derivative that would otherwise be required to be bifurcated from its host contract in accordance with SFAS 133 by allowing companies to make an irrevocable election to measure a hybrid financial instrument at fair value in its entirety, with changes in fair value recognized in earnings. The election may be made on an instrument-by-instrument basis and can be made only when a hybrid financial instrument is initially recognized or undergoes a remeasurement event. Statement No. 155 also requires that interests in securitized financial assets be evaluated to identify whether they are freestanding derivatives or hybrid financial instruments containing an embedded derivative that

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

requires bifurcation. SFAS 155 is effective for all financial instruments acquired, issued, or subject to a remeasurement event occurring in fiscal years beginning after September 15, 2006. The impact of SFAS 155 will depend on the future issuance or remeasurement of and the nature of any hybrid financial instruments held by the Company after the effective date, but management does not currently expect SFAS 155 to have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

In July 2006, the FASB issued FIN No. 48 — ‘‘Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109’’ (‘‘FIN 48’’). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with SFAS 109 — ‘‘Accounting for Income Taxes’’. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We are currently evaluating the potential impact, if any, that the adoption of FIN 48 will have on our consolidated financial statements.

In September 2006, FASB issued Statement No. 157 — ‘‘Fair Value Measurements’’ Statement No. 157 (‘‘SFAS 157’’) defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements. SFAS 157 becomes effective for us on January 1, 2008. Upon adoption, the provisions of SFAS 157 are to be applied prospectively with limited exceptions.

In September 2006, FASB Statement No. 158, ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)’’ (‘‘SFAS 158’’), was issued. This statement requires an employer that sponsors one or more defined benefit pension or other postretirement plans to recognize an asset or liability for the overfunded or underfunded status of its postretirement benefit plans in its balance sheet for years ending after December 15, 2006. The funded status is measured as the difference between the fair value of the plan’s assets and its benefit obligation. The statement also requires an employer to measure plan assets and benefit obligations as of the date of the employer’s statement of financial position. SFAS 158 is effective for fiscal years ending after December 15, 2006, except for the requirement to measure plan assets and benefit obligations as of the statement of financial position date, which is effective for fiscal years ending after December 15, 2008. Transition for the recognition provisions is entirely prospective. We are currently evaluating the potential impact, if any, that the adoption of SFAS. 158 will have on our consolidated financial statements.

In September 2006, the FASB ratified EITF Issue No. 06-1 — ‘‘Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider’’ (‘‘EITF 06-1’’). This guidance requires the application of EITF Issue No. 01-9 — ‘‘Accounting for Consideration Given by a Vendor to a Customer’’ (‘‘EITF 01-9’’), when consideration is given to a reseller or manufacturer for benefit to the service provider’s end-customer. EITF 01-9 requires the consideration given to be recorded as a liability at the time of the sale of the equipment and also provides guidance for the classification of the expense. EITF 06-1 is effective for the first annual reporting period beginning after June 15, 2007. We are currently evaluating the potential impact that adoption of SFAS 157 will have on our consolidated financial statements.

In September 2006, Securities and Exchange Commission Staff Accounting Bulletin No. 108 codified as SAB Topic 1.N, ‘‘Considering the Effects of Prior Year Misstatements When Quantifying

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Misstatements in Current Year Financial Statements’’ (‘‘SAB 108’’) was issued. This guidance states that registrants should use both a balance sheet approach and an income statement approach when quantifying and evaluating the materiality of a misstatement. The guidance also provides transition guidance for correcting errors existing in prior years. SAB 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. We do not believe SAB 108 will have a material impact on our consolidated financial statements.

In February 2007, the FASB issued Statement No. 159 — The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Statement No. 159 is effective for fiscal years beginning after November 15, 2007. We do not believe the adoption of SFAS 157 will have significant impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, ‘‘Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51.’’ SFAS No. 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Additionally, SFAS No. 160 requires expanded disclosures in the consolidated financial statements. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company is currently assessing the potential impact of SFAS No. 160 on its financial statements.

Restricted short-term bank deposits represent the amounts of cash pledged by two subsidiaries to secure credit facilities granted by financial institutions. Unrestricted short-term bank deposits represents bank deposits which do not qualify as cash equivalents.

Goodwill of $8,801 (2005: $8,324; 2004: $8,324) relates to the manufactured products segment and the changes in the carrying value of goodwill for the years ended December 31, 2004, 2005 and 2006 are as follows :

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

On December 31, 2004, 2005 and 2006, the Company held available-for-sale securities issued by a minority shareholder of two of the Operating Subsidiaries.

A summary of the carrying values and balance sheet classification of all investments in debt, equity securities and available-for-sale securities disclosed above was as follows:

There were realized gains (losses) of $89, $(19), $nil and $343 on disposal of available-for-sale securities in 2003, 2004, 2005 and 2006, respectively. The disposal of available-for-sale securities was for a consideration of $175, $nil, $nil and $626 in 2003, 2004, 2005 and 2006, respectively. The net adjustment to unrealized holding gains (losses) on available-for-sale securities included as a separate component of shareholders’ equity totaled, $464, $911, $(505) and $(64) in 2003, 2004, 2005 and 2006, respectively.

Under line of credit arrangements for short-term debt with the Company’s bankers, the Company may borrow up to approximately $110,994 (2005: $95,488, 2004: $103,183) on such terms as the Company and the banks may mutually agree upon. These arrangements do not have termination dates but are reviewed annually for renewal. As of December 31, 2006, the unused portion of the credit lines was approximately $59,915 (2005: $34,233; 2004: $37,973), which included unused letters of credit amounting to $24,077 (2005: $23,653; 2004: $24,606). Letters of credit are issued by the Company during the ordinary course of business through major financial institutions as required by certain vendor contracts. As of December 31, 2006, the Company had open letters of credit totaling $18,730 (2005: $43,646; 2004: $45,423). Liabilities relating to the letters of credit are included in current liabilities.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The weighted average interest rates on bank loans and overdrafts as of December 31, 2004, 2005 and 2006 were 5.0%, 5.8% and 5.9% per annum, respectively.

During 2003, 2004, 2005 and 2006, interest paid totaled $155, $250, $237 and $339, respectively. The bank loan on December 31, 2006 is secured by land and buildings of a subsidiary of the Company with a net book value of $2,974, $2,641 and$2,655 on December 31, 2004, 2005, 2006, respectively; a mortgage debenture over all of the company’s assets and uncalled capital and requires the Company to maintain a certain minimum percentage holding in this subsidiary.

The loan as of December 31, 2004, 2005 and 2006 bore interest at the commercial bill rate plus 1%, and the weighted average interest rate on commercial bills during the year 2004, 2005 and 2006 were 5.83%, 7.7% and 8.4%, respectively.

The above loan as of December 31, 2006 matured on February 1, 2007 and the Company repaid the amount due in February 2008.

The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions from the Operating Subsidiaries and the investee companies.

As described in Note 2, the earnings reflected in the financial statements prepared in accordance with US GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries and investee companies. In accordance with the relevant laws and regulations applicable to the Company’s subsidiaries and investee companies, the earnings available for distribution are based on their respective statutory financial statements. At December 31, 2005, the amount of the Company’s retained earnings available for distribution was approximately $7,369 and the consolidated retained earnings included $(3,084), $(1,003), $(717), $362 and $(22) of the accumulated (losses) profits of Lox Pac, Thai Professional, SPHC, SPRC and Shandong Huayu, respectively. At December 31, 2006, the amount of the Company’s retained earnings available for distribution was approximately $22,124 and the consolidated retained earnings included $(3,084), $(1,003), $(723), $442 and $(22) of the accumulated (losses) profits of Lox Pac, Thai Professional, SPHC, SPRC and Shandong Huayu, respectively.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


Description	Balance at beginning of year			Net charged to costs and expenses			Deduction				Currency translation adjustment				Balance at end of year
Year ended December 31, 2003:
Deducted from asset accounts
Allowance for doubtful accounts		$	3,958		$	902		$	(279	)		$	271			$	4,852
Allowance for inventories			2,405			77			(370	)			95				2,207
Allowance for deferred tax assets			5,329			—			(1,950	)			—				3,379
		$	11,692		$	979		$	(2,599	)		$	366			$	10,438
Year ended December 31, 2004:
Deducted from asset accounts
Allowance for doubtful accounts		$	4,852		$	3,528		$	(11	)		$	147			$	8,516
Allowance for inventories			2,207			1,439			(270	)			74				3,450
Allowance for deferred tax assets			3,379			1,663			—				103				5,145
		$	10,438		$	6,630		$	(281	)		$	324			$	17,111
Year ended December 31, 2005:
Deducted from asset accounts
Allowance for doubtful accounts		$	8,516		$	1,017		$	(986	)		$	(164	)		$	8,383
Allowance for inventories			3,450			346			(1,579	)			(75	)			2,142
Allowance for deferred tax assets			5,145			2,397			—				(1,515	)			6,027
		$	17,111		$	3,760		$	(2,565	)		$	(1,754	)		$	16,552
Year ended December 31, 2006:
Deducted from asset accounts
Allowance for doubtful accounts		$	8,383		$	1,221		$	(946	)		$	632			$	9,290
Allowance for inventories			2,142			2,017			(509	)			156				3,806
Allowance for deferred tax assets			6,027			—			(2,088	)			402				4,341
		$	16,552		$	3,238		$	(3,543	)		$	1,190			$	17,437

Under current Bermuda law, the Company is not subject to tax on income or capital gains, and no Bermuda withholding tax is imposed upon payments of dividends by the Company to its shareholders.

The Company’s investments in the Operating Subsidiaries are held through subsidiaries incorporated in the British Virgin Islands (‘‘BVI’’). Under current BVI law, dividends from the BVI subsidiaries’ investments are not subject to income taxes and no withholding tax is imposed on payments of dividends by the BVI subsidiaries to the Company.

The Operating Subsidiaries and equity investees are governed by the income tax laws of Singapore, Thailand, Australia, the People’s Republic of China and Myanmar. The corporate income tax rate in Singapore was 22%, 20%, 20% and 20% for 2003, 2004, 2005 and 2006, respectively, and there is no withholding tax on dividends applicable to the Company. For Thailand, the corporate income tax rate was 30% for each of the four years ended December 31, 2006 and a withholding tax of 10% is levied on dividends received by the Company. In Australia, the corporate income tax rate was 30% for 2003/2004, 2004/2005, 2005/2006 and 2006/2007 tax years. The applicable corporate

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

income tax rate for the subsidiaries in the People’s Republic of China was 33% for each of the four years ended December 31, 2006. The corporate income tax rate for Myanmar was 30% for 2003/2004, 2004/2005, 2005/2006 and 2006/2007 tax years.

Pursuant to the income tax law of the PRC concerning foreign investment enterprises and various local income tax laws (the Income Tax Law), the enterprises generally are subject to income tax at an effective rate of 33% (30% state income taxes plus 3% local income taxes) on income as reported in their statutory accounts unless the enterprise is located in specially-designated regions or cities for which more favorable effective rates apply.

PEWS is located in Shenzhen, which is a region where preferential tax rates apply and currently qualifies for a reduced rate of taxation of 15% (50% of the full rate of 30% State income taxes and no local income taxes). PEWS is exempt from income tax for the two years starting from its first profitable year of operations (2001). PEWS is entitled to a 50% tax exemption from the State income taxes for a further three-year period (2003 to 2005) under the Income Tax Law. With the preferential tax rate, current income tax liabilities of PEWS were reduced by approximately $840 for the year ended December 31, 2006. The preferential tax rate also increased the net income per share by $0.06 for the year ended December 31, 2006.

Pre-tax income (loss) from continuing operations was taxed in the following jurisdictions:

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Significant components of the provision (benefit) for income taxes are as follows:


	Year ended December 31,
	2003				2004				2005				2006
Allocated to net income
Current:
Thailand		$	3,747			$	3,232			$	3,502			$	6,990
Singapore			150				254				(283	)			(168	)
Myanmar			12				—				—				—
The People’s Republic of China			252				925				(335	)			1,630
Australia			286				460				652				1,382
Total current			4,447				4,871				3,536				9,834
Deferred:
Thailand			(466	)			(194	)			(515	)			516
Singapore			(258	)			—				414				334
The People’s Republic of China			—				83				762				149
Australia			(1,246	)			(44	)			(337	)			(576	)
Total deferred			(1,970	)			(155	)			324				423
		$	2,477			$	4,716			$	3,860			$	10,257
Allocated to comprehensive income (loss)		$	15			$	(1	)		$	(286	)		$	(92	)

At December 31, 2004, 2005 and 2006, the Operating Subsidiaries had net operating loss carry forwards of approximately $16,793,$19,375 and $19,460, respectively. The remaining net operating losses can be carried forward indefinitely, subject to any condition to be met under the relevant tax laws of the respective jurisdictions. The utilization of these net operating loss carry forwards is subject to agreement by the income tax authorities in the respective jurisdictions.

The parent company’s tax is filed in Bermuda, which does not have a statutory tax rate. Therefore the provision for income taxes differs based on the taxes incurred by the Operating Subsidiaries, in their respective jurisdiction. The principal reasons for the differences are listed in the following table:

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


	December 31,
	2004				2005				2006
Deferred tax liabilities:
Tax over book depreciation		$	(275	)		$	(275	)		$	(275	)
Book over tax basis in subsidiaries			(1,365	)			(1,270	)			(1,459	)
Unrealized gain on available-for-sale securities			—				(286	)			—
Translation adjustments			(493	)			(555	)			(565	)
Total deferred tax liabilities			(2,133	)			(2,386	)			(2,299	)
Deferred tax assets:
Unused tax losses and unused tax credits			4,462				5,089				4,747
Provision for doubtful accounts			2,172				2,185				1,959
Provision for inventories			876				602				554
Provision for impairment in investment			583				1,399				601
Others			(277	)			—				64
Total deferred tax assets			7,816				9,275				7,925
Valuation allowance for deferred tax assets			(5,145	)			(6,027	)			(4,341	)
Total deferred tax assets			2,671				3,248				3,584
Net deferred tax assets		$	538			$	862			$	1,285

The amount of deferred tax liabilities and assets at December 31, 2004, 2005 and 2006 were as follows:


	December 31,
	2004				2005				2006
Gross current deferred tax liabilities		$	(493	)		$	(1,161	)		$	(1,074	)
Gross current deferred tax assets			4,209				2,954				2,680
Valuation allowance for deferred tax assets			(1,633	)			(1,815	)			(1,632	)
			2,576				1,139				1,048
Net current deferred tax assets (liabilities)			2,083				(22	)			(26	)
Gross long-term deferred tax liabilities			(1,640	)			(1,225	)			(1,225	)
Gross long-term deferred tax assets			3,607				6,321				5,245
Valuation allowance for deferred tax assets			(3,512	)			(4,212	)			(2,709	)
			95				2,109				2,536
Net long-term deferred tax assets (liabilities)			(1,545	)			884				1,311
Net deferred tax assets		$	538			$	862			$	1,285

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The deferred tax liabilities and assets are presented in the accompanying consolidated balance sheets as follows:

Undistributed earnings of the Company’s foreign subsidiaries included in the Company’s retained earnings amounted to approximately $22,253,$17,101 and $30,000 on December 31, 2004, 2005 and 2006, respectively. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to withholding taxes payable to the respective foreign countries. Except for earnings relating to a subsidiary in Thailand, the Company has no intention of distributing the earnings that are subject to withholding taxes. Withholding taxes of approximately $1,345 would be payable upon remittance of all previously unremitted earnings of that subsidiary, to the extent allowed by the subsidiary’s articles of association, on December 31, 2006.

The management estimated and accrued a tax provision in the amount of $620, $158 and $887 during 2004, 2005 and 2006 as the Company determined that it is more-likely-than-not that income derived from certain activities may be subject to taxes in offshore locations that have a higher tax rate.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company had deferred tax assets totaling approximately $7,816, $9,275 and $7,925 at December 31, 2004, 2005 and 2006, respectively. However, realization of all of these deferred assets is not reasonably assured; therefore, they were reserved by a valuation allowance of $5,145, $6,027 and $4,341 at December 31, 2004, 2005 and 2006, respectively.

The net change in valuation allowance for the years ended December 31, 2003, 2004, 2005 and 2006 was an (decrease) increase of approximately $(1,950), $1,766, $882 and $(1,686), respectively, resulting primarily from net operating (gains) losses generated during the respective years.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


	Currency translation adjustments				Unrealized gains (losses) on available- for-sale securities				Total
Balance at January 1, 2003		$	(30,415	)		$	(249	)		$	(30,664	)
Currency translation adjustment			4,754				—				4,754
Gains realized on disposal of available-for-sale securities			—				(89	)			(89	)
Unrealized gains on available-for-sale securities			—				479				479
Deferred taxes relating to unrealized gains on available-for-sale securities			—				(15	)			(15	)
Balance at December 31, 2003			(25,661	)			126				(25,535	)
Currency translation adjustment			1,583				—				1,583
Unrealized gains on available-for-sale securities			—				910				910
Deferred taxes relating to unrealized gains on available-for-sale securities			—				1				1
Balance at December 31, 2004			(24,078	)			1,037				(23,041	)
Currency translation adjustment			(4,062	)			—				(4,062	)
Unrealized losses on available-for-sale securities			—				(791	)			(791	)
Deferred taxes relating to unrealized losses on available-for-sale securities			—				286				286
Balance at December 31, 2005			(28,140	)			532				(27,608	)
Currency translation adjustment			9,822				—				9,822
Realized gain on liquidation of subsidiary			(1,801	)			—				(1,801	)
Deferred taxes relating to realized gain on liquidation of subsidiary			556				—				556
Gain realized on sale of available-for-sale securities			—				(601	)			(601	)
Deferred taxes relating to realized gain on sales of available-for-sale securities			—				258				258
Unrealized losses on available-for-sale securities			—				(156	)			(156	)
Deferred taxes relating to unrealized losses on available-for-sale securities			—				92				92
Balance at December 31, 2006		$	(19,563	)		$	125			$	(19,438	)

The Company leases certain machinery and equipment under capital leases for 2004, 2005 and 2006.

The Company leases a piece of land in Singapore and certain buildings under non-cancelable operating lease arrangements for terms from 5 to 30 years.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Future minimum payments under capital leases and non-cancelable operating leases with initial terms of one year or more consisted of the following as of December 31, 2006:

The current and non-current portion of the capital lease liabilities of $109 and $264 as of December 31, 2006 are included in other current liabilities and other liabilities, respectively. The capital lease liabilities are secured by a charge over the leased machinery and equipment at cost of $662,$683 and $539 as of December 31, 2004, 2005 and 2006, respectively. The accumulated depreciation of these leased assets for the years ended December 31, 2004, 2005 and 2006 amounted to $247,$313 and $158, respectively.

The average discount interest rate implicit in the lease is 7.9%, 7.7% and 7.8% for 2004, 2005 and 2006, respectively.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, investments, investment securities and trade accounts receivable.

The Company maintains cash and cash equivalents with various financial institutions. These financial institutions are located in Singapore, Thailand, Australia and the People’s Republic of China. The Company’s policy is designed to limit its exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities comprising the Company’s customer base. The Company carefully assesses the financial strength of its customers and generally does not require any collateral. At December 31, 2005 and 2006, there was no trade receivable which exceeded 10% of the Company’s account receivable amounts.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The Company is exposed to credit loss in the event of non-performance by counter parties on foreign exchange contracts, but the Company does not anticipate non-performance by any counter parties.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value because of the short-term maturity of these instruments.

Accounts receivable and accounts payable: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair values because of the short-term maturity of these instruments.

Investment securities: The fair values of marketable equity securities are based on quoted market prices, details of which are set out in Note 7. The fair values for debt securities are based on discounted cash flow analysis using current interest rates for instruments with similar maturities. It is not practicable to estimate the fair values of the equity investments that do not have a quoted market price, without incurring excessive costs.

Long-term and short-term debt: The carrying amounts of the Company’s borrowings under its short-term revolving credit arrangements approximate their fair values. The fair values of the Company’s long-term debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. As of December 31, 2005 and 2006, the Company had non-interest bearing long-term debt outstanding with a related party of $2,926 and $900, respectively. The fair value of this debt was $2,600 and $811 as of December 31, 2005 and 2006. The fair value of the remaining long-term interest bearing debt of $3,000 as of December 31, 2005 and the fair value of the non-interest bearing short-term debt from related parties is not determinable because of the related party nature of the debt and the fact that they have no stated due dates.

Forward exchange contracts: The fair values of forward exchange contracts are estimated by reference to market quotations for forward contracts with similar terms, adjusted where necessary for maturity differences.

There are no significant differences between the carrying amounts and fair values of the Company’s financial instruments as of December 31, 2004, 2005 and 2006.

Copper is the principal raw material used by the Company. The Company purchases copper at prices closely related to the prevailing international spot market prices on the London Metal Exchange for copper. The price of copper is influenced heavily by global supply and demand as well as speculative trading. Consequently, a change in the price of copper will have a direct effect on the Company’s cost of sales.

Changes in exchange rates influence the Company’s results of operations. The Company’s principal operations are located in Thailand, the People’s Republic of China (‘‘PRC’’) and Singapore and a substantial portion of its revenues are denominated in Thai Baht, PRC Renminbi (‘‘RMB’’) or

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Singapore dollars, whereas a substantial portion of the Company’s cost of sales are denominated in US dollars. In 1997, the devaluation of the Thai Baht against the US dollar adversely affected the operations of the Company in Thailand. Any devaluation of the Thai Baht, RMB or Singapore dollar against the US dollar would have an adverse impact on the operations of the Company.

The Company has investments in subsidiaries in the PRC. The distributions of earnings outside the PRC are subject to control because the RMB is not freely convertible into foreign currencies.

On January 1, 1994, the PRC government introduced a single rate of exchange as quoted daily by the People’s Bank of China (the ‘‘Unified Exchange Rate’’). The quotation of the exchange rates does not imply free convertibility of RMB into other foreign currencies. All foreign exchange transactions continue to take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the Bank of China or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts.

The related parties are defined as affiliates of the Company; entities for which investments are accounted for by the equity method by the Company; the principal owners of the Company; its management; members of the immediate families of the principal owners of the Company and its management.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


	December 31,
	2004			2005			2006
Due from:
Pardee Assets Co. Ltd.		$	2		$	2		$	—
PEWC			1,859			622			739
PEWC, Singapore Branch			543			—			—
PEWC, Singapore Co. (Pte) Ltd.			—			1,034			885
Italian-Thai Development Public Company Limited (‘‘Ital-Thai’’) and its affiliates			634			1,254			4,639
SPHC			1,204			1,170			1,351
A director of Siam Pacific			10			10			10
Shandong Yanggu Wire & Cable Corp Ltd (‘‘Shandong Yanggu’’)			—			342			809
Others			192			128			101
		$	4,444		$	4,562		$	8,534
Due to:
PEWC		$	17,891		$	19,980		$	26,898
PEWC, Singapore Branch			1,145			—			—
PEWC, Singapore Co. (Pte) Ltd.			—			2,090			3,571
Shandong Yanggu Wire & Cable Corp Ltd (‘‘Shandong Yanggu’’)			—			536			69
Fujikura Limited			44			136			76
Thai Metal Processing Co., Ltd.			160			286			50
SPHC			2,544			2,465			2,619
Others			200			15			23
		$	21,984		$	25,508		$	33,306
Short-term loans from:
Moon View Venture Limited (‘‘Moon View’’)		$	1,537		$	1,537		$	1,537
Pacific Overseas Investment Management Ltd			195			195			195
		$	1,732		$	1,732		$	1,732

The above balances with related parties are interest-free and are repayable upon demand. All balances with related parties are unsecured.

Moon View and PEWC, Singapore Branch are controlled by PEWC. Ital-Thai is the minority shareholder of one of the Company’s Operating Subsidiaries in Thailand. Shandong Yunggu is the shareholder of one of the Company’s Operating Subsidiaries in China. SPHC is one of the Company’s affiliates.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The long term loans from PEWC Singapore Co. (Pte) Ltd have a term of three years and are due in March 2007 and are uncollateralized. Partial repayment was made in 2007 and the remaining balance of $240 is expected to be repaid in 2008. As the balance was not paid in full in March 2007, the debt is in default and therefore, is accruing interest at the default interest rate of 7.5% per annum. Subsequent to the maturity date, the debt has not been called by PEWC Singapore Co. (Pte) Ltd.


	Year ended December 31,
	2003			2004			2005			2006
Purchases of copper from PEWC		$	30,708		$	30,968		$	30,267		$	54,403
Purchases of power cables from PEWC			20,130			23,505			17,483			18,587
Purchases of power cables from PEWC, Singapore Branch			—			—			6,375			—
Subcontracting services provided by PEWC			100			—			—			—
Sales to Ital-Thai and its affiliates			520			1,247			3,583			11,615
Sales to PEWC			941			—			6			—
Sales to PEWC, Singapore Branch			146			42			3,147			—
Sales to Lox Pac			19			7			—			—
Sales to Shandong Yanggu			131			53			2,829			141
Purchases of raw materials from Thai Metal Processing Co. Ltd			995			1,297			1,466			1,196
Purchases of goods from Fujikura Limited			1,161			416			—			1,109
Interest expense paid to PEWC			129			21			337			491
Interest expense paid to PEWC, Singapore Co. (Pte) Ltd.			—			—			—			52
Management fee paid to PEWC			292			151			117			152
Management fee paid to Italian Thai Development			—			—			—			32
Management fee received from PEWC			12			12			—			—
Management fee received from PEWC, Singapore Branch			24			24			12			12
Royalty fee paid to Fujikura Limited			14			—			—			—
Purchases of goods from Shandong Yanggu			147			216			28			43
Dividend income from Thai Metal Processing Co. Ltd.			152			155			140			117

Copper is the major raw material of the Company’s wire and cable products. The Company purchases copper in the form of copper rods and copper cathode. Copper cathode is purchased by Siam Pacific to avoid the high import tariff levied on copper rods. Copper cathode needs to be processed into copper rods prior to the manufacturing of wire and cable products.

Substantially all of the Company’s copper rods are supplied by PEWC while copper cathodes are supplied by unrelated third parties. The price of copper rods purchased from PEWC is determined by reference to the quoted copper prices on the London Metal Exchange (the ‘‘LME’’) plus a certain premium.

In addition to copper rods, the Company purchases high voltage power cable from PEWC for distribution purposes. The purchase price of power cable from PEWC is determined by reference to the quoted copper prices on the LME. Prior to 2003, a sales commission at an average rate of 1% to 3% was received from PEWC in addition to sales proceeds received from customers.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

To the extent that transactions occur in the future between the Company and PEWC or affiliates of PEWC other than under the Composite Service Agreement, such transactions will be entered into on an arm’s length basis on terms no less favorable than those available from unaffiliated third parties.

The Company has several defined contribution plans covering its employees in Australia, the People’s Republic of China (‘‘PRC’’) and Singapore. Contributions to the plan are made annually. Total charges for the years ended December 31, 2003, 2004, 2005 and 2006 were $691, $756, $363 and $815, respectively.

In accordance with the Thailand labor law, Charoong Thai is obliged to make payment to retiring employees, at rates of 1 to 10 times of their final month’s salary rate, depending on the length of service. During the financial year 2006, the Company’s total expense included $140 (2005:$146; 2004: $1,000 and 2003: $nil). The plan is not funded and the amount is recognized in Other Current Liabilities in the balance sheet. The Company pays to settle the obligations as and when employees retire.

In conformity with SFAS 132, ‘‘Employers’ Disclosures about Pensions and Other Postretirement Benefits,’’ the following table sets forth the Plan’s funded status and pension amounts recognized as at December 31, 2004, 2005 and 2006 based on the latest actuarial valuation:


	2004				2005				2006
Change in benefit obligation:
Benefit obligation at beginning of year		$	—			$	1,000			$	1,128
Service cost			1,000				89				78
Interest cost			—				57				62
Benefits paid			—				(18	)			(3	)
Actuarial loss (gain)			—				—				—
Curtailment			—				—				—
Settlement			—				—				—
Benefit obligation at end of year		$	1,000			$	1,128			$	1,265
Change in plan assets:
Fair value of plan assets at beginning of year		$	—			$	—			$	—
Employer’s contribution
Actual return on plan assets			—				—				—
Settlement			—				—				—
Benefits paid			—				—				—
Fair value of plan assets at end of year			—				—				—
Funded status		$	(1,000	)		$	(1,128	)		$	(1,265	)
Unrealized net transition obligation			—				—				—
Unrecognized net actuarial loss (gain)			—				—				—
Accrued benefit cost		$	(1,000	)		$	(1,128	)		$	(1,265	)

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The accumulated benefit obligations amounted to $1,000, $1,128 and $1,265 as at December 31, 2004, 2005 and 2006, respectively.

The significant assumptions used in determining the actuarial present value of the projected benefit obligations as at December 31, 2006, 2005 and 2004 are as follows:

The Company has three reportable segments – manufacturing of wire and cable products (‘‘Manufactured products’’), distribution of copper and cable products manufactured by PEWC (‘‘Distributed products’’) and sales, delivery and installation of wires and cables.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The Company evaluates performance and allocates resources based on profit or loss from operations before interest, gains and losses on the Company’s investment portfolio, and income taxes. The accounting policies of the reportable segments, including transactions entered between reportable segments, are the same as those described in the summary of significant accounting polices.


	Year ended December 31,
	2003				2004				2005				2006
Revenues
Revenues from external customers:
Manufactured products		$	192,293			$	269,107			$	301,516			$	439,280
Distributed products			15,187				15,493				20,055				12,416
Sales, delivery and installation of wires and cables			3,919				9,656				15,691				16,421
Total revenues from external customers		$	211,399			$	294,256			$	337,262			$	468,117
Intersegment revenues:
Manufactured products		$	4,134			$	5,146			$	4,581			$	934
Total intersegment revenues		$	4,134			$	5,146			$	4,581			$	934
Total revenue		$	215,533			$	299,402			$	341,843			$	469,051
Reconciling items
Intersegment revenues			(4,134	)			(5,146	)			(4,581	)			(934	)
Total consolidated revenues		$	211,399			$	294,256			$	337,262			$	468,117

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


	Year ended December 31,
	2003				2004				2005				2006
Segment profit
Manufactured products		$	32,705			$	37,746			$	36,548			$	57,592
Distributed products			491				868				634				1,107
Sales, delivery and installation of wires and cables			92				258				(375	)			(284	)
Total segment profit		$	33,288			$	38,872			$	36,807			$	58,415
Reconciling items
Corporate and other expenses			(21,364	)			(30,162	)			(30,236	)			(29,548	)
Exchange (loss) gain			4,161				233				(3,137	)			5,464
Interest income			285				225				680				705
Interest expense			(1,407	)			(2,250	)			(3,427	)			(5,886	)
Share of net gain (loss) of equity investees			1,475				(4,224	)			170				73
Gain on liquidation of subsidiary			—				—				—				1,801
Other income			1,122				925				829				1,536
Total consolidated income before income taxes		$	17,560			$	3,619			$	1,686			$	32,560
Segment assets
Manufactured products		$	209,356			$	247,977			$	247,160			$	349,082
Distributed products			6,348				2,294				1,011				293
Sales, delivery and installation of wires and cables			460				1,977				543				187
Total segment assets		$	216,164			$	252,248			$	248,714			$	349,562
Reconciling items
Corporate and other assets			5,763				10,397				10,059				10,765
Investment in equity investees			10,249				7,788				4,165				4,238
Intersegment accounts receivable			—				—				—				—
Total consolidated assets		$	232,176			$	270,433			$	262,938			$	364,565
Expenditures for additions to long-lived assets
Manufactured products		$	4,877			$	4,500			$	4,387			$	5,202
Corporate			—				—				91				—
Total expenditure for additions to long-lived assets		$	4,877			$	4,500			$	4,478			$	5,202

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)


	Year ended December 31,
	2003			2004				2005				2006
Depreciation expenses
Manufactured products		$	9,217		$	8,295			$	9,422			$	8,964
Corporate			—			—				7				25
Total consolidated depreciation expenses		$	9,217		$	8,295			$	9,429			$	8,989
Impairment loss
Corporate			—		$	(134	)		$	(3,223	)		$	(86	)
Total consolidated impairment expense			—		$	(134	)		$	(3,223	)		$	(86	)
Interest income
Manufactured products		$	67		$	41			$	434			$	536
Distributed products			40			88				98				69
Sales, delivery and installation of wires and cables			153			55				77				93
Corporate			25			41				71				7
Total consolidated interest income		$	285		$	225			$	680			$	705
Interest expense
Manufactured products		$	988		$	1,845			$	2,999			$	5,476
Distributed products			34			155				153				129
Sales, delivery and installation of wires and cables			132			96				120				173
Corporate			253			154				155				108
Total consolidated interest expense		$	1,407		$	2,250			$	3,427			$	5,886
Share of net (loss) gain of equity investees
Corporate		$	1,475		$	(4,224	)		$	170			$	73
Total consolidated share of net (loss) gain of equity investees		$	1,475		$	(4,224	)		$	170			$	73

The sales to a major customer, SP Powerassets, which include sales of manufactured products, distributed products, and sales, delivery and installation of wires and cables can be summarized as follows:

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

Revenue from external customers is attributed to individual countries based on the customer’s country of domicile and is summarized as follows:


	Year ended December 31,
	2003			2004			2005			2006
Revenues from external customers
Thailand		$	93,543		$	130,486		$	148,920		$	212,204
Singapore			35,193			42,036			50,714			49,134
Australia			22,058			30,491			34,831			58,277
The People’s Republic of China			60,605			91,243			102,797			148,502
Total revenues from external customers		$	211,399		$	294,256		$	337,262		$	468,117
Long-lived assets by area:
Thailand		$	42,856		$	39,829		$	34,535		$	36,221
Singapore			9,720			9,820			8,905			4,033
Australia			5,312			5,159			4,359			8,733
The People’s Republic of China			18,397			18,319			17,340			17,148
Other									36			10
Total long-lived assets		$	76,285		$	73,127		$	65,175		$	66,145

The following tables present summarized financial information of the Company’s principal equity investees, Lox Pac, Thai Professional, SPHC, BCN (formerly known as NGL, on October 4, 2005 changed its name to Blue Chip Financial Solutions Limited, BCF), Shandong Huayu and SPRC for 2003, 2004, 2005 and 2006.

On June 21, 2004, the investment in BCN was reclassified to short-term investments because the Company’s effective shareholding interest has dropped to 1.24% following a reverse takeover excerise at BCN. BCN is listed on the New Zealand Stock Exchange. The aggregate market value of the Company’s investment in BCF amounted to approximately $773 as of December 31, 2005. On September 28, 2006 BCN changed to be listed on the stock exchange in Australia. As at December 31, 2006 all the shares were sold.

In addition, on January 1, 2004, the investment in SPRC was reclassified from long-term investments as the Company’s considered that it is now able to exercise significant influence over the operating and financial decisions of SPRC and actively participates in the running of day-to-day operations.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The following tables present summarized financial information of the Company’s principal equity investees, Lox Pac, Thai Professional, SPHC, Shandong Huayu and SPRC for 2003, 2004, 2005 and 2006.

At December 31, 2004, 2005 and 2006, the unamortized difference between the amount at which the investment in Lox Pac and Thai Professional was carried and the amount of the Company’s underlying equity in its net assets amounted to $nil, $nil and $nil, respectively.

In conjunction with the adoption of Statement 142, the Company discontinued the amortization of goodwill associated with equity method investments effective January 1, 2002. The Company impaired goodwill in certain equity investees amounting to $nil, $3,534, $nil and $nil in 2003, 2004, 2005 and 2006, respectively.

Included in share of net (loss)/gain of equity investees is writeback of advances to equity investees of $1,346 in 2003.

At December 31, 2005 and 2006 the Company’s share of the underlying net assets of certain equity investees was lower than its value of the investment in these equity investees. Accordingly, the Company recorded an impairment charge in value of its investment in these equity investees amounting to $3,223 and $nil, respectively.

Certain equity investees did not use PCAOB-registered accountants in the preparation of their financial statements, and as a minority shareholder, the Company cannot compel these equity investees to re-audit their financial records. The Company is thus unable to include audited financial statements of these equity investees in these financial statements.

As disclosed in Note 1, on September 14, 2005, PEWC exercised the repurchase option under the Option Agreement and reacquired 7,307,948 shares of the Common Stock, representing 52.84% of the total issued and outstanding Common Stock. As a result of the reacquisition by PEWC of majority control, PEWC indirectly held as of that date 7,664,615 shares of Common Stock, representing 55.4% of the total issued and outstanding shares of Common Stock and Sino-JP held as of that date 2,766,154 shares of the Common Stock, representing 20% of the total issued and outstanding shares of Common Stock (the ‘‘Sino-JP Shares’’).

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

On June 29, 2007, SOF Investments, L.P. (‘‘SOF’’), a Delaware limited partnership controlled by MSD Capital, L.P. acquired the Sino-JP Shares pursuant to a share purchase agreement (the ‘‘Purchase Agreement’’) and entered into a shareholders’ agreement with the Company and PEWC (the ‘‘Shareholders’ Agreement’’). The shares acquired constituted 20% of the issued and outstanding shares of the Company.

The Company must certify to SOF whether or not it is considered a Controlled Foreign Corporation or a Passive Foreign Investment Company as of each fiscal year end. Should this certification be challenged by the taxing authorities and found to be incorrect, the Company must indemnify SOF and its shareholders against interest and penalties that may be imposed and reasonable attorney’s fees incurred.

It is management’s opinion that this indemnification will not result in any adverse material financial consequence to the Company.

The Shareholders’ Agreement provides SOF with certain registration rights. Specifically, as promptly as possible after receiving all requisite information necessary for filing of a registration statement, the Company must use its reasonable best efforts to prepare and file with the SEC a registration statement or statements covering, among such other securities as may be offered from time to time by the Company, the resale of the ‘‘Registrable Securities’’ for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act of 1933. ‘‘Registrable Securities’’ includes the shares beneficially owned by SOF.

The Company must use its reasonable best efforts to cause any such registration statement required by the Shareholders’ Agreement to be declared effective as promptly as possible after being filed, and to keep such registration statement effective until (i) all Registrable Securities either have been sold or may be sold without volume restrictions pursuant to Rule 144(k) of the Securities Act of 1933 and (ii) SOF receives freely transferable shares from the Issuer’s transfer agent.

If (i) any such registration statement is not declared effective by November 30, 2008, or (ii) any such registration statement ceases to remain continuously effective for any reason after the effectiveness date and during any time when the registration statement is required to be effective, or SOF is otherwise not permitted to utilize the prospectus therein to resell such Registrable Securities, in either case, for more than fifteen (15) consecutive trading days or more than an aggregate of forty-five (45) trading days during any twelve month period (an ‘‘Event’’), then the ‘‘Put Right’’ (defined below) will become immediately exercisable and will continue until such event has been cured.

ASIA PACIFIC WIRE & CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US Dollars, except share data)

The Company is currently evaluating the accounting for financial reporting in 2007, if any, that may result from such registration rights.

SOF has the right and option (but not the obligation) to sell to PEWC upon the occurrence of a Put Event (defined below), and PEWC agreed to purchase from SOF upon the occurrence of a Put Event, all Registrable Securities then owned by SOF (the ‘‘Put Shares’’), for an amount equal to the Put Price (defined below) together with interest (calculated on the basis of a 360 day year) on the Put Price, computed from the date of the Shareholders’ Agreement until the closing related to the applicable put right at a rate per annum that is equal to the Libor Rate plus fifty (50) basis points (compounded annually) (the ‘‘Put Right’’). If the Put Event terminates prior to the closing of such Put Right, the exercise of the Put Right is deemed rescinded and the transaction relating to the Put Right is deemed cancelled, but this will not terminate the existence of a future Put Right upon the triggering of a future Put Event.

A ‘‘Put Event’’ means any date (i) after November 30, 2008 whereby (A) an Event has occurred and continues to occur or (B) the shares are not quoted on the Nasdaq OTC Bulletin Board or (ii) after January 31, 2009 whereby the shares are not listed on a US Securities Market. The ‘‘Put Price’’ means for (i) shares purchased pursuant to the Purchase Agreement, an aggregate amount equal to the product of (a) the number of shares being sold and (b) US$4.35 and (ii) shares purchased under the preemptive right provisions of the Shareholders’ Agreement, an aggregate amount equal to the purchase price therefore.

To the Board of Directors and Shareholders of
Shandong Huayu Pacific Fiber Optics Communication Co., Ltd

We have audited the accompanying balance sheet of Shandong Huayu Pacific Fiber Optics Communication Co., Ltd (the ‘‘Company’’) as of December 31, 2004, and the related statements of income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Shandong Huayu Pacific Fiber Optics Communication Co., Ltd as of December 31, 2004, and the results of its operations and its cash flows for the year then ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.


	December 31
	2004			2005			2006
	Audited			Unaudited			Unaudited
ASSETS
Current assets:
Cash and cash equivalents		1			61			7
Other assets		293			295			65
Total current assets		294			356			72
Amount due from a related company (Note 8)		1,163			1,129			804
Property, plant and equipment:
Land use rights		1,718			1,718			1,718
Machinery and equipment		344			105			105
Buildings and constructions		4,504			4,504			4,504
Project materials		37,489			37,415			37,415
Construction in progress		17,182			17,187			17,243
		61,237			60,929			60,985
Accumulated depreciation and impairment losses		(17,409	)		(17,582	)		(17,863	)
		43,828			43,347			43,122
Total assets		45,285			44,832			43,998
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		9,260			9,272			10,350
Accrued expenses		50			67			56
Amount due to related parties (Note 8)		14,838			14,717			13,929
Total current liabilities		24,148			24,056			24,335
Commitments and contingencies (Note 5)
Shareholders’ equity:
Share capital		41,088			41,088			41,088
Retained earnings		(19,951	)		(20,312	)		(21,425	)
Total shareholders’ equity		21,137			20,776			19,663
Total liabilities and shareholders’ equity		45,285			44,832			43,998


	Share Capital		Retained earnings			Total
Balance at January 1, 2003 (Unaudited)		33,777		—			33,777
Additional share capital		6,816		—			6,816
Net income for 2003		—		(2,322	)		(2,322	)
Balance at December 31, 2003 (Unaudited)		40,593		(2,322	)		38,271
Additional share capital		495		—			495
Net income for 2004		—		(17,629	)		(17,629	)
Balance at December 31, 2004 (Audited)		41,088		(19,951	)		21,137
Additional share capital		—		—			—
Net income for 2005		—		(361	)		(361	)
Balance at December 31, 2005 (Unaudited)		41,088		(20,312	)		20,776
Additional share capital		—		—			—
Net income for 2006		—		(1,113	)		(1,113	)
Balance at December 31, 2006 (Unaudited)		41,088		(21,425	)		19,663


	December 31
	2003			2004			2005			2006
	Unaudited			Audited			Unaudited			Unaudited
Operating activities:
Net loss		(2,322	)		(17,629	)		(361	)		(1,113	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation of property, plant and equipment		63			286			173			281
Impairment of long lived assets		—			17,031			—			—
Changes in operating assets and liabilities:
Other assets		2,087			124			(2	)		230
Amount due from a related company		(1,663	)		500			34			325
Accounts payable		(116	)		5,906			12			1,078
Accrued expenses		—			50			17			(11	)
Amount due to related parties		(4,575	)		85			(121	)		(788	)
Net cash (used in) provided by operating activities		(6,526	)		6,353			(248	)		2
Investing activity:
Disposal of property, plant and equipment		—			—			308			—
Purchases of property, plant and equipment		(328	)		(6,864	)		—			(56	)
Net cash used in investing activity		(328	)		(6,864	)		308			(56	)
Financing activity:
Contribution from joint venture holders		6,816			496			—			—
Net cash provided by financing activity		6,816			496			—			—
Net decrease in cash and cash equivalents		(38	)		(15	)		60			(54	)
Cash and cash equivalents at beginning of year		54			16			1			61
Cash and cash equivalents at end of year		16			1			61			7

On August 18, 2001, a joint-venture agreement was signed between Asia Pacific Wire & Cable Corporation Limited and Shandong Yanggu Huatai Co, Ltd (‘‘Shandong Yanggu’’) to establish Shandong Huayu Pacific Fiber Optics Communication Co., Ltd. (‘‘the Company’’) for the manufacture of optic fibers. Shandong Yanggu’s share was subsequently transferred to Hebei Huayu Co. Ltd. At balance sheet date, 49% of the Company is owned by Asia Pacific Wire & Cable Corporation Limited and a subsidiary with the remaining 51% owned by Hebei Huayu Co. Ltd (presently known as Yu Yuan Co. Ltd).

Due to the subsequent deterioration of the fiber optic market price, the plant has yet to be completed and production date has yet to be announced.

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (‘‘US GAAP’’). The basis of accounting differs from that used in the statutory financial statements of the Company, which are prepared in accordance with the accounting principles generally accepted in the People’s Republic of China. In the opinion of management, the financial statements have reflected all costs incurred by the Company in operating the business.

All amounts in the financial statements and in the notes herein are Renminbi (‘‘$’’) unless otherwise designated.

The comparative figures as at and for the year ended 31 December 2003 were not audited.

The preparation of the financial statements in conformity with generally accepted accounting principles accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Property, plant and equipment are stated at cost. Asset leases qualifying as capital leases, if any, are also included in property, plant and equipment. Major renewals and improvements are capitalized and minor replacements, maintenance, and repairs are charged to current operations as incurred.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the respective lease term, whichever is shorter. No depreciation is charged for construction in progress and machinery and equipment under installation. Depreciation is provided as follows:

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Recoverability of an asset is measured by comparison of the carrying amount of the asset to the net undiscounted future cash flow expected to be generated from the asset. If the future undiscounted cash flows are not sufficient to recover the carrying value of the asset, the asset’s carrying value is adjusted to fair value. The Company estimates fair value based on discounted future cash flow.

In 2004, the Company recorded an impairment charge of $17,031 related to the impairment of certain property, plant and equipment. The remaining carrying value of these impaired long-lived assets, immediately after recording the impairment charge, was approximately $43,828.

These impairment charges were recorded to reduce the carrying value of the identified assets to fair value. Fair values were derived using a variety of methodologies, including cash flow analysis, estimates of sales proceeds and independent appraisals. Where cash flow analyses were used to estimate fair values, key assumptions employed, included estimates of future growth, estimates of gross margins and estimates of the impact of inflation. The charges were primarily the result of management’s revised outlook due to the prolonged unfavourable market conditions.

In March 2005, the FASB issued Interpretation, or FIN, No. 47, ‘‘Accounting for Conditional Asset Retirement Obligations’’ (‘‘FIN 47’’) — an interpretation of FASB Statement No. 143, ‘‘Accounting for Asset Retirement Obligations’’, which clarifies the term ‘‘conditional asset retirement obligations’’ and specifically when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The provisions of FIN 47 are effective on December 15, 2005. The adoption of FIN 47 is not expected to have a material effect on our results of operations or financial condition.

In March 2006, FASB Statement No. 156, ‘‘Accounting for Servicing of Financial Assets — an Amendment of FASB Statement No. 140’’ (‘‘SFAS 156’’), was issued. SFAS 156 requires recognition of a servicing asset or liability at fair value each time an obligation is undertaken to service a financial asset by entering into a servicing contract. SFAS 156 also provides guidance on subsequent measurement methods for each class of servicing assets and liabilities and specifies financial statement presentation and disclosure requirements. SFAS 156 is effective for fiscal years beginning after September 15, 2006. Management does not currently expect SFAS 156 to have a material impact on the Company’s future financial position, results of operations and cash flows.

in income taxes recognized in a company’s financial statements in accordance with SFAS 109 — ‘‘Accounting for Income Taxes’’. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We are currently evaluating the potential impact, if any, that the adoption of FIN 48 will have on our financial statements.

The Company is governed by the income tax laws of the People’s Republic of China. The applicable corporate income tax rate for the Company was 33% for years ended December 31, 2006, 2005, 2004 and 2003.

The provision for income taxes differs from the amount computed by applying the statutory rates to income before income taxes of the Company. The principal reasons for the difference are listed in the following table:

The Company is in the process of obtaining the land use right certificate in respect of its land.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and receivables.

The Company maintains cash and cash equivalents with financial institutions that are located in the People’s Republic of China. The Company relies on capital contributions from the shareholders’ when funding is required.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value because of the short-term maturity of these instruments.

Receivables and payables: The carrying amounts reported in the balance sheet for accounts receivable and accounts payable approximate their fair values because of the short-term maturity of these instruments.

The Company’s principal operation is located in Shandong, a province in the People’s Republic of China (‘‘PRC’’). The Company has not commenced productions. As the management determined that there is a market oversupply at Shandong, there has been a temporary suspension of construction of the production lines.

The Company sold major equipments including drawing towers, glass working lathe, rewinding and screening systems to a third party on 6^th June 2007 for net proceeds of approximately $15,800.


Year Ended December 31,	At Period End		Average⁽¹⁾		High		Low
			(Bt per $1.00)
2001		44.24		44.517		45.82		42.30
2002		43.20		43.020		44.20		40.42
2003		39.63		41.485		43.18		39.09
2004		38.80		40.263		41.70		38.80
2005		40.99		40.339		42.08		38.21
2006		36.10		37.680		40.76		35.19


Month	High		Low
September 2007		32.50		31.50
October 2007		31.80		31.40
November 2007		31.73		30.62
December 2007		30.62		29.50
January 2008		29.36		31.45
February 2008		32.08		29.53


Year Ended December 31,	At Period End		Average⁽¹⁾		High		Low
			(S$ per $1.00)
2001		1.847		1.797		1.854		1.732
2002		1.735		1.787		1.852		1.731
2003		1.699		1.743		1.784		1.699
2004		1.632		1.690		1.729		1.631
2005		1.663		1.665		1.706		1.618
2006		1.534		1.580		1.652		1.534


Month	High		Low
September 2007		1.527		1.484
October 2007		1.480		1.449
November 2007		1.452		1.439
December 2007		1.463		1.436
January 2008		1.438		1.417
February 2008		1.419		1.393


Year Ended December 31,	At Period End		Average⁽¹⁾		High		Low
			(Rmb per $1.00)
2001		8.277		8.277		8.279		8.271
2002		8.280		8.277		8.280		8.270
2003		8.277		8.277		8.280		8.277
2004		8.277		8.277		8.277		8.276
2005		8.070		8.183		8.277		8.070
2006		7.804		7.958		8.070		7.804


	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934


	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Title for each class Common Shares, par value $0.01 per share			Name of each exchange on which registered None


Item 1:	Identity of Directors, Senior Management and Advisers		2
Item 2:	Offer Statistics and Expected Timetable		2
Item 3:	Key Information about Asia Pacific Wire & Cable		2
	3.1	Selected Consolidated Financial Data	2
	3.2	Exchange Rates	3
	3.3	Risk Factors	6
	3.4	Forward-looking Statements	14
Item 4:	Information on the Company		15
	4.1	History and Development of the Company; Recent Developments	15
	4.2	Business Overview	19
	4.3	Organizational Structure	30
	4.4	Property, Plant and Equipment	32
Item 5:	Operating and Financial Review and Prospects		34
	5.1	Disclosures of Critical Accounting Policies	34
	5.2	Summarized Income Statement	38
	5.3	Operating Results	38
	5.4	Liquidity and Capital Resources	46
	5.5	Inflation	47
	5.6	Off-Balance Sheet Arrangements	47
Item 6:	Directors, Senior Management and Employees		48
	6.1	Directors and Senior Management	48
	6.2	Audit Committee	49
	6.3	Remuneration Committee	50
	6.4	Compensation	50
	6.5	Employees	50
Item 7:	Major Shareholders and Related Party Transactions		51
	7.1	Major Shareholders	51
	7.2	Related Party Transactions	52
Item 8:	Financial Information		52
	8.1	Legal Proceedings	52
	8.2	Dividend Policy	54
Item 9:	The Offer and Listing		54
	9.1	Historical Trading Information	54
	9.2	Nature of the Trading Market	55
Item 10:	Additional Information		56
	10.1	Memorandum of Association and Bye-laws	56
	10.2	Material Contracts	63
	10.3	Environmental Matters	64
	10.4	Insurance	64
	10.5	Credit Support	65
	10.6	Taxation	65
	10.7	Documents on Display	70
Item 11:	Quantitative and Qualitative Disclosures About Market Risk		71
	11.1	Foreign Currency Exposure	71
	11.2	Interest Rate Risk	72
	11.3	Risks Relating to Copper	72
Item 12:	Description of Securities Other Than Equity Securities		72
Item 13:	Defaults, Dividend Arrearages and Delinquencies		73


Item 14:	Material Modifications to the Rights of Security Holders and Use of Proceeds		73
Item 15:	Disclosure Controls and Procedures		73
Item 16A.	Audit Committee Financial Expert		73
Item 16B.	Code of Ethics		74
Item 16C.	Principal Accountant Fees and Services		74
Item 16D.	Exemptions from the Listing Standards for the Audit Committees		74
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		74
Item 17:	Financial Statements		75
Item 18:	Financial Statements		75
Item 19:	Exhibits		75
	19.1	Index to Asia Pacific Wire & Cable Corporation Limited Audited Financial Statements	75
	19.2	Index to Shandong Huayu Pacific Fiber Optics Communication Corporation Limited Audited and Unaudited Financial Statements	75
	19.3	Index to Exhibits	75


	•	our prospects for future revenues and profits in the markets in which we operate;


	•	the possibility that our Common Shares will again be listed on a national exchange;


	•	our dependence on a limited number of suppliers for our raw materials and our vulnerability to fluctuations in the cost of our raw materials; and


	As of December 31,
	2001			2002			2003			2004			2005			2006
Balance Sheet Data:
Cash and cash equivalents		$	14,241		$	14,431		$	25,032		$	24,419		$	20,748		$	24,664
Working capital			36,900			46,446			71,141			80,152			80,350			108,084
Total assets			193,426			208,193			232,176			270,433			262,938			364,565
Total debt			54,559			49,681			32,965			57,389			58,438			100,195
Total shareholders’ equity			80,718			92,047			107,176			107,146			97,622			118,765


	•	Lack of documented policies and procedures governing the Company’s accounting policies, internal control and code of conduct;


	•	Need for improvement in monthly financial statement close process for the Company and its subsidiaries to allow timely financial reporting;


	•	Need for greater U.S. GAAP and tax expertise to identify potential accounting and taxation issues that have a material impact on the Company; and


	•	The need for improvement in monthly financial statement close process for the Company and its subsidiaries to allow timely financial reporting.


	•	Certain unauthorized payments from the Company and certain of its subsidiaries to several of its former directors and officers.


	Manufactured products only			All products and services
Thailand		48.3	%		45.3	%
Singapore		6.7	%		12.5	%
Australia		11.2	%		10.5	%
China		33.8	%		31.7	%
Total		100.0	%		100.0	%


	December 31, 2006		December 31, 2005
Foreign currency to US$1:
Thai Baht		36.10		40.99
Singapore $		1.53		1.66
Australian $		1.27		1.36
Chinese Rmb		7.80		8.07


	December 31, 2005		December 31, 2004
Foreign currency to US$1:
Thai Baht		40.99		38.80
Singapore $		1.66		1.63
Australian $		1.36		1.28
Chinese Rmb		8.07		8.28


	December 31, 2004		December 31, 2003
Foreign currency to US$1:
Thai Baht		38.80		39.63
Singapore $		1.63		1.70
Australian $		1.28		1.33
Chinese Rmb		8.28		8.28


	Payments due by period
Contractual obligations as of December 31, 2006 (In thousands of US$)	Total		2007		2008-2009		2010-2011		After 2011
Long term debt		1,577		1,577		—		—		—
Long term loan from PEWC		900		660		240		—		—
Capital lease obligations (principal amount only)		373		109		264		—		—
Operating leases		3,637		493		433		273		2,438
Purchase obligations for copper cathodes		85,403		85,403		—		—		—
Total contractual cash obligations		91,890		88,242		937		273		2,438


Name	Age	Position
Ryoji Furukawa	51	Director (Class A)
Eric Chi Chiu Yip	47	Director (Class A)
Wellen Sham	52	Director (Class A)
Michael C. Lee	55	Director (Class B)
Yuan Chun Tang	45	Director (Class B)
Jimmy Tsay	52	Director (Class B)
James M. Keyes	41	Bermuda Resident Secretary
Reid Management Company	N/A	Resident Representative in Bermuda


Identity of Person or Group	Number of Shares		Percent of Class
Pacific Electric Wire & Cable Co., Ltd.		7,664,615		55.400	%
Sino-JP Fund Co., Ltd.		2,766,154		20.000	%
Directors and Officers of the Company		10,000		0.072	%


	8.1.1	Set Top Litigation (Settled); See — ‘‘Recent Developments, Section 4.1.2’’


	8.1.2	Sino-JP/PEWC/APWC Litigation (Settled); See — ‘‘Recent Developments, Section 4.1.2’’


	10.1.2	Description of Shareholder Rights Attaching to Our Common Shares


	•	Holders of the Common Shares have no preemptive, redemption, conversion or sinking fund rights.


	•	Holders of the Common Shares are entitled to one vote per share on all matters submitted to a poll vote of holders of Common Shares and do not have any cumulative voting rights.


	•	In the event of our liquidation, dissolution or winding-up and subject to any alternative resolution that may be pursued by our shareholders, the holders of Common Shares are entitled to share ratably in our assets, if any, remaining after the payment of all our debts and liabilities.


	•	Our outstanding Common Shares are fully paid and nonassessable.


	•	Additional authorized but unissued Common Shares may be issued by the Board without the approval of the shareholders.