On behalf of the Board of Directors of Industronics Berhad ("Industronics" or "the Company"), I hereby present the Annual Report and the Financial Statements of the Group and the Company for the financial year ended 31 December 2010.

Economy and Business Outlook

The world economy improved significantly in year 2010 especially in the Asian region. The economic growth in 2011 is expected to continue but at a more moderate rate. In Malaysia, the economy expanded at 7.2% for the year 2010 but grew at a more moderate rate in the second half. The Malaysia government iniative in the ETP will invariably help ensure continued growth in the country economy.



Industronics Groups various business sectors were in line with the some of the government ETP projects. Industronics Group will continue to pursue and develop its various business segments and tergaeting some of the ETP projects such as Electronics Solutions for Transportation sectors, Environmental Monitoring and M&E Infrastructure works. The Group have had some success in the overseas market and will continue to expand its products and services in the ASEAN region, Middle-East and USA.

Financial Review

On behalf of the Board of Directors of Industronics Berhad, it is my pleasure to present the Annual Report of the Group and the Company for the financial year ended 31 December 2010 ("FY 2010").

Results

Year 2010 has been a challenging year for the Group. In FY 2010, the Group reported revenue of RM53.3 million represents a decrease of 4.8% compared to RM56.0 million in FY 2009. The Group achieved a pre-tax loss of RM4.865 million in FY 2010 as compared to a pre-tax profit of RM0.579 million in FY 2009 due mainly to projects push out to a later dates.

At the Company level, the Company recorded in 2010 a loss before tax of RM3.550 million as compared to a profit of RM2.153 million in FY 2009 due mainly to projects push out to later dates and a substantial dividend income declared by subsidiary of RM 2.728 million in year 2009 ( nil for year 2010 ).

The balance sheet of the Group continues to remain stable. As at 31 December 2010, the shareholders’ equity has decreased slightly to RM 48.4 million while the cash and cash equivalents remained healthy at RM22.3 million.

The earnings per share for FY 2010 dropped from 0.11sen to a loss per share of 4.45sen.

Dividend

The Board of Directors does not recommend any payment of dividend for the financial year ended 31 December 2010.

Prospects

The prevailing uncertainties in the global financial economy and the rising costs continue to pose a challenge to the Group’s performance.

The Group will continue with its prudent efforts to widen the applications of our products and shall remain focused on improving operational efficiencies to achieve improved profitability and sustainable business growth.

As part of our growth plans, the Group will explore any opportunities or new market to enhance its core businesses. The Group also will consider new ventures and new business activities which are synergistic to the operations of the Group to further enhance shareholders’ value.

Corporate Responsibility

While there is no formal policy on CSR, I am pleased to observe that we discharge our responsibilities to stakeholders and community in which we operate. We appreciate the value of being a good corporate citizen who stresses on the importance of safe products, respect for employees, and its social responsibilities to community.

Acknowledgement

At the last Annual General Meeting in 2010, we saw the retirement of Dr. Lim Jit Chow and Mr. Deepak Kumar Ruia from the Board of Directors. On behalf of the Board, I wish to convey our appreciation to them for their contributions and services to the Company.

The Board would like to take this opportunity to extend its appreciation to shareholders, customers, business associates and regulatory authorities for their unwavering support and confidence in us.

I also wish to extend my sincere appreciation to my fellow directors, the management and staff for their contribution, commitment and dedication throughout this challenging year.

2010 Business Highlights

Industronics Berhad (“Industronics”) designs and manufactures its own range of Electronic Public Information Display Systems (PIDS) under the brand OLYMPEX. Apart from this, the Industronics Group is also an established engineering and systems solutions provider with strong track records in fabrication & manufacturing, security systems, building management systems, mechanical & electrical engineering contracting, lighting and environmental monitoring & control.

The Industronics Group has a strong track record of successful projects both locally and abroad. Industronics is active in many countries including the United States, Australia, Singapore, Vietnam, Philippines, India, Thailand, Indonesia, Cambodia and the Middle East. Apart from Malaysia, the Group also has operations in Singapore and Vietnam.

Electronic Products

Industronics Berhad develops and manufactures Public Information Display Systems (PIDS) and Electronic LED Information Displays under the brand OLYMPEX.

Architectural Displays and nMatrix Displays
OLYMPEX Architectural Displays are products that are mounted on buildings that enhance their overall facade and image. nMatrix Displays are primarily large screen electronic matrix displays which are used for large venues and for advertising.

In 2010, Industronics was awarded and successfully completed two major installations of its Architectural Displays – one in Kuala Lumpur, Malaysia and other in Kuwait.

Sports
Industronics enjoys a strong reputation as one of the major providers of Sports Venue Systems and Equipment which include Electronic Scoreboards, Track and Field as well as Swim Timing Systems, Meet and Sports Management Systems among others. The Company has an impressive track record with a long and illustrious track record that lists several regional and international major sporting events such as the Asian Games, SEA Games and SUKMA among them.

2010 saw consistent performance in this market sector with orders coming in mostly from international customers. These include projects in the United States, Kuwait, Vietnam, Singapore and Dubai. Locally, the Company provided its timing systems for SUKMA 2010 in Malacca.

Transport and Passenger Terminals
2010 saw exceptionally strong growth in the Transport sector. For projects within Malaysia, the key factor for this was the country’s increased emphasis on providing improved public transport infrastructure. This resulted in Industronics being awarded the contract to supply Bus Destination Displays for RAPID Buses in Penang.

Industrial Electronics Pte Ltd (“IEPL”), the Singapore arm of the Industronics Group, also managed to build upon its existing reputation to secure a new contract for the provision of LED Traffic Lights and Integrated Pedestrian Crossings (IPCs) for the island. The contract is sizable and, as these products are manufactured by Industronics, they provide significant contribution to revenue to the Company.

Industronics was also awarded a project for the Sri Rampai Station along the Kelana Line by Bombardier (Malaysia) Sdn Bhd. Industronics is closely involved in the Transportation sector in which its specifically in its Public Information Display Systems (PIDS), Bus Destination Displays and LED Traffic Lights.

In 2010, Industronics began what is to be a series of exports to Singapore LED by OLYMPEX traffic lights.

LED Lighting
LED Lighting is gaining popularity as an alternative to, among others, tungsten lights, high pressure sodium lights and fluorescent lights. Key advantages for this include the intrinsic characteristics of LED such as its long lifetime, low power consumption and it being environmentally friendly.

In 2010, the Company has focused on strategically positioning itself in several key sectors for the lighting business. As 2011 sees the general public at large becoming more aware of green issues and energy efficiency, Industronics hopes to have LED Lighting becoming a major revenue contributor in the near future.

Audio Visual Systems, Intelligent Transport Systems and Communications
This sector covers business areas for integrated systems involving Audio Visual Systems, Intelligent Transport Systems (ITS) and Telecommunications Equipment Solutions as well as major integration projects involving Information and Communication Technology (ICT).

In 2010, this sector enjoyed strong growth with very strong contribution from the transport sector. Whilst Maintenance contracts from SPRINT and LDP Highways as well as for ITIS DBKL for ITS products provided a steady stream of income, the challenge of several prestigious on-going projects including the Traffic Control & Surveillance System (TCSS) for the South Luzon Expressway (SLEX) in Manila and the KL-Kuala Selangor Expressway (KLS) boosted the Company’s revenue.

For the other sectors, the Company secured further maintenance contracts for its projects in the Ambang Botanic Township, Nottingham University in Malaysia and the ICT System in Parlimen Malaysia.

Furthermore, the Company completed its supply and installation of the AV and Acoustic System for the Convention and Cultural Centre Phase 1 for UiTM.

Industronics plans to capitalize on its significant and growing track record and reputation as a competent and high quality regional ITS system integrator. Bolstered by its achievements in the Philippines and Thailand, Vietnam and Indonesia will be a strategically important area of development in 2011.

Industrial Automation and Environmental Monitoring and Control

The Industronics Group provides integrated solutions in monitoring, control and automation for the environmental and building sectors. These include telemetry systems in hydrology, water quality, flood mitigation systems, meteorology, geotechnics and building automation systems. This business is carried out via its subsidiary Industronics Automation Sdn Bhd (“IASB”).

In 2010, the Environmental Technology Unit (ETU) of IASB secured strong revenue from various JPS in Water Quality Monitoring System including Sg Melana @ JPS Johor; Kg Pengkala Chepa @ JPS Kota Bahru Kelantan, Sg Juru @ JPS Pulau Pinang, Kolam Takungan S18 Muara Sg Pinang @ JPS Pulau Pinang, Sg Melaka @ JPS Melaka, Sg Galing Besar @ JPS Kuantan Pahang and Sg Temiang @ JPS Negeri Sembilan.

IASB is also providing operations and maintenance services for the SMART Flood Detection System (FDS) via a joint venture entity Greenspan Australia. IASB plans to develop more new businesses in areas such as disaster recovery systems and fiber-optic communication systems.

In the same year, the Building Technology Unit (BTU) also successfully carried out ventilation works and fire automation systems for Sekolah Taman Palma in Taiping, Perak and Politeknik Muadzam Shah Building in Pahang.

IASB is optimistic that recent national initiatives and programs including the “One State One River Program” by the Jabatan Pengairan Saliran (JPS) in improving water quality levels and flood mitigation, as well as greater investment in green technologies in renewable energies will create greater business opportunities for the Company.

Fabrication & Manufacturing

Industronics’ fabrication and manufacturing subsidiaries comprise of Primeworth (M) Sdn Bhd (“Primeworth”) and TTE Electronics Sdn Bhd (“TTE”).

Sheet metal fabrication works, primarily in the manufacture of 19” racks and other metal enclosures have steadfastly continued to be the core business for Primeworth.

As the economy begins its recovery, which improving economic pointers are showing, Primeworth is hopeful that these will result in better business for the Company. However, for 2010, these opportunities have yet to filter down to this level of the industry.

Primeworth observes that the outlook for its mass-produced 19” rack business is levelling out into a mature phase in its life cycle. Primeworth is also facing increasing competition from low-end manufacturers and cheaper imports mainly from China. An exception to this is the high-end 19” racks which are mostly imported and used in niche markets such as the Oil and Gas Industry.

The Company has since embarked on an aggressive and urgent diversification of its manufacturing lines with new ventures in Distribution Boxes, Chassis and CCTV Consoles.

On a backdrop of slightly lower revenue in 2010 as compared to the previous year, Primeworth sees a stronger potential in the coming year due to its CCTV Consoles and its co-development programs with the Company’s Strategic Business Partners.

TTE provides contract manufacturing services primarily for the electronics market. Such services include PCB assembly, wire harnessing, product testing and in-house engineering and design solutions to both local and foreign companies that seek to outsource their product manufacturing needs.

TTE has worked on products for a diverse range of industry sectors such as automobile electronics, medical & healthcare, security, telecommunication and lighting.

The revenue for TTE in 2010 improved from the previous year. This can be attributed to the overall recovery of the global electronic industry.

TTE will continue to carry out quality improvement initiatives whilst widening its present business and customer network to address potential businesses especially in mass production services in PCB assembly and the Lighting industry.

Security Systems and Mechanical & Electrical (M&E) Engineering

The Industronics Group provides integrated systems and solutions for building and home security, fire protection systems and M&E Services through our subsidiaries Ademco (M) Sdn Bhd (“Ademco”) and Sukitronics Sdn Bhd (“Sukitronics”).

Industronics itself has been a major supplier of conventional, microprocessor and addressable Fire Alarm Detection Panels under the Industronics brand name since 1975.

In 2010, Ademco was mainly involved in the provision of Extra Low Voltage Equipment (ELVE) systems (Smart Home Systems, Intruder Detection Systems, CCTV Systems, Access Systems, Barrier Gate Systems, Parking Systems, Audio & Video Intercom Systems and Guard Tour Systems) to numerous housing developments, retail chain stores, hypermarkets and GLCs such as Pos Malaysia Berhad and Bank Simpanan Nasional.

ELVE Systems were successfully supplied and installed to several notable developments such as for a number of bungalows in Seksyen 7, Shah Alam, Residence @ Southbay in Pulau Pinang and Metro Centre along Jalan Klang Lama, Kuala Lumpur.

Ademco also supplies a wide range of Fire Alarm Detection Systems, System Sensor devices, Home Safeguard Smoke Detectors, Battery Operated Smoke Alarms, Industronics Fire Alarm Panels and Fire Intercom Systems.

2010 saw the Company providing engineering solution and supply in this to a number of buildings including the Embassy of Malaysia in Phnom Penh, Cambodia.

Sukitronics is primarily focused on the business of M&E Services for building, industrial plants, power stations, oil/petroleum downstream engineering sectiros and other such markets.

Sukitronics’ businesses in 2010 were fairly slow due to the deferment of secured projects. However, better progress is expected in 2011 as the situation improves.

Moving forward, the Company has also tendered for several new power plant projects and has also strategically positioned itself for some forthcoming building projects in the country.