Extracted from Annual Report 2008


Dear Shareholders,

As part of the effort of the Group to ensure a clear division of responsibilities, and a balance of power and authority as well as greater capacity of the Board for independent decision making, the Board invited Ambassador Toh Hock Ghim, to take over the chairmanship of the Company during the financial year. With his credentials and experience, the Board believes that the new Chairman is able to bring new visions and invaluable insights to Equation. The appointment of separate persons as Chairman and CEO of the Company reflects our continuous effort to improve our corporate governance standards.

The Year In Review

The financial year in review started with promising growth, until the US sub-prime issue escalated and disrupted the growth momentum in third quarter of 2007. The resultant financial contagion from the sub-prime crisis such as volatility in international financial markets, weakening US dollar, credit crunch and economic slowdown posed serious threats to most businesses. The recent escalation in oil prices and increasing inflation in general added further uncertainty and challenges to the business environment during the financial year.

Against this backdrop, we are pleased that the Group achieved revenue of $48.8 million, an increase of 74.6% from $27.9 million in the previous financial year. The revenue is from the sales and distribution of consumer electronic products and the electronic waste recycling business segments, which enjoyed growth over the last financial year of 61.4% and 98.7% respectively. These two business segments have made significant progress over the last year in terms of improved revenue and the achievement of significant economies of scale.

We completed the installation of a Cathode Ray Tube ("CRT") Recycling System in our Tuas factory in Singapore this year. Subject to final testing and commissioning, the CRT system is expected to be ready for operation by the end of 2008. This system can safely reduce a CRT in computer monitors and televisions to its constituent parts effectively, which enhances our effectiveness in extracting valuable raw materials from CRT for recycling.

As part of our long-term corporate strategy to stay invested in electronic waste and environmental related businesses, the Company completed the subscription of additional 948,724,172 shares in Centillion Environment & Recycling Limited ("Centillion") in the financial year in review. Centillion is our associated company which is listed in the Main Board of SGX and our current shareholding in Centillion stands at 35.07%.

Centillion is a fully integrated service provider of recycling and processing services for electronic waste with a global footprint. It has achieved several business milestones in its expansion plan during the financial year in review such as the acquisition of Metech International Inc., a US-based electronic waste recycler that operates recycling plants in the states of Massachusetts and California and has collection presence in Malaysia and Thailand. In August 2008, Centillion acquired Computer & Electronics Recycling, LLC (trading under the names of Guaranteed Recycling Xperts and GRX) ("GRX"), a business based in Denver, USA and which focuses on end of life materials. With this acquisition, GRX is expected to provide better coverage of the Mid-Western US and increase the volume of materials collected by the Centillion Group in US.

In our continuing effort in the divestment of non-core business segments, the Company has liquidated its investment in Xiamen Xiangyu Presto Trading Ltd (a subsidiary that was deconsolidated in Group's financial statement for financial year ended 30 June 2005), realising approximately $1.2 million of our investment cost in the process.

Other income for the Group included gains of $9.6 million arising from the sale of 150 million shares in Centillion. The proceeds from the sale have been used to fund the subscription of additional shares in Centillion as mentioned above.

Certainly, FY 2008 has been both challenging and eventful for the Company. Our proposed investment in Solar Morph Pte. Ltd. ("SolarMorph") announced in July 2007 was subsequently terminated in November 2007. Solar Morph was set up with plans to construct and operate a 45 Mega Watts solar panel manufacturing plant in Singapore using large-area thin film silicon technology. Due to the sub-prime crisis, there was uncertainty on timing for sufficient funds to be raised for construction and operations of the solar panel manufacturing plant. The decision to terminate this investment was a difficult one and was arrived at after considering the risks and uncertainties involved. Consequently, the proposed notes issue of up to $35 million to Pacific Capital Investment Management Limited was aborted.

The net profit attributable to equity holders is $0.5 million in the financial year in review as compared to $0.7 million in the previous financial year.

Share Capital

On 19 February 2008, the Company issued 290,185,626 new ordinary shares in the issued and paid-up share capital of the Company pursuant to a renounceable and non-underwritten rights issue ("Rights Issue") at an issue price of $0.05 for each Rights Share on the basis of two (2) Rights Shares for every five (5) existing Shares then held by Shareholders. Net proceeds of $14.3 million were raised from the Rights Issue. Since the close of the Rights Issue until 30 June 2008, an aggregate of S$1.98 million from the Rights proceeds have progressively been used for normal working capital purposes.

Looking Ahead

The prolonged uncertainty in the global economy due to slow growth and high inflation rate has caused market uncertainty and challenges ahead for the Group. This volatility may persist but we will continually adapt our operations to the changing market conditions.

Baring unforeseen circumstances, the Group is reasonably optimistic on the electronic waste recycling businesses due to increased awareness of environmental issues and the shortening of product life cycles of electronic goods due to continuous technological advancements. With the incorporation of a new Indonesia subsidiary during the financial year in review (PT CHE Recycling Indonesia), the Group hopes to expand the e-waste collection and trading activities in this region.

As for the consumer electronic distribution business, our newly incorporated subsidiary in Germany, "DISA - Digital Safety GmbH", was formed to explore new distribution business opportunities related to digital security systems in Europe.

The Group has also incorporated a subsidiary in early May 2008, Equation Solar Management Pte. Ltd., to explore solar energy related business opportunities including the provision of management and consultancy services, and the installation, operation and ownership of solar panels and related assets. The Group may seek to maximise the value of this business segment through strategic partnerships or joint ventures to help position the Group as a leader in the growing environmental related industry with raising public awareness of environmental issues.

The Group will continue to evaluate opportunities in our existing business segments of electronic waste recycling and consumer electronic product distribution to develop and grow these segments. At the same time, we will explore possible new business ventures which offer high growth potential.

We will continue to work diligently to develop and grow the Group's businesses and bring greater shareholder value to you in the years ahead.

Appreciation

We would like to express our heartfelt appreciation to our shareholders, customers, and business partners for their continued trust and unwavering support.

Our gratitude also goes to our fellow Board members for their expertise and invaluable advice.

On behalf of the Board, we thank the Management and staff for their hard work and dedication which have been essential in the development of the Group.

Yours faithfully,

Ambassador Toh Hock Ghim	Chng Weng Wah (Eddie)
Chairman	Chief Executive Officer

17 September 2008