Greetings!

Fifteen years ago, we embarked on an exciting journey to spearhead the development of smart card technology products with an aim to widen user acceptance of smart cards around the world. One of the pioneers in the industry, we are proud to have taken part in the developments of the smart card revolution, which has experienced continued rapid growth over the years.

ACS was originated from another Hong Kong-based company called Advanced Electronics Ltd. (AEL), which was founded by me and was a distributor of Motorola semiconductors to the Chinese market. A department was set up in AEL in 1994 to do smart card technology business. At that time, Motorola was the world's leading supplier of smart card chips. Realizing that the smart card business and the semiconductor business were different undertakings, I decided to spin off the smart card department in 1995 and make it a new company called Advanced Card Systems Ltd.

ACS is among the world's top three suppliers of PC-linked smart card readers as ranked by Frost &Sullivan. Listed on the Hong Kong Stock Exchange, ACS exports its products to over 100 countries in the world. We received the 2009 Best Practices Award “Product Quality Leadership Award for Smart Card Readers” from Frost &Sullivan. In 2010, ACS was included into Forbes Asia's annual Best Under A Billion list as one of the top-performing 200 firms from close to 13,000 publicly listed Asia Pacific firms with actively traded shares and sales between US$5 million and US$1 billion.

Now, we have reached another milestone as we celebrate ACS's 15^th anniversary. Let me take this opportunity to thank the various stakeholders who have helped us in this fruitful journey.

To our staff, allow me to express my gratitude for your commendable efforts in fulfilling your respective roles. Your individual and collective contributions have been vital in ACS's every achievement, and I hope that our talents, passion, enthusiasm and dedication will help us achieve even more. This anniversary is as much a beginning of our journey towards a challenging but bright future as it is a culmination of our collective hard work and achievements over the past years.

To our valued clients, thank you for continuously choosing and trusting ACS in providing you with the smart card technology products for your respective system needs. Our 2009 and 2010 customer satisfaction surveys indicate your high level of satisfaction with ACS products and services. We are grateful for your positive feedback and will work harder, be better and continue doing our best to live up to and exceed your expectations. My appreciation to our other business associates for your support throughout the years.

To the shareholders of ACS, thank you for your continual support and for your understanding that the management team of ACS emphasize on the long-termed viability of this technology business and so over 50% of the earnings from the current products are spent in the development of new products and services.

Last but not least, to our fellow participants in the smart card industry, let us continue our collaborative efforts to advance the smart card technology to new frontiers. The recent economic downturn has deterred the growth of the industry, with the implementation of some key government projects delayed due to a shaky financial environment, but a promising future lies ahead with the emergence of new opportunities in telecommunication, finance, transportation and identity . From our end, ACS will continue to maintain a high level of competitiveness to ensure our products and services meet the industry's rigorous standards and satisfy the growing number of smart card technology users around the globe.

Future Prospects

As we continue this journey, we would aim on accelerating the growth of the company based on the foundation we built in the last 15 years. In fact, the first ten years was a period with great challenges, primarily owing to the limited market size of PC-linked smart card readers, the flagship product of ACS. We focused on perfecting the readers and satisfying customers. We spread our products widely in the world and so we finally reached a critical mass. At the same time, the card operating systems in another key product category began to generate better and better business for the company. Since 2005, the company has been profitable and growing.

From 2005 onward, we spent more than half of the engineering resources to develop more sophisticated smart card terminals and card operating systems. Moreover, we built in house an automatic fare collection solution business. The achievements in the development work made during the last five years far exceeded those made in the first ten years as we started in 2005 from a much stronger base. We have recently launched or are launching a range of products including desk-top and portable smart card terminals using 32-bit micro-processors, used in identification, health care and transportation. We launched our automatic fare collection solutions with certain unique technologies and innovative business models. We received extremely warm responses. We expect to see accelerated growth in sales and profits in the coming five years.

ACS is moving forward with the reputation as a major international player, known for its cutting-edge design and technology, product reliability, cost-effectiveness and its constant endeavour to deliver its commitments to customers and other business partners. ACS is determined to stay at the forefront when it comes to providing the best possible technology, equipment and service to support the expanding smart card revolution.

Denny Wong

CEO, Advanced Card Systems Ltd.