The deteriorationfluctuation of economic conditions resulting fromcopper prices in 2011 has further impacted the current globalCompany’s ability to improve its overall financial and credit crisis and economic downturn has and may well continue to adversely affect each of the markets in which the Company sells and distributes its products and provide services. In certain markets, sales have stagnated or even decreased as there has been a reduction in infrastructure development by governmental entities in certain instances and in capital expenditures and construction by private companies in anticipation of the fall in demandperformance, particularly in the residentiallatter part of 2011. The increase in average London Metal Exchange (“LME”)copper price over 2010 was higher than the increase in our prevailing selling price for manufactured products, resulting in a gross margin lower than in 2010 for operations in China. Elsewhere in Thailand, the net sales were slightly lower than that of last year as our production and commercial building markets. Many customers haveour ability to ship our products was curtailed by the nationwide flooding that affected Thailand and severely disrupted many business operations in that country.  In Australia and Singapore, we witnessed an increase in net sales, as the copper price rose during the first three quarters of 2011 and production volume also delayed their construction projects in the current weak market environment. The reduction in the manufacture of electronic products for export or local consumption has also reduced our sales of enameled wire. increased by 29.8% and 31.2%, respectively.

When compared with 2010 sales, sales in the second half of 2008 and into first half of 2009, which included lower sales and lower gross margins as compared to the first half of 2008 and the second half of 2007. The lower results2011 increased by 5.7%, boosted by an increase in 2009 were primarily due to reduced order flow from customers However, with the re-bound of copper price in 2009, the customers were willing to accept a higher sales price from APWC in the beginning. Revenue for 2009 was $362.2 million, representing a 27.7% decline from 2008. Gross margin in the second half of 2009 decreased slightly by 1.2% as compared to the first half of 2009, primarily due to some pre-determined supply contracts to the customers in the first half. However, sales in the second halfpower wire category by 35.3%, which was partially offset by decreases in sales of 2009 increasedenameled wire and fiber optic out of Thailand by $60.8 million or 40% as compared to the first half10.9% and 36.4%, respectively. Sales of 2009.

The Company is unable to determine the precise impact of the Euro zone fiscal crises, and the fragile state of the global economic crisisrecovery, on its operations and cash flow, since its operating results are also affected by factors that are, or may be, unrelated to the economic crisis,turmoil, such as the completion of routine purchase cycles by customers and the completion, suspensionexpansion or terminationcontraction of large infrastructure projects.  However, the Company has concluded that thecurrent economic uncertaintyinstability has negatively affected and will likely continue to have a significant impact on the Company’s operations and cash flow. Specifically, the operating subsidiaries may encounter greater difficulty in raising new banking facilities and loans to support their working capital requirements in the current environment where banks are less willing to offer new facilities. Governments in certain countries, such as China, Thailand and Singapore, have pledged to increase infrastructure and construction spending to boost or maintain economic growth. Assuming those pledges are acted upon, those developments will likely have a favorable impact on our sales of manufactured products. However, the Company’s results for the first half of 2009 indicate that actual or planned governmental increases in allocations for expenditures on infrastructure development have not yielded any sustainable increase in sales of the Company’s products, particularly when the government’s focus was on additional housing and mass public transportation projects such as, among other things, cross-island passage ways. In addition, the re-bound in the trading prices of many public companies and the increases in major indices on a number of national exchanges since the lows of March 2009 have not translated into a material increase in customer behaviors with either private or government sponsored projects. The Company believes that any efforts to forecast likely future performance with any degree of specificity would be fraught with uncertainty due to the suddenness and severity of the financial crisis. In addition, the apparent recent stabilization of the

Macroeconomic events and those specific to the Companyconditions may have a material adverse impact on the Company’s business operations until such time as the global financial crisis has substantially abated and financial and economic conditions have materially improved.  The Company notes, however, that the foregoing is subject to a number of unknown variables, including the impact of actions taken or that may be taken in the future by governmental entities to address the capital needs of banks and other financial institutions and to increase the flow of credit to businesses.

3.3.23.3.4     Risks Related to the Common Shares and Corporate Governance

Consolidation of Charoong Thai Group Accounts

As of December 31, 2009,2011, the Company effectively owned 50.93% of the issued and outstanding shares of Charoong Thai Wire and Cable Public Company Limited (“Charoong Thai” or “CTW”). That percentage ownership constitutes, a decrease from the Company’s initial ownership percentage andwhich 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 determinedwere to make a further offering of voting securities, or securities convertible into or exchangeable for

Approximately 75.4% of our Common Shares are either unregistered securities or registered securities held by affiliates, which are subject to restrictions on trading.  Accordingly, approximately three quarters75% of our Common Shares are not fully liquid investments.  In the recent past,Since April 2011, when APWC was listed on NASDAQ,  the volume of trading in our Common Shares has not been substantial. This illiquidity may negatively impactpicked up fractionally.  However, the value of our Common Shares may be impacted negatively by their relative illiquidity when compared to the Common Shares.

Control of the Company Rests with Majority Shareholder; Controlled Company Exemption; Risks Related to PEWC

As the majority shareholder, Pacific Electric Wire & Cable Co., Ltd. (“PEWC”) has sufficient votes to control the outcome of any matters presented for a shareholder vote, including the election of the members of the Board of Directors.  PEWC may vote its shares in the Company in the manner that it sees fit.  In addition, subject to compliance with applicable securities laws, PEWC may sell, convey or encumber all or a portion of its ownership interest in the Company without regard to the best interests of the other shareholders of the Company except to the extent that it may beis: (i) prohibited from engaging in conduct oppressive to minority interests under applicable law and (ii) required to comply with the terms of the Amended and Restated Shareholders’ Agreement dated March 27, 2009 among the Company, PEWC andMSD CREDIT OPPORTUNITY Master Fund, L.P. (“COF”) (as the assignee ofSOF Investments, L.P. (“SOF”) in July 2011), a Delaware limited partnership which owns beneficially 9.8% of the issued and outstanding Common Shares (the “Amended and except that it may not engage in conduct oppressive to minority interests under applicable law.

The Company’s plans include seeking a listingCommon Shares of the Company are traded on a national securities exchange, such as Nasdaq or NYSE Amex Equities (formerly knownthe NASDAQ Capital Markets tier.  However, as the American Stock Exchange), as and whenCompany has a more than fifty percent (50%) shareholder, the Company meets the listing criteria for one of those exchanges. In the event of a listing on a national securities exchange, the Company intendsis entitled to rely upon thea “controlled company exemption” which will exemptto the Company fromrequirement that a requirement tocompany have a board of directors that has a majority of independent directors. The Company may also rely upon Nasdaq Rule 4350(a) or AMEX Company Guide Section 110, each of which would permit the Company to rely in certain instances upon the rules of its home country, Bermuda, which do not require that the board of directors be comprised of a majority of independent directors. Accordingly, even assuming a listingdirectors in order to be listed on a national securities exchange,NASDAQ. At present, a majority of the Company’s Board may not be comprisedboard of directors independent from any affiliation with the majority shareholder, PEWC.

Limited Trading Volume on the OTC BB

Although our Common Shares are traded on the over-the-counter bulletin board (the “OTC BB”). TradingNASDAQ Capital Markets tier, trading in, and demand for, our Common Shares has been limited and there may not exist from time to time an active trading market for our Common Shares.limited. As a consequence, shareholders may find that their ability to sell their Common Shares quickly or in substantial amounts is adversely affected by the limited public trading market.  Thinly-traded equity can be more volatile than equity securities traded in an active trading market.  The high and low daily closing price for our Common Shares during the past 24 months (March 2010 – March 2012) has been $6.45$7.85 and $0.50,$1.92, respectively.  In the future, our Common Shares may experience significant price fluctuations which could adversely affect the value of your ownership interest in the Common Shares.

Disclosure Controls and Procedures and Internal Control Overover Financial Reporting

Our management is responsible for establishing and procedures and itsmaintaining adequate internal control over financial reporting, as defined under Rule 13a-15(f) under the Securities Exchange Act of 1934.

Based on the Company’s evaluation under the applicable framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), our management concluded that a material weakness in the Company’s  internal controls over financial reporting was identified.

Delinquency in Reporting Obligations; Reporting of Financial Results

Potential Conflict of Certain Officers and Directors

In March 2011, the Company appointed twoa third independent directors on September 28, 2007.director as required by NASDAQ. Other than those twoour three independent directors, all of the members of the Board of Directors 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 10.3).  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 executive and management duties on behalf of the Company.  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 of Directors 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.  We do not make any loans to our directors or executive officers in accordance with the provisions of The Sarbanes-Oxley Act of 2002.

Obligations under the Amended and Restated Shareholders Agreement

In addition, the Company granted certain registration rights to SOF with respect to the SOFits Common Shares (the “Registrable Securities”) in the Shareholders Agreement.  In particular, the Company agreed to use its

Under the terms of the Shareholders Agreement, if the Company failed to fulfill its obligations thereunder, SOF maywould have a claim for damages against the Company.  No such claim has been made.  In addition, if the Company fulfilled its reasonable best efforts undertakings but failed to meet one or more of the stated goals, SOF maywould have a put right of their Common Shares to PEWC.  In accordance with those terms, on February 2, 2009, SOF delivered to PEWC notice of its exercise of the put right under the Shareholders Agreement due to the fact that the Common Shares were not listed on a national Securities Market as of January 31, 2009.  On March 27, 2009, SOF sold 51% of its Common Shares to PEWC pursuant to the terms of a share purchase agreement between those parties.  Upon the consummation of that share purchase agreement, SOF held 1,355,415 registered Common Shares of the Company and PEWC held 1,410,739 registered Common Shares, respectively, representing 9.8% and 10.2% of the outstanding Common Shares, with PEWC holding an additional 7,664,615 unregistered Common Shares, giving it an aggregate of 65.6% of the total issued and outstanding Common Shares.  In connection with this transaction, the Company, PEWC and SOF entered into anthe Amended and Restated Shareholders Agreement, which among other things, granted to the Company an extension for listing the Common Shares on a national Securities Market until February 2011 and maintainsmaintained for SOF the right to sell its remaining Common Shares to PEWC in the event the Company doesdid not list its Common Shares on a national Securities Market by February 2011. such time. In April 2011, the Common Shares of the Company were approved for trading on the NASDAQ Capital Markets tier, which tier does not fit within the definition of a national “Securities Market”, as provided in the Amended and Restated Shareholders Agreement.  As of July 1, 2011, SOF transferred its Common Shares to COF, at which time COF executed a joinder agreement and became a party to the Amended and Restated Shareholders Agreement and succeeded to the rights and interests of SOF thereunder.  The Company is not aware that COF has taken any action with respect to the Common Shares held by it.The Amended and Restated Shareholders Agreement also provides for those put, registration and indemnification rights set forth above in the description of the Shareholders Agreement.Agreement and such rights now apply to COF in place of SOF.  While the sale of Common Shares by SOF to PEWC resulted in PEWC holding a higher concentration of Common Shares which may impact liquidity for the other shareholders, the Company does not believe that any definitive impact can be forecasted or determined.

In addition, sales of Common Shares held by SOFCOF and registered under the shelf registration statement, or any registration statement that goes effective following an exercise of demand registration rights, will increase theincreasethe number of Common Shares available for purchase in the public market and may adversely affect the value of the Common Shares held by other shareholders.  Even without substantial sales by SOFCOF or PEWC of their respective Registrable Securities, the possibility of such sales may create a “market overhang” that has the effect of depressing the trading price of the Common Shares.

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.

Requirement to Maintain Effectiveness of the Registration Statement and to List on a National Securities Exchange; Effect of the Put of the SOFCOF Shares to PEWC

Under the Amended and Restated Shareholders Agreement, SOFCOF has retained the right to sell its remaining Common Shares (the “SOF“COF Shares”) to PEWC if the Company does not achieve a listing on a national Securities Market within the time frame provided in the agreement. The Company’s Common Shares are currently listed on the NASDAQ Capital Markets tier. The Company intends to apply to list the Common Shares on the Global Markets tier after the Company is satisfied that it qualifies in all respects for that tier. However, there are no assurances that the Common Shares will qualify for the Global Markets tier or that the Company’s application, when filed, will be approved. In addition, the Company has agreed to maintain the effectiveness of the registration statement on Form F-1,F-3, for the benefit of SOF,COF, and if the Company fails to do so for any period of thirty (30) consecutive trading days or an aggregate of sixty (60) trading days during any twelve month period, then SOFCOF may, subject to compliance with notice and other procedural requirements, exercise a right to sell its remaining Common Shares to PEWC.  At all times, the Company must exercise its reasonable best efforts to comply with its covenants under the Amended and Restated Shareholders Agreement.  Otherwise, the Company could be subject to a damages claim by SOF. The Company is using its diligent efforts to bring and maintain current the financial disclosure in the registration statement on Form F-1 covering the SOF Shares and the registered Common Shares held by PEWC.

We are incorporated in and organized pursuant to the laws of Bermuda.  In addition, all of our directors and officers reside outside the United States and our material 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.  Even if investors are successful in realizing against such persons in courts of the United States, the laws of Taiwan may render such investors unable to enforce the judgment against the Company’s assets or the assets of its officers and directors.  Also, investors may have difficulty in bringing an original action based upon the United States federal securities law against such persons in the Taiwan courts.  Additionally, we have been advised by our legal counsel in Bermuda, Appleby (Bermuda) Limited, 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 BermudaalthoughBermuda Courts will enforce foreign judgments for liquidated amounts in civil matters subject to certain conditions and exceptions.  As a result, shareholders may encounter more difficulties in enforcing their rights and protecting their interests in the face of actions taken by management, the Board of Directors or controlling shareholders than they would if the Company were organized under the laws of the United States or one of the states therein, or if the Company had material assets located within the United States or some of the directors and officers were resident within the United States.  See “Enforceability of Certain Civil Liabilities” for additional information.

Risks Relating to Copper

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”)LME for copper for the one month prior to purchase.  The price of copper is affected by numerous factors beyond our control, including international economic and political conditions, supply and demand, inventory levels maintained by suppliers, actions of participants in the commodities markets and currency exchange rates.  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 selling prices to its customers, such that increases and decreases in the price of copper are fully reflected in those selling prices.  Most of our sales of manufactured products reflect the cost of copper used to manufacture those products at the time the products are ordered.  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.  A long-term decrease in the price of copper would require the Company to revalue 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.  In the fourth quarter of 2011, there was a dramatic decline in the price of copper on global markets.  This decline impacted adversely on the Company’s fourth quarter and year-end results, as much of the Company’s copper inventory was procured prior to the fourth quarter price decline.  No assurance can be given that such volatility will not recur.

Risks related to our Customer Base and our Geographic Markets

Risks relating to Force Majeure Events

Operations and other business conducted at our plants and other facilities are at risk to acts of god consisting of uncontrollable natural and climatic events (often referred to as force majeure events), such as the 2011 flooding in much of Thailand that severely disrupted our manufacturing operations at our Thai plant controlled by our subsidiary, Charoong Thai.  The severe flooding affected much of our Thai operations and forced the suspension of operations for a period of 5 months. The temporary suspension of operations at Siam Pacific Electric Wire & Cable Company Limited (“Siam Pacific”), which is 100% owned by Charoong Thai impacted adversely on its 2011 sales, which experienced a 20% reduction in product sales in 2011 compared with that of 2010. With the help of  its affiliated companies such asPacific Electric Wire & Cable (Shenzhen) Co., Ltd. (“PEWS”)andShanghai Yayang Electric Co., Ltd. (“Shanghai Yayang” or “SYE”), together with our parent company, PEWC, Siam Pacific partially restored its operations in January and February with shipments of 281 tons and 588 tons, respectively. Full production is expected to resume in the second quarterof 2012.  The insurance coverage includes flood, fire, and theft but does not include losses due to business interruption.

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.

Economic Reform Measures in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The PRC government has gradually moved away from a planned economic model and 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, many of  the reforms are at an early stageunprecedented and theremay be subject to revision, modification or termination based on the outcome of such economic changes and other considerations, such as their social impact.  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.

PRC Civil Law System May Limit the Company’s Remedies

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 late 1970s, 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, since 1979, the PRC legislation over the past decades hasand regulations have significantly enhanced the protections afforded to various forms of foreign investment in China.  As foreignForeign investment laws and regulations in China are relatively newevolving 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 anduniform.  Accordingly, 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.

PRC Control over the Convertibility of Currency May Restrict the Payment of Dividends

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 andis remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies.currencies unless SAFE has pre-approved the amortization schedule of the foreign currency loan in question. The PRC government may also at its discretion restrictput restrictions on access in the future to foreign currencies for current account transactions. Shortages in

Pursuant to the availabilityForeign Exchange Administration Regulation promulgated on January 29, 1996, as amended on January 14, 1997 and August 5, 2008, and various regulations issued by the SAFE and other relevant PRC government authorities, the Renminbi is freely convertible only with respect to current account items, such as trade-related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriations of investments, require the prior approval of the SAFE or its local branches for conversion of Renminbi into foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC. Payments for transactions that take place within the PRC must be made inRenminbi. Foreign exchange transactions under the capital account are still subject to limitations and require approvals from, or registration with, the SAFE and other relevant PRC governmental authorities, or their competent local branches.

Political or Social Instability in the PRC May Adversely Affect the Company’s Operations or Financial Condition

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.  In addition, as our corporate headquarters are located in Taipei, any escalation in political tensions between the PRC and the government of Taiwan could impact adversely our ability to manage our Chinese operations efficiently or without third party interference.

Inflation in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The rapid growth of the PRC economy has historically resulted in high levels of inflation. Ifinflation, coupled with a rise in the value of RMB against U.S. dollars.  The PRC government trieshas publicly announced its commitment to control inflation, itand the anti-inflation policies of the PRC government may have an adverse effect on the business climate and growth of private enterprise in the PRC.  An economic slowdown may increase our costs.  If inflation is significant, our costs would likely increase, and there can be no assurance that we would be able to increase our prices to an extent that would offset the increase in our expenses.

PRC Power Shortages and Lack of Insurance May Adversely Affect the Company’s Operations or Financial Condition

The insurance industry in China is still at an early stage of development.development and foreign insurance companies are limited to operate only in a certain number of big cities.  In particular, PRC insurance companies do not offer extensive business insurance products.  As a result, we do not have anylimited business liability orand disruption insurance coverage for our operations in China.  Any business disruption, litigation or natural disaster might result in our incurring substantial costs and the diversion of resources.

PRC Tax Treatments May Adversely Affect the Company’s Operations or Financial Condition

On March 16, 2007, the National People’s Congress of the PRC, or NPC, passed the new PRC Enterprise Income Tax Law (the “New EIT Law”).  Under the New EIT Law, effective January 1, 2008, China adopted a uniform tax rate of 25% for all enterprises (including foreign-invested enterprises) and revoked the then current tax exemption, reduction and preferential treatments applicable to foreign-invested enterprises.  However, there is a transition period for enterprises, whether foreign-invested or domestic, that were receiving preferential tax treatments granted by relevant tax authorities at the time the New EIT Law became effective.  Enterprises that are subject to an enterprise income tax, or EIT, rate lower than 25% may continue to enjoy the lower rate and gradually transition to the new tax rate within five years after the effective date of the New EIT Law.  Enterprises that are currently entitled to exemptions or reductions from the standard income tax rate for a fixed term may continue to enjoy such treatment until the fixed term expires. Preferential tax treatments will continue to be granted to industries and projects that are strongly supported and encouraged by the state, and enterprises otherwise classified as such “encouraged” high-tech enterprises will be entitled to a 15% EIT rate. On April 14, 2008, the Measures for the Recognition and Administration of New and High-tech Enterprises (the “Measures”), were promulgated jointly by the Ministry of Science and Technology of the PRC, the Ministry of Finance of the PRC and the State Administration of Taxation of the PRC and became retroactively effective from January 1, 2008. Under the Measures, the term “high-tech enterprise” is defined as a resident enterprise that has been registered in the PRC (excluding Hong Kong, Macao or Taiwan) for more than one year, conducts business in the new and high-tech fields encouraged by government as listed in an appendix to the Measures, continuously undertakes research and development and technology conversion, and relies on self-owned intellectual property rights as the basis of its business operation. Such new and high-tech enterprises may apply for tax incentives. Pacific Electric Wire & Cable (Shenzhen) Co., Ltd. (“PEWS”)PEWS is the only subsidiary of the Company in the PRC that qualifies for thesestill enjoys a reduced tax incentives providedrate under the Measures.transitional period.  The preferential income tax rate of PEWS under the revised tax incentive regulations was 20% in 2009, and is scheduled to be 22% in 2010 and 24% in 2011, and is 25% in 2012.

Recent

Labor Law Legislation in the PRC May Adversely Affect the Company’s Operations or Financial Condition

The Labor Contract Law which became effective on January 1, 2008.  It formalizes workers’ rights concerning

Changes in exchange rates influence our results of operations.  Our principal operations are located in Thailand, Australia, Singapore and China, and a substantial portion of our revenues is denominated in Baht, Australian dollars, 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 Australian dollar, the Singapore dollar or the 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 Thai operations, which accounted for 32.6%42.0% of our sales in 2009,2011, is the Baht, the functional currency of our Chinese operations (except for PEWS and CCH HK which are in US$ and account for 17.8%), which accounted for 13.6% of our sales in 2009, is the Renminbi, and theThai Baht. The functional currency of our Singapore operations, which accounted for 26.6%15.7% of Companyour sales (including sales of Distributed Products and revenues from SDI project engineering) in 2009,2011, is the Singapore dollar. The functional currency of our Australian operations, which accounted for Australian operation is in Australian dollar and account for 9.4%13.0% of total Companyour sales in 2009.2011, is the Australian dollar. The functional currencies for our China operations, in total accounted for 29.3% of our sales in 2011, are divided into two groups: for Shandong Pacific Rubber Cable Company, Ltd. (“SPRC”, equity investee with 25% equity owned by APWC, accounting under equity method for consolidation purpose),SPFO (which was disposed of on December 1, 2011) and SYE, their functional currency is Renminbi, while for CCH HK, PEWS and Epan Industries Pte. Ltd (“Epan Industries”) in Singapore, their functional currency is U.S. dollars. Accordingly, the functional currency accounts of these operations are all 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, the Australian dollar, the Singapore dollar, or the Renminbi against the U.S. dollar would adversely affect our financial performance measured in U.S. dollars.

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.

Risks associated with Required Productivity Increases

Our business strategy includes a focus on increasing profitability through increased efficiency and productivity.  In the event we are not able to implement measures to increase efficiencies and productivity, we may be limited in achieving increased profitability or may become less profitable.  Moreover, productivity increases are linked to capacity utilization rates.  A drop in the utilization rate of our manufacturing capacity would adversely impact productivity.

Indebtedness

As of December 31, 2009,2011, the Company had a total of $279.8$316.4 million in credit line available to itself, spreading over 22or one or more of its operating subsidiaries. The available credit is provided by a total of 14 banks aggregated for allin the various regions/territories in which we operate.  Out of $279.8 million intotal available credit, $211.2$224.6 million was unused.  The Company, collectively and on individual basis, is not highly leveraged and management does not consider it is notto be likely tothat the Company will become highly leveraged just because it has over 75% of the credit facilities unutilized.leveraged. Weighted average borrowing rate, for all the outstandingtheoutstanding loans combined, would sum up to be 2.6%3.71%, which runs slightly lowerhigher than like-kind borrowing rates in the marketplace, i.e., three month LIBOR (data of 0.33%April 24, 2012) of 0.47% plus 2.5%. None of the loan agreements would prohibit the companies from making acquisitions or paying dividends.

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, or be unable to perform in whole or in part, the business it conducts with the Company pursuant to the terms of the Composite Services Agreement.

Risks Relating to Thailand

A substantial portion of our Thai operations, which accounted for approximately 32.9%42.0% of our net sales in 2009,2011, 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 performanceresults will depend in part on the political situation in Thailand and the general state of the Thai

While the political upheavalturmoil in Thailand has resulted,subsided since 2010, the continuing political uncertainty and the risk of further social unrest lessens the attractiveness of the local market for foreign investment, and diminishes the focus of the government on infrastructure development, both of which considerations may continue to result,adversely impact on the volume of business of the Company’s actual and potential customers in a reduced volume, or cancellation or suspension, of contracts with the Thai government, a significant customer of the Company.market.  The Company’s Thai operations are increasinglyremain vulnerable to uncertainties with regard to payment for current sales and the award of future contracts in view of the ongoing political crisisinstability in Thailand.  Additionally, 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,Moreover, 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.

Environmental Liabilities

We are subject to certain environmental protection laws and regulations governing our operations and the use, handling, disposal and remediation of hazardous substances used by us.  A risk of environmental liability could arise from our manufacturing activities in the event of a release or discharge by us of a hazardous substance.  Under certain environmental laws, we could be held responsible for the remediation of any hazardous substance contamination at our facilities and at third party waste disposal sites and could also be held liable for any consequences arising out of human exposure to such substances or other environmental damage.  There can be no assurance that the costs of complying with environmental, health and safety laws and requirements in our current operations or the liabilities arising from past releases of, or exposure to, hazardous substances, will not result in future expenditures by us that could materially and adversely affect our financial results, cash flows or financial condition.

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 November 2011 we sold our entire 51% equity interest in SPFOto a group of buyers in China for a cash consideration of $2.9 million, due to its low profit margin generation and fierce competition in the local fiber optic cable market. 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.

International Business Risks

We are subject to risks specific to our international business operations, including:  the risk of supply disruption,disruption; production disruption or other disruption arising from events of force majeure, such as the severe weather and climatic events that caused the 2011 floods in Thailand; the outbreak of highly infectious or communicable diseases such as Severe Acute Respiratory Syndrome, swine influenza or pandemics of a similar nature; the risk of potential conflict and further instability in the relationship between Taiwan and the PRC; risks related to national and international political instability, such as disruptions to business activities and investment arising out of the political unrest and turmoil currently occurring in Thailand; risks related to the recent global economic turbulence and adverse economic developments in a number of Asian markets; 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 Australia, 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 the possible expropriation of private enterprises; and

Item 4:4 Information on the Company

4.1 History and Development of the Company

General

Asia Pacific Wire & Cable Corporation Limited was formed on September 19, 1996 as a Bermuda exempted limited liability company under the Companies Act.   The address of the Company’s principal place of business is 7/Fl. B, No. 132, Sec. 3, Min-Sheng East Road, Taipei, 105, Taiwan, Republic of China, and its telephone number is (886) 2-2712-2558.  Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711, is the Company’s agent for service of process in the United States.

The Company 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 Thailand, China, Singapore and Australia.  The Company manufactures and distributes its own wire and cable products (“Manufactured Products”) and also distributes wire and cable products (“Distributed Products”) manufactured bymanufacturedby its principal shareholder, Pacific Electric Wire & Cable Company, a Taiwanese company (“PEWC”).PEWC.  The Company also provides project engineering services in the supply, delivery and installation (“SDI”) of power cables to certain of its customers.

Total purchases of property, plant and equipment amounted to $2.7 million in 2007, $3.4 million in 2008 and $3.3 million in 2009. Those purchases related mainly to the capacity expansion of certain subsidiaries2009, $3.7 million in Thailand2010, and China, particularly Charoong Thai,$8.9 million in 2011, mostly for old machinery replacements for Australia Pacific Electric Cable Pty Limited (“APEC”) and to the replacement of oldSigma Cable Company (Private) Limited (“Sigma Cable”), and for newly purchased production machinery and equipment at various operating facilities.

4.2

4.2.1 Certain Recent Events

On April 30, 2012, the Company replacing Mr. Samuel See who had served as interim chiefannounced certain of its financial officer. Mr. Tseng was previously the Deputy CFO for ABB Taiwan.

On March 21, 2012, the Company announced that it has been awarded three new supply contracts in Singapore valued at approximately $87 million.

On February 9, 2012, the Company announced the appointment of MZ-HCI as APWC’s new investor relations firm.  The contract with MZ-HCI would provide APWC with total solution in terms of investor relations work, investor relations website design, press releases and XBRL report printing with reduced costs.

On October 22, 20097, 2011, the Company’s shareholders passed a resolution at the Annual General Meeting (“AGM”) adopting the third amended and restated bye-laws of the Company (the “Bye-Laws”), which allowthe Company to purchase its own shares for cancellation or acquire them to be held as treasury shares, as provided for in Section 42B of the Companies Act, and to be applied or allotted for any of the purposes permitted by said Section 42B. At the AGM, the shareholders also elected to the Board each of the Directors named in Item 6 of this Annual Report.

On September 7, 2011, the Commission declared effective the Company’s Post‑Effective Amendment No. 8 to a registration statement on Form F‑1 reporting on and converting to Form F‑3, covering 2,766,154 Common Shares, of which 1,410,739 Common Shares are held by PEWC and 1,355,415 Common Shares are held by COF.

On April 29, 2011, the Common Shares of the Company commenced trading on the NASDAQ Capital Markets tier.

On March 17, 2011, the Board passed resolutions whereby 1) it accepted the resignation of an existing director, Mr. Lee Gai Poo, 2) it appointed a resolution whereby in connection withnew member to the restructuring plan, Crown Century Holdings Limited (“CCH HK”),Board, Dr. Lambert Ding, as an independent director, who also serves as a wholly-owned subsidiarymember of the Company, plannedAudit Committee, and 3) it passed on amendment to acquire 51%the Audit Committee charter, to clarify that the appointment of the shares Asia Pacific Electric Cable, Pty, Ltd., an Australian company owned 13.79% by APWCindependent auditors is subject to shareholder approval.

4.2.2 Managing Our Business in Current Market Conditions

In order to address the continuing market challenges facing our business, the Company has taken and 86.21% by Sigma Cable Co. (Pte) Limited (“Sigma Cable”). The plan would call forplans to continue to implement a transfernumber of shares from Sigma Cable for a consideration of $9,958,917,measures in order to offsetmaintain efficient operations.

Specifically, the Company has continued to focus on increased efforts to collect its receivables on a timely basis.  The days of sales outstanding in 2011 have improved from 102 days to 92 days. The Company continues to focus on working actively with all of its significant customers to reduce collection times and minimize write-offs.  The Company has also reduced its inventory levels through planned reductions in raw material purchases while negotiating with suppliers to reduce costs of raw materials and supplies.  The Company has focused also on reducing operating costs where practicable. Overall the Company has decreasedits headcount by 92 since the beginning of 2011, which reflected management’s view that the business of APWC would experience some slowness in 2011, which would also cause an erosion on net income for the fiscal year. ��Accordingly, headcount reduction became one of the cost containment measures taken by the Company.  The Company has entered into certain copper futures contracts in Singapore and at CTW in several instances in order to reduce the effect of the current volatility in copper prices on its operations.  The Company has also negotiated and finalized arrangements with banks for additional loans being extendedand credit facilities to be applied against construction of NPC’s plant.

4.3 Business Overview

The Company is a holding company that operates its business through operating subsidiaries and joint ventures, principally located in Thailand, China, Singapore and Australia.

The following chart shows the organizational structure of the Company and its principal operating subsidiaries, including joint venture ownerships, and the percentage of ownership interest and voting power in each case.  The location of the headquarters of each company is indicated in parentheses under the company’s name (“S” for Singapore, “T” for Thailand, “A” for Australia and “C” for China or Hong Kong).