Annual. report. Making New Waves in the Right Direction

Transcription

1 Annual report Making New Waves in the Right Direction

2 annual report 2007 Report Contents Focus brings insight that is invaluable, genuine and profitable. It creates opportunities for growth one can never imagine. 01 Chairman s Message 03 Operations Review 05 Our Directors 07 Our Key Executives 09 Corporate Governance Report 14 Group Structure 15 Financial Report Statistics of Shareholders Notice of Annual General Meeting Proxy Form Corporate Information

3 EZION HOLDINGS LIMITED CHAIRMAN'S MESSAGE Dear Shareholders proved to have steered towards the right direction by focusing on the Offshore Marine Logistics and Support Services Division. The assembling of a new panel of Board of Directors (with highly regarded leaders of the industry) is also a strategic move made to improve operations and business efficacy. We are pleased to announce that Nylect Technology Limited ( Nylect ) has been renamed as ( Group ) as we focus on Offshore Marine Logistics and Support Services after the complete disposal of Fabrication, Mechanical and Electrical ( M&E ) business in December The Group is now purely a marine and offshore service provider. This strategic move sets the stage for us to embark on the next phase of growth. Year in Review Year 2007 was a very positive yet challenging year. Major changes have been made to the corporate structure including its positioning and business ventures. These changes brought about encouraging improvements in its financial performance as demands for offshore marine logistics and support services in the global oil and gas industry continue to grow. Leveraging on the expertise of our strategic partners, we managed to establish a fleet of nine vessels over a short period of time. This investment contributed significantly to the overall yielding in the fiscal year of 2007 and brought us to the development, owning and chartering of our offshore assets. We currently own and operate 16 Vessels specially designed for the global offshore oil and gas industry. Business Collaborations The Group has also entered into an exclusive 5-year renewable agreement with Levingston Corporation ( Levingston ) in Levingston will be collaborating with the Group in areas of designing, supplying, constructing, delivering and warranting Liftboats in the region of Asia Pacific and Middle East, exclusively for the Group or its associates. We also went into a joint venture with Nordic Maritime Pte Ltd in the very year for the development of Premium Offshore Accommodation Vessels. Financial Review FY2007 The Group performed modestly well with its new investments and diversion. It has achieved revenue of approximately S$13.5 million and a net profit of approximately S$3.4 million attributable to the Offshore Marine Logistics and Support Services business. Moving Ahead with a Positive Outlook The Group foresees that the Offshore Marine Logistics and Support Services Division will continue to grow as the demand continues to surge in the global offshore oil and gas industry. More activities and explorations are expected in the mentioned industry across the continents. We remain positive and undeterred regardless of the unforeseen circumstances and we will

4 02 continue to leverage on the expertise of our management team to develop strategic offshore assets in a cost and time effective manner. EZION 320E Further, we will focus on the development, ownership and chartering of strategic offshore assets with particular emphasis on two main types of vessels: Multi-purpose Self-propelled Jack Up Rig ( Liftboat ) and Premium Offshore Accommodation Vessels, and develop a series of them to meet the demands. The Group will design, build, acquire and/or modify other types of marine and offshore assets and deploy these assets on long term charters to our customers. The Group also hopes to secure major projects from these efforts put forth. We will be looking out for possible mergers and acquisitions to expand our offshore marine logistics and support services business and capabilities. For further development, we will remain vigilant in seeking opportunities to tie up with potential partners and equipment suppliers. EZION 320E We are also excited about the continual development of our assets: Liftboats and the Premium Offshore Accommodation Vessels to be actualized in year Additionally, we seek to fully utilise our fleet to expand into the marine logistics of Special Cargo. We are certain that this move will definitely help the Group to chart new heights with greater profitability. Heartfelt Appreciation I would like to thank our staff, management team and esteemed customers for your unwavering support throughout the year. I would also like to extend my appreciation to our shareholders and partners for your continual support. Let s look forward to another year of new challenges and embrace success. Lee Kian Soo Chairman EZION 320E

5 EZION HOLDINGS LIMITED OPERATIONS REVIEW Nylect Technology Limited ( Nylect ), renamed as ( Group ), saw major changes in its corporate structure in year 2007 with its strategic foray into offering offshore marine logistics and support services to the global oil and gas industry. Its new found focus in this area has brought about positive yielding and great opportunities that exposed the Group to the global oil and gas industry. The Group continued to leverage on the expertise of the board members who are respected leaders in the industry; and its strategic partners. With the escalating demand in this thriving industry, the Group has built its own fleet of vessels to meet the challenge. Further plans in expanding the fleet are in the pipeline and a steady flow of profit is expected from the Offshore Marine Logistics and Support Services Division. Year 2007 also saw the strategic alliance with Ezra Holdings Limited ( Ezra ), shipyards and key equipment suppliers. Ezra showed its support in lending its technical expertise and human resource to the Group and expanded the services the Group can offer to its growing global clientele base. An Overview of Ventures and Projects The Group saw a number of projects secured for both the Multipurpose Self-propelled Jack Up Rigs ( Liftboats ) as well as in its Premium Offshore Accommodation Vessels business. The Group is one of the pioneering companies to introduce Liftboats in Asia. This not only helps to reduce costs but also improves operations effectiveness. Liftboat also serves as a more stable and mobile platform for offshore services. One of the projects worth mentioning is the first job secured for the bareback charter of two units of Liftboats in collaboration with Ezra Holdings Limited. Ezra will be responsible for operating Liftboats and time charter out to the oil and gas majors. The second job secured in this area is one with a state linked company in the Middle East. The Levingston Corporation An Exclusive Agreement The Group has entered into an exclusive 5-year renewable agreement with the Levingston Corporation ( Levingston ). Levingston is reputed for its extensive experience in the shipbuilding industry since It is lauded by the world as a premier shipbuilder. Levingston Shipbuilding Company is the company that established Far East Levingston Shipbuilding ( FELS ) that has grown into what today is Keppel FELS, an international premier shipbuilder. It is reported that Levingston will be in-charge of design, supply, construct, deliver and warranty Liftboats for both and its affiliated companies in particular the regions of Asia Pacific and the Middle East. It is

6 04 also stated that the key components of Liftboats are designed and built in the United States for quality. Together with the Group and its associates, Levingston will see to the assembly and completion of Liftboats in a lower cost region within Asia. Premium Offshore Accommodation Vessels The Group also went into a joint venture with a Norwegian ship owner and management company that offers offshore maritime services, Nordic Maritime Pte Ltd ( Nordic ), as it saw the rising demands for Premium Offshore Accommodation Vessels. The Group noticed that the current accommodation facilities in the market are not able to meet the steep standard of the European and American Comfort Standards. In view of the situation, the Group and Nordic have been jointly developing Premium Offshore Accommodation Vessels to meet the challenge. With that, the Group managed to secure its first major project for Premium Offshore Accommodation Vessel. An American Multinational Company ( American ) expressed interest in collaborating with the Group in the mentioned business. American is a company that focuses on lending support to upstream oilfield development projects around the world.

7 MR LEE KIAN SOO Non-Executive Chairman and Non-Executive Director Appointed the Non-Executive Chairman and Non-Executive Director since 1 June 2007, Mr Lee Kian Soo is also the founder of the Ezra Group of Companies ( Ezra ) with 30 years of experience in the shipping and offshore support service industry. Prior to founding Ezra, Mr Lee has worked in various established companies which include Jurong Shipyard, Sembawang Shipyard and Offshore Supply Association. Mr Lee has been responsible for the strategic planning, business development and marketing of Ezra since its inception in MR CHEW THIAM KENG Chief Executive Officer and Executive Director Mr Chew Thiam Keng was appointed the Executive Director on 1 March 2007, and was appointed as the Chief Executive Officer on 1 June in the same year. Backed by years of experience with public listed companies, Mr Chew adds value to the management of ( Group ) by handling the Group s operations in strategic planning, corporate management and business development. Before joining the Group, Mr Chew assumed important roles in managing companies that include KS Energy Services Limited since He also served in the corporate finance and retail banking division of Development Bank of Singapore for 9 years. Mr Chew also sits on the Board of Showy International Ltd, Pharmesis International Ltd, Multi-Chem Limited, China Diary Group Ltd and Sim Siang Choon Ltd. Mr Chew was last re-elected on 26 April CAPTAIN LARRY GLENN JOHNSON Chief Operating Officer and Executive Director Captain Larry Glenn Johnson was appointed an Executive Director cum Chief Operating Officer of the Group since 13 February He is a seasoned Marine Professional with over 30 years of experience in the maritime industry. He holds a valid USCG Masters License with 16 years of management experience, which include 9 years of P&L responsibilities. He also had the opportunity to work with ExxonMobil Development Corporation, Chevron and Aker Kvaerner as a marine consultant for a number of oil and gas projects. Before joining the Group, Captain Johnson worked at Foss Maritime Company for 24 years, with his last position as the Director International Operations. He recently retired as Senior Vice President of America Cargo Transport Corp (ACTC), an US Government Contractor for Visa, MSP and USC05 cargoes operating in the Gulf of Mexico, Asia, Australia and Middle East. DR WANG KAI YUEN Independent Non-Executive Director Dr Wang Kai Yuen is an Independent Non-Executive Director appointed on 28 July 2000 and was last re-elected on 27 April He currently also serves as the Chairman of the Audit Committee and is a member of both the Remuneration and Nominating Committees. Dr Wang is also the Center Manager of Fuji Xerox Singapore Software Center, a 132-strong R&D division of Fuji Xerox Asia Pacific Pte Ltd. Adding on to his credentials, Dr Wang sits on the Board of Superbowl Holdings Ltd, Xpress Holdings Ltd, Asian Micro Holdings Ltd, COSCO Corporation (Singapore) Limited, Hiap Hoe Ltd, ComfortDelGro Corporation Limited, Koon Holdings Limited, Matex International Ltd, China Lifestyle Food & Beverages Group Ltd, HLH Corp, EOC Ltd and Carats Ltd. MR LIM THEAN EE Independent Non-Executive Director Another Independent Non-Executive Director appointed since 28 July 2000, Mr Lim Thean Ee was last re-elected on 27 April He serves as the Managing Director of Coastal Navigation Pte Ltd and is also the Chairman of Depot Estate Business Association and Dover Community Centre Management Committee; the Vice-Chairman of Telok Blangah Community Club Management Committee and Telok Blangah Citizens' Consultative Committee. MR TAN WOON HUM Independent Non-Executive Director Mr Tan Woon Hum is an Independent Non-Executive Director appointed since 21 March 2007 and last re-elected on 26 April He is a member of the Audit Committee, the Remuneration Committee and the Nominating Committee. Mr Tan has been appointed as Chairman of the Nominating Committee with effect from 1 June Mr Tan s involvement as a partner in the corporate finance and international finance practice of Shook Lin & Bok includes REITs, funds and M&A. He also advises on licensing and regulatory matters in the financial sector and has previously advised on a wide range of corporate finance transactions, particularly cross border mergers and acquisitions, joint ventures, strategic investments and listed company matters. He has been involved in 17 of the 19 listed S-REITs (as at December 2007) transactions of various structures, magnitude and complexity. Mr Tan also sits on the Board of AP Oil International Ltd and Yong Xin International Holdings Ltd. MR TEO CHUAN TECK Independent Non-Executive Director Mr Teo Chuan Teck is an Independent Non-Executive Director appointed since 21 March 2007 and is also a member of the Audit Committee, the Remuneration Committee and the Nominating Committee. He was last re-elected on 26 April Mr Teo has been appointed as Chairman of the Remuneration Committee with effect from 1 June 2007.

8 06 MR TAN WOON HUM DR WANG KAI YUEN MR CHEW THIAM KENG Our Directors MR LEE KIAN SOO CAPTAIN LARRY GLENN JOHNSON MR LIM THEAN EE MR TEO CHUAN TECK

9 MR CHEAH BOON PIN Group Financial Controller Mr Cheah Boon Pin is responsible for all accounting, financial and taxation matters. He joined Ezion Holdings Limited ( Group ) in June 2007 bringing with him over 10 years of experience in auditing and commercial accounting. Before joining the Company, Mr Cheah had served in financial management positions in 2 Singapore Exchange Main Board listed companies. He holds an ACCA accounting qualification and is a member of the Institute of Certified Public Accountant of Singapore. MR POH LEONG CHING (DAVID) Operation and Commercial Head Our Key Executives Mr Poh Leong Ching, David, is responsible for the day-to-day operations and deployment of the Group s fleet of vessels as the Operation and Commercial Head. Under his credentials is over 15 years of experience in the sales and operations of vessels and cranes. Mr Poh was the Marketing Manager of Tiong Woon Marine Pte Ltd and Tat Hong Holdings Group before joining the Group. His portfolio includes overseeing operations of the entire fleet of tugs and barges. MR GURU SHARMA Technical & ISM Head A Chartered Engineer by training, Mr Guru Sharma joined the Group in August 2007 and is a Fellow Member of the Institute of Marine Engineers (India). He holds a Class 1 Competency as a Marine Engineer Officer from United Kingdom and has been a Classification Surveyor for 12 years. He brings with him over 35 years of technical, operational and management experience and a wealth of knowledge in the shipping and offshore industry. MR DERRICK CHING Business Development Manager Mr Derrick Ching joined the Group in March 2008 and is responsible for marketing of the Group s fleet of Jackups and vessels. Mr Ching has more than 8 years of experience in the oil and gas industry and has successfully completed several upgrading and refurbishment of offshore drilling rigs. On top of that, he is also experienced in heavy lift accommodation barges, seismic vessels and pipelayers.

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11 CORPORATE GOVERNANCE REPORT ( Ezion or the "Company") observes high standards of corporate governance in line with the principles and guidelines of the Code of Corporate Governance 2005 ( Code 2005 ) so as to ensure greater transparency, accountability and protections of shareholders interest. The Company s corporate governance practices on each of the principles of the Code are outlined in the following sections. BOARD MATTERS Principle 1 Board s Conduct of its Affairs The Board oversees the business of Company and assumes responsibility for the overall strategic plans, key operational initiatives, major investment and funding proposals, financial performance reviews and corporate governance practices. The Board provides the direction and goals for the management and monitors the performance of these goals to enhance the shareholders value. The Board also approves the financial results for release to the Singapore Exchange Securities Trading Limited (SGX-ST). The Board currently comprises the following members: i) Mr Lee Kian Soo Non-Executive Chairman ii) Mr Chew Thiam Keng Executive Director iii) Captain Larry Glenn Johnson Executive Director iv) Dr Wang Kai Yuen Independent Director v) Mr Lim Thean Ee Independent Director vi) Mr Teo Chuan Teck Independent Director vii) Mr Tan Woon Hum Independent Director As a group, the Directors bring with them a broad range of industry knowledge, expertise and experience in areas such as accounting, finance, business and management. The diversity of the directors experience allows for the useful exchange of ideas and view as well as provide for effective decision-making. The profile of each Board member is set out on pages 5 & 6 of this Annual Report. The Board considers the present size appropriate for the current nature and scope of the Group s operations. Principle 3 Chairman And Chief Executive Officer The Board is supported in its tasks by Board committees such as the Audit Committee, Nominating Committee and Remuneration Committee, which have been established to assist in the execution of its responsibilities. There is a clear separation of the roles and responsibilities of the Chairman and the Chief Executive Officer ( CEO ). This is to ensure appropriate balance of power and authority, accountability and decision-making. The Board conducts regular scheduled meetings at least twice a year. Ad-hoc meetings are convened as and when warranted by particular circumstances. The Company s Articles of Association provide for meetings to be held via telephone conference. The attendance of the Directors at meetings of the Board and Board committees, as well as frequency of such meetings, is disclosed in this report. Mr Lee Kian Soo, who is the Non-Executive Chairman, and Mr Chew Thiam Keng, the CEO of the Company are not related to each other. The CEO is responsible for the day-to-day management of the affairs of the Company and the Group. He plays a leading role in developing and expanding the businesses of the Group and ensures that the Board is kept updated and informed of the Group s business. Principle 2 Board Composition And Guidance The Chairman s responsibilities include: The size and composition of the Board are reviewed from time to time by the Nominating Committee, which strives to ensure that the size of the Board is conducive to effective discussions and decision-making and that the Board has an appropriate balance of independent directors. The majority of our directors are non-executive and independent directors. The Nominating Committee reviews the independence of each director on an annual basis and it considers a director as independent if he has no relationship with the Group or its officers that could interfere, or reasonably perceived to interfere, with the exercise of the director s independent business judgement with a view to the best interest of the Company. i) scheduling meetings and leading the Board to ensure its effectiveness and approves the agenda of Board meetings in consultation with the CEO; ii) reviewing key proposals and Board papers before they are presented to the Board and ensures that Board members are provided with accurate and timely information; iii) ensuring that Board members engage Management in constructive debate on various matters including strategic issues and business planning processes; and iv) promoting high standards of corporate governance.

12 CORPORATE GOVERNANCE REPORT 10 Principle 4 Board Membership Principle 5 Board Performance NOMINATING COMMITTEE The Nominating Committee ( NC ) comprises four Directors, all of whom, including the Chairman are independent. The NC members are: Mr Tan Woon Hum (Chairman) Dr Wang Kai Yuen Mr Lim Thean Ee Mr Teo Chuan Teck The NC s responsibilities include the following: i) review and assess all candidates for directorships before making recommendation to the Board for appointment of directors; ii) reviews and recommends to the Board the retirement and reelection of directors in accordance with the Company s Articles of Association at each Annual General Meeting ( AGM ); iii) reviews the independence of directors annually; iv) reviews the composition of the Board annually to ensure that the Board has appropriate balance of independent directors and to ensure an appropriate balance of expertise, skills, attributes and ability among the directors; v) evaluates the performance and effectiveness of the Board as a whole. The NC reviews and assesses candidates for directorship before making recommendations to the Board. In recommending new directors to the Board, the NC takes into consideration the skills and experience and the current composition of the Board, and strives to ensure that the Board has an appropriate balance of independent directors as well as directors with the right profile of expertise, skills, attributes and ability. In evaluating a director s contribution and performance for the purposes of re-nomination, the NC takes into consideration a variety of factors such as attendance, preparedness, participation and candour. Recommendation for new directors and retirement of directors are made by the NC. The NC has established a formal assessment process to assess the effectiveness of the Board as a whole. The performance criteria for Board evaluation are based on financial and non-financial indicators such as an evaluation of the size and composition of the Board, the Board s access to information, Board processes, strategy and planning, risk management, accountability, Board performance in relation to discharging its principal functions, communication with senior management and standards of conduct of the directors. The Board and Management have strived to ensure that directors appointed to the Board possess the experience, knowledge and skills critical to the Group s business to enable the Board to make sound and well-considered decisions. Principle 6 Access To Information The Board members are provided with adequate and timely information prior to Board meetings and on an ongoing basis. The Board has separate and independent access to the Group s senior management and the advice and services of the Company Secretary who is responsible to the Board for ensuring board procedures are followed and the relevant statutory rules and regulations are complied with. Under the Articles of Association of the Company, the decision to appoint or remove the Company Secretary can only be taken by the board as a whole. The Company Secretary attends all the required board meetings. The Board may also take independent professional advice as and when necessary to enable it to discharge its responsibilities effectively at the expense of the Company. The Board is updated on the regulations of the SGX-ST, Companies Act, corporate governance policies and other statutory requirements. The Directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. The Company s Articles of Association provides that one third of the Board, or the number nearest to one third is to retire by rotation at every AGM. In addition, the Company s Articles of Association also provides that newly appointed Directors are required to submit themselves for re-nomination and re-election at the next AGM of the Company.

13 CORPORATE GOVERNANCE REPORT Attendance at Board and Board Committees meetings held during the year under review is as set out below: Board Audit Committee Nominating Committee Remuneration Committee No. of meetings held No. of meetings attended by respective directors Lee Kian Soo 1 2 N/A N/A N/A Chew Thiam Keng 2 3 N/A N/A N/A Dr Wang Kai Yuen Lim Thean Ee Sim Hee Chew 3 3 N/A 2 N/A Ong Wee Heng N/A N/A Sim Beng Chye 5 2 N/A N/A 1 Teo Chuan Teck N/A Tan Woon Hum N/A Captain Larry Glenn Johnson 8 N/A N/A N/A N/A N/A: Not Applicable Notes: 1. Lee Kian Soo was appointed on 1 June Chew Thiam Keng was appointed on 1 March Sim Hee Chew resigned on 7 August Ong Wee Heng retired on 26 April Sim Beng Chye retired on 26 April Teo Chuan Teck was appointed on 21 March Tan Woon Hum was appointed on 21 March Captain Larry Glenn Johnson was appointed on 13 February 2008 REMUNERATION MATTERS Principle 7 Procedures for Developing Remuneration Policies Principle 8 Level and Mix of Remuneration Principle 9 Disclosure of Remuneration The Remuneration Committee ( RC ) comprises four Directors, all of whom including the Chairman are independent. The RC members are as follows: Mr Teo Chuan Teck (Chairman) Dr Wang Kai Yuen Mr Lim Thean Ee Mr Tan Woon Hum The RC s responsibilities include the following: i) reviews and recommends to the Board an appropriate and ii) competitive framework of remuneration for the Board and key executives of the Group; recommends to the Board specific remuneration packages for each Executive Director, taking into account factors including remuneration packages of Executive Directors in comparable industries as well as the performance of the Company and that of the Executive Directors; iii) reviews and make recommendation on the fees of independent non-executive directors for approval by the Board; and iv) ensures the remuneration policies and systems of the Group support the Group s objectives and strategies. The remuneration package adopted for the Executive Directors is as per the service contract entered into between the respective Director and the Company. The RC will recommend on the specific remuneration packages for an Executive Director upon recruitment. Thereafter, the RC will review subsequent increments, bonuses and allowances where these payments are discretionary. No Director or member of the RC is involved in deciding his own remuneration. Non-Executive Directors do not have any service contracts with the Company. Save for Directors fees, Non-Executive Directors do not receive any remuneration from the Company. Directors fees are set in accordance with a remuneration framework comprising basic fees and additional fees for serving on any of the committees. Directors fees are subject to approval of shareholders of the Company as a lump sum payment at the AGM of the Company. No immediate family members of a Director or CEO have remuneration exceeding S$150,000 during the year. Remuneration of Directors and Key Executives A breakdown showing the level and mix of each individual director s remuneration payable for FY 2007 No. of Directors in remuneration band Remuneration Band $500,000 and above - - $250,000 to below $500, Below $250, Total 5 8

14 CORPORATE GOVERNANCE REPORT 12 Details of Directors remunerations Directors Fees % Salary & CPF % Bonus & CPF % Other Benefits % Total % Lee Kian Soo Chew Thiam Keng Dr Wang Kai Yuen Lim Thean Ee Sim Hee Chew Ong Wee Heng Sim Beng Chye Teo Chuan Teck Tan Woon Hum Captain Larry Glenn Johnson 8 N/A N/A N/A N/A N/A Notes: 1. Lee Kian Soo was appointed on 1 June Chew Thiam Keng was appointed on 1 March Sim Hee Chew resigned on 7 August Ong Wee Heng retired on 26 April Sim Beng Chye retired on 26 April Teo Chuan Teck was appointed on 21 March Tan Woon Hum was appointed on 21 March Captain Larry Glenn Johnson was appointed on 13 February 2008 No. of Key Executives in remuneration band Principle 10 Accountability The Company keeps the shareholders updated on the Group s financial performance, positions and prospects through half yearly financial results announcements and annual financial reports. The Company also issues announcements on developments in the Group s business on an on-going and timely basis. Management provides the Board with the relevant information on the performance of the Group on a timely and on going basis in order that the Board may effectively discharge its duties. AUDIT Remuneration Band Below $250,000 Total Principle 11 Principle 12 Principle 13 Audit Committee Internal Control Internal Audit ( IA ) The Audit Committee ( AC ) comprises four Directors, all of whom including the Chairman are independent. The AC members are: Dr Wang Kai Yuen (Chairman) Mr Teo Chuan Teck Mr Lim Thean Ee Mr Tan Woon Hum 3 3 ii) reviews the half yearly and annual financial statements, including announcements to shareholders and the SGX-ST prior to submission to the Board so as to ensure the integrity of the Company s financial statements; iii) reviews any significant findings and recommendations of the external and internal auditors and related management response and assistance given by the management to auditors; iv) reviews interested person transactions to ensure that internal control procedures approved by the shareholders are adhered to; and v) conducts annual review of the independence and objectivity of the external auditors, including the volume of non-audit services provided by the external auditors, to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination. The AC has full access to and receives full co-operation from Management, and has full discretion to invite members of Management to attend its meetings and has been given reasonable resources to enable it to discharge its functions. The External Auditors have direct and unrestricted access to the AC, which is empowered to conduct or authorise investigations into any matters within its terms of reference. The AC has reviewed the overall scope of the external audits and the assistance given by the Company s officers to the auditors. It met with the Company s external auditors to discuss the results of their respective examinations and their evaluation of the Company s system of internal accounting controls. The AC has also reviewed the half yearly and annual financial statements of the Company and the Group for the financial year ended 31 December 2007 as well as the auditors report thereon. The AC has also reviewed interested person transactions of the Group in the financial year. The AC performs the following functions: i) reviews with the external auditors, their audit plan, evaluation of the accounting controls, audit reports and any matters which the external auditors wish to discuss ;

15 CORPORATE GOVERNANCE REPORT The Group maintains a system of internal controls for all companies within the Group, but recognises that no internal control system will preclude all errors and irregularities. The system is designed to manage rather than to eliminate the risk of failure to achieve business objectives. The controls are to provide reasonable, but not absolute, assurance to safeguard shareholders' investments and the Group's assets. The AC and the Board of Directors reviews the effectiveness of the key internal controls, including financial, operational and compliance controls, and risk management on an on-going basis. There are formal procedures in place for the external auditors to report independently their findings and recommendations to the AC. The Company is in the process of outsourcing its internal audit function to a firm of certified public accountants. In line with the Code 2005, the AC has incorporated a formal whistle blowing policy into the Company s internal control procedures to provide a channel for staff to raise in good faith and in confidence, without fear of reprisals, concerns about possible improprieties in financial reporting or other matters. The objective of such a policy is to ensure independent investigation of such matters and for appropriate follow-up action. The AC has conducted an annual review of all non-audit services by the auditor to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the auditors. The Board is kept informed of the AC s activities. COMMUNICATION WITH SHAREHOLDERS Principle 14 Principle 15 Communication with Shareholders Greater Shareholder Participation The Company believes in engaging in regular, effective and fair communication with shareholders and is committed to conveying pertinent information to shareholders on a timely basis. All material and price sensitive information as well as information on the Company s new initiatives are publicly released via SGXNET on a timely basis. In addition, the Company also responds to enquiries from investors, analysts, fund managers and the press. At the general meetings of the Company, shareholders are given the opportunity to air their views and ask questions regarding the Company and the Group. The Articles of Association of the Company allow shareholders to appoint one or two proxies to attend and vote in their stead. Each item of special business included in the notice of the general meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting. The Chairmen of the Audit, Remuneration and Nominating Committees are normally available at the meeting to answer those questions relating to the work of these committees. The External Auditors are also present to assist the Directors in addressing any relevant queries by shareholders. DEALINGS IN SECURITIES The Company has adopted an internal code with regards to dealings in securities to provide guidance for its directors and officers. The Company s Code provides that Directors and employees are prohibited from dealing in the securities of the Company during the period commencing one month before the announcement of the Company s half and full year financial results and ending on the date of the announcements of the results or if they are in possession of unpublished price-sensitive information on the Group. They are also made aware of the applicability of the insider trading laws at all times. INTERESTED PERSON TRANSACTIONS ( IPTs ) POLICY The Company has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for review and approval of the Company s interested persons transactions with Ezra Holdings Limited and its subsidiaries, which are covered by a Shareholders Mandate approved at the Extraordinary General Meeting of the Company held on 24 August The AC reviews the Shareholders Mandate at regular intervals, and is satisfied that the review procedures for IPTs and the reviews to be made periodically by the AC in relation thereto are adequate to ensure that the IPTs will be transacted on normal terms and will not be prejudicial to the interests of the Company and its minority shareholders. Interested Person Transactions for FY2007 Name of Interested Person Purchase of goods and services from: Emas Offshore Pte Ltd MATERIAL CONTRACTS Aggregate value of all IPTs during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) S$ 000 Aggregate value of all IPTs conducted during the financial year under review under shareholders mandate pursuant to Rule 920 (excluding transactions less than $100,000) S$ Total There were no material contracts entered into by the Company and its subsidiaries involving the interests of its CEO, Directors or Controlling Shareholders.

16 14 GROUP STRUCTURE AS AT 29 FEBRUARY 2008 EZION HOLDINGS LIMITED (Formerly known as Nylect Technology Limited) 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Northern Offshore Pte Ltd Teras Offshore Pte Ltd Teras Transporter Pte Ltd Teras Transporter 2 Pte Ltd Teras 281 Pte Ltd Teras 331 Pte Ltd Teras 335 Pte Ltd Teras 336 Pte Ltd Teras 338 Pte Ltd Teras 339 Pte Ltd Teras 3652 Pte Ltd Teras Conquest 1 Pte Ltd Teras Conquest 2 Pte Ltd 50% 50% Eminent Offshore Logistics Pte Ltd Singapore Ocean Hotels Pte Ltd 100% 100% 100% 100% 100% 100% 100% 100% 100% Eminent 237 Pte Ltd Eminent 1 Pte Ltd Eminent 2 Pte Ltd Eminent 3 Pte Ltd Eminent 4 Pte Ltd Eminent 5 Pte Ltd Eminent 6 Pte Ltd Ocean H1 Ltd Ocean H2 Ltd 100% Northern Offshore (Australia) Pty Ltd

17 annual report 2007 Financial contents As lucid and dynamic as water, strives to make new waves in the right direction Offshore Marine Logistics and Support Services Division. 16 Directors Report 19 Statement by Directors 20 Independent Auditors Report 21 Balance Sheets 22 Consolidated Income Statement 23 Consolidated Statement of Changes in Equity 24 Consolidated Cash Flow Statement 25 Notes to the Financial Statements 65 Statistics of Shareholders 67 Notice of Annual General Meeting 70 Proxy Form Corporate Information

18 16 DIRECTORS REPORT... We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December Directors The directors in office at the date of this report are as follows: Lee Kian Soo (Appointed on 1 June 2007) Chew Thiam Keng (Appointed on 1 March 2007) Captain Larry Glenn Johnson (Appointed on 13 February 2008) Dr Wang Kai Yuen Lim Thean Ee Teo Chuan Teck (Appointed on 21 March 2007) Tan Woon Hum (Appointed on 21 March 2007) Change of Company s Name On 24 August 2007, the Company changed its name from Nylect Technology Limited to. Directors interests According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the Act ), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned subsidiaries) are as follows: Name of director and corporation in which interests are held Holdings at beginning of the year/ date of appointment Direct Holdings at end of the year Holdings at beginning of the year/ date of appointment Deemed Holdings at end of the year Lim Thean Ee 814, ,000 Dr Wang Kai Yuen 200,000 Chew Thiam Keng 290,000, ,000,000 Lee Kian Soo 100,000, ,000,000 The number of shares at the beginning of the financial year and the date of appointment were adjusted after the subdivision of each existing ordinary share in the capital of the Company into two ordinary shares of the Company on 26 December Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year. There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2008.

19 17 DIRECTORS REPORT... Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. During the financial year, the Company and its related corporation have in the normal course of business entered into transactions with companies in which a director of the Company has a substantial financial interest. Such transactions comprised lease of office and charter of vessel carried out on normal commercial terms as set out in note 28 to the financial statements. The director has neither received nor become entitled to receive any benefit arising out of these transactions other than those to which he is ordinarily entitled to as shareholder of these companies. Except for the transactions disclosed in the preceding paragraph and short-term employee benefits as disclosed in note 28 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest. Share options During the financial year, there were: (i) (ii) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; and no shares issued by virtue of any exercise of options to take up unissued shares of the Company or its subsidiaries. As at the end of the financial year, there were no unissued shares of the Company or its subsidiaries under option. Audit Committee The members of the Audit Committee during the year and at the date of this report are: Dr Wang Kai Yuen Lim Thean Ee Teo Chuan Teck Tan Woon Hum (Chairman and Independent Director) (Independent Director) (Independent Director) (Independent Director) The Audit Committee performs the functions specified in Section 201B of the Act, the SGX Listing Manual and the Code of Corporate Governance. The Audit Committee has held four meetings since the last directors report. In performing its functions, the Audit Committee met with the Company s external auditors to discuss the scope of their work, the results of their examination and evaluation of the Company s internal accounting control system. The Audit Committee also reviewed the following: assistance provided by the Company s officers to the external auditors; interim financial information and annual financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).

20 18 DIRECTORS REPORT... The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and nonaudit fees. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company. Auditors At the Extraordinary General Meeting held on 10 December 2007, KPMG were appointed as auditors of the Company. The auditors, KPMG, have indicated their willingness to accept re-appointment. On behalf of the Board of Directors Lee Kian Soo Director Chew Thiam Keng Director Singapore 29 February 2008

21 19 STATEMENT BY DIRECTORS In our opinion: (a) (b) the financial statements set out on pages 21 to 64 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2007 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the Board of Directors Lee Kian Soo Director Chew Thiam Keng Director Singapore 29 February 2008

22 20 INDEPENDENT AUDITORS REPORT Members of the Company We have audited the financial statements of (formerly known as Nylect Technology Limited) (the Company ) and its subsidiaries (the Group ), which comprise the balance sheets of the Group and the Company as at 31 December 2007, the income statement, statement of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 21 to 64. The financial statements for the year ended 31 December 2006 were audited by another firm of auditors whose report dated 2 March 2007 expressed an unqualified opinion on those financial statements. Directors responsibility for the financial statements The Company s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act ) and Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion: (a) (b) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2007 and the results, changes in equity and cash flows of the Group for the year ended on that date; and the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. KPMG Certified Public Accountants Singapore 29 February 2008

23 21 BALANCE SHEETS As at 31 December 2007 Group Company Note $ 000 $ 000 $ 000 $ 000 Non-current assets Property, plant and equipment 3 76,354 4, Investment properties Subsidiaries 5 44,117 4,342 Joint ventures 6 4,814 4,786 Other assets ,345 5,199 49,171 4,342 Current assets Inventories Trade and other receivables 9 4,767 8, Other investment Cash and cash equivalents 11 64,879 5,968 60, ,646 14,792 61, Total assets 150,991 19, ,891 4,443 Equity attributable to equity holders of the Company Share capital ,926 12, ,926 12,862 Reserves 14 (1,900) 33 Accumulated losses (4,564) (8,675) (8,623) (8,651) 111,462 4, ,303 4,211 Minority interests 318 Total equity 111,462 4, ,303 4,211 Non-current liabilities Financial liabilities 16 20, Current liabilities Trade and other payables 17 12,865 9, Financial liabilities 16 5,512 5, Provision for taxation Employee benefits ,760 15,132 1, Total liabilities 39,529 15,453 1, Total equity and liabilities 150,991 19, ,891 4,443 The accompanying notes form an integral part of these financial statements.

24 22 Financial year ended 31 December 2007 Continuing operations CONSOLIDATED INCOME STATEMENT Group Note $ 000 $ 000 Revenue 19 13,505 Cost of sales and servicing (6,925) Gross profit 6,580 Other income Administrative expenses (2,037) (380) Other expenses (575) Results from operating activities 4,172 (20) Finance income Finance expense (429) Net finance income Share of results of joint ventures, net of tax 28 Profit before income tax 20 4, Income tax expense 22 (901) Profit from continuing operations 3, Discontinued operations Profit from discontinued operations, net of tax Profit for the year 4, Attributable to: Equity holders of the Company 4, Minority interests (93) 9 Profit for the year 4, Earnings per share Continuing and discontinued operations Basic earnings per share (cents) Diluted earnings per share (cents) Continuing operations Basic earnings per share (cents) Diluted earnings per share (cents) The accompanying notes form an integral part of these financial statements.

25 23 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Financial year ended 31 December 2007 Total attributable Share Capital Share premium Foreign currency translation reserve Statutory reserve Accumulated losses to equity holders of the Company Minority interests Total equity Group $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 January , (8,914) 4, ,346 Exchange differences on translation of financial statements of foreign operations recognised directly in equity (83) (83) (8) (91) Profit for the year Total recognised income and expense for the year (83) Transfer from share premium account to share capital upon implementation of the Companies (Amendment) Act (255) Appropriation to statutory reserve 35 (35) At 31 December ,862 (33) 66 (8,675) 4, ,538 Exchange differences on translation of financial statements of foreign operations recognised directly in equity (1,900) (1,900) 8 (1,892) Profit for the year 4,111 4,111 (93) 4,018 Total recognised income and expense for the year (1,900) 4,111 2,211 (85) 2,126 Issue of shares 107, , ,328 Share issue expenses (2,264) (2,264) (2,264) Disposal of subsidiaries 33 (66) (33) (233) (266) At 31 December ,926 (1,900) (4,564) 111, ,462 The accompanying notes form an integral part of these financial statements.

26 24 CONSOLIDATED CASH FLOW STATEMENT Financial year ended 31 December 2007 Note $ 000 $ 000 Operating activities Profit for the year 4, Adjustments for: Income tax expense Depreciation expense 3 1, Decrease in fair value of investment property 20 Fair value gain on current investments (8) (7) Gain on disposal of property, plant and equipment (103) Gain on sale of discontinued operations (23) Interest expense Interest income (629) (105) Reversal of impairment losses on other assets (5) Reversal of impairment losses on leasehold properties (71) Share of results of joint ventures (28) Operating profit before changes in working capital 5, Changes in working capital: Inventories (85) 4 Trade and other receivables (601) 1,800 Employee benefits 2 27 Trade and other payables 39 (1,718) Cash generated from operations 5, Income taxes paid (664) Cash flows from operating activities 4, Investing activities Disposal of discontinued operations, net of cash disposed of 24 2,301 Interest received Payment for investing in joint ventures (4,786) Pledged fixed deposits 3,125 (8) Proceeds from disposal of property, plant and equipment 132 Purchase of property, plant and equipment (71,266) (144) Cash flows from investing activities (70,111) 85 Financing activities Interest paid (294) (344) Net proceeds from issue of new shares 105,064 Proceed from borrowings 27,960 Repayment of borrowings (815) (239) Repayment of finance leases (20) (106) Cash flows from financing activities 131,895 (689) Net increase in cash and cash equivalents 66, Cash and cash equivalents at beginning of the year (1,667) (1,747) Effect of exchange rate fluctuations 110 (74) Cash and cash equivalents at end of the year 11 64,879 (1,667) During the financial year ended 31 December 2007, the Group acquired property, plant and equipment with an aggregate cost of $80,574,000 of which $9,308,000 were amounts owing to third party. During the last financial year ended 31 December 2006, the Group acquired property, plant and equipment with an aggregate cost of $244,000 of which $100,000 were acquired by means of finance lease. The accompanying notes form an integral part of these financial statements.

27 25 These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 29 February Domicile and activities (formerly known as Nylect Technology Limited) (the Company ) is incorporated in the Republic of Singapore and has its registered office at 15, Hoe Chiang Road, #13-03 Tower Fifteen, Singapore On 24 August 2007, the Company changed its name from Nylect Technology Limited to. The principal activities of the Company are those of an investment holding company and provision of management services to its subsidiaries. For the financial year ended 31 December 2006, the Group was engaged in the Mechanical, Electrical and Fabrication division. During the current financial year, the Group diversified into the provision of offshore and marine services. Subsequently, the Group disposed its interests in the Mechanical, Electrical and Fabrication division as disclosed in note 24 to the financial statements. The principal activities of the subsidiaries are set out in note 5 to the financial statements. The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the Group ) and the Group s interests in joint ventures. 2 Summary of significant accounting policies 2.1 Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards ( FRS ). New/Revised FRSs/INT FRSs that came into effect for the first time for 2007 In 2007, the Group adopted the following new/revised FRSs/INT FRSs which are relevant to its operations: FRS 32 (revised) Financial Instruments: Presentation FRS 107 Financial Instruments: Disclosures and the Amendment to FRS 1 Presentation of Financial Statements: Capital Disclosures INT FRS 108 Scope of FRS 102 INT FRS 110 Interim Financial Reporting and Impairment The initial adoption of the above mentioned new/revised FRS and INT FRS in 2007 has no material impact on the financial statement of the Group s financial result and position for the year ended 31 December 2007, except for the extensive additional disclosures with respect to the Group s financial instruments and share capital. The Group s comparative information in relation to FRS 107 was not disclosed in the financial statements as the operations were discontinued, as discussed in note 24. The financial statements have been prepared on the historical cost basis except for the following assets and liabilities which are stated at fair value; investment properties and non-current assets and disposal groups held for sale are measured at the lower of the carrying amount and fair value less costs to sell. The financial statements are presented in Singapore dollars which is the Company s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated. The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,

28 26 income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Judgement made by management in the application of FRSs, and accounting policies that have the most significant effect on the amounts recognised in the financial statements are discussed in note 29. The accounting policies set out below have been applied consistently to all periods presented in these financial statements by the Group. 2.2 Consolidation Business combinations Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. The excess of the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is credited to the consolidated income statement in the period of the acquisition. Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into consideration. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Joint ventures Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures are accounted for using the equity method. The consolidated financial statements include the Group s share of the income, expenses and equity movements of joint ventures, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group s share of losses exceeds its interest in a joint venture, the carrying amount of that interest (including any long-term investments) is reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with joint ventures are eliminated against the investment to the extent of the Group s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Accounting for subsidiaries and joint ventures by the Company Investments in subsidiaries and joint ventures are stated in the Company s balance sheet at cost less accumulated impairment losses.

29 Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying transactions, events and conditions relevant to that entity (the functional currency ). The consolidated financial statements of the Group and balance sheet of the Company are presented in Singapore dollars, which is the Company s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated. 2.4 Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate on the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in the income statement except for differences arising on the retranslation of monetary items that in substance form part of the Group s net investment in foreign operations (see below), available-for-sale equity instruments and financial liabilities designated as hedges of the net investment in a foreign operation (see note 2.8). Foreign operations The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2006, the exchange rates at the date of acquisition were used. Foreign currency differences are recognised in the foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to the income statement. Net investment in foreign operations Exchange differences arising from monetary items that in substance form part of the Company s net investment in a foreign operation are recognised in the Company s income statement. Such exchange differences are reclassified to equity in the consolidated financial statements. When the foreign operation is disposed of, the cumulative amount in equity is transferred to the income statement as an adjustment to the profit or loss arising on disposal. 2.5 Property, plant and equipment Owned assets Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Costs incurred on subsequent dry-docking of vessels are capitalised and depreciated over the shorter of period to next estimated dry-docking and five years. When significant dry-docking costs are incurred prior to the expiry of the depreciation period, the remaining costs of the previous dry-docking are written off in the month of the next drydocking.

30 28 Leased assets Leases of assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases is capitalised at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is stated at cost less accumulated depreciation and impairment losses. Leased assets are depreciated over the shorter of the lease term and their estimated useful lives. Subsequent expenditure The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred. Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the difference between the estimated net sale proceeds and the carrying amount of the asset and are recognised in the income statement on the date of retirement or disposal. Depreciation Depreciation on other property, plant and equipment is recognised in the income statement on a straight-line basis over the estimated useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment as follows: Vessels Assets on board the vessels Freehold building Leasehold properties Plant and equipment years 3 10 years 33 years over terms of lease which is between years 3 10 years Depreciation method, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date. No depreciation is provided on vessels under construction. 2.6 Intangible assets Goodwill Goodwill and negative goodwill arise on the acquisition of subsidiaries and joint ventures. Goodwill represents the excess of the cost of the acquisition over the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is negative (negative goodwill), it is recognised immediately in the consolidated income statement. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill arising on the acquisition of joint ventures is presented together with investments in joint ventures. Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note Acquisitions of minority interest Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the

31 29 additional investment over the carrying amount of the net assets acquired at the date of exchange. Other intangible assets Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and impairment losses. Other intangible assets are amortised in the income statement on a straight-line basis over their estimated useful lives, from the date on which they are available for use. 2.7 Investment properties Investment property is property held either to earn rental income or capital appreciation or both. It does not include properties for sale in the ordinary course of business, used in the production or supply of goods or services, or for administrative purposes. Investment property is measured at fair value, with any change recognised in the income statement. 2.8 Financial instruments Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, financial liabilities, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group s obligations specified in the contract expire or are discharged or cancelled. Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group s cash management are included as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement. Financial assets at fair value through profit or loss An instrument is classified as at fair value through profit or loss if it is acquired principally for the purpose of selling in the short term or is designated as such upon initial recognition. Financial instruments are designated as fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group s documented risk management and investment strategies. Upon initial recognition, attributable transaction costs are recognised in the income statement when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in the income statement. Held-to-maturity investments If the Group has the positive intent and ability to hold debt securities to maturity, they are classified as held-tomaturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses.

32 30 Available-for-sale financial assets The Group s investments in certain equity securities are classified as available-for-sale financial assets if they are not classified in any of the other categories. Subsequent to initial recognition, they are measured at fair value and changes therein, other than for impairment losses, and foreign exchange gains and losses on available-for-sale monetary items (see note 2.4), are recognised directly in equity. When an available-for-sale financial asset is derecognised, the cumulative gain or loss in equity is transferred to the income statement. Other non-derivative financial instruments Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. Derivative financial instruments and hedging activities The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value, through profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the income statement when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the income statement. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to the income statement in the same period that the hedged item affects profit or loss. Fair value hedges Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised in the income statement. The hedged item also is stated at fair value in respect of the risk being hedged; the gain or loss attributable to the hedged risk is recognised in the income statement and the carrying amount of the hedged item is adjusted. Hedge of net investment in a foreign operation Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in the Company s income statement. On consolidation, such differences are recognised directly in equity, in the foreign currency translation reserve, to the extent that the hedge is effective. To the extent that the hedge is ineffective, such differences are recognised in the income statement. When the hedged net investment is disposed of, the cumulative amount in equity is transferred to the income statement as an adjustment to the profit or loss on disposal.

33 31 Economic hedges Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognised in the income statement as part of foreign currency gains and losses. Separable embedded derivatives Changes in the fair value of separable embedded derivatives are recognised immediately in the income statement. Impairment of financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to the income statement. Impairment losses in respect of financial assets measured at amortised cost are reversed if the subsequent increase in fair value can be related objectively to an event occurring after the impairment loss was recognised. Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not reversed through the income statement. Any subsequent increase in fair value of such assets is recognised directly in equity. Intra-group financial guarantees Financial guarantees are financial instruments issued by the Group that requires the issuer to make specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantees are recognised initially at fair value and are classified as financial liabilities. Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortisation and the amount that would be recognised if they were accounted for as contingent liabilities. When financial guarantees are terminated before their original expiry date, the carrying amount of the financial guarantees is transferred to the income statement. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Where share capital recognised as equity is repurchased (treasury shares), the amount of the consideration paid, including directly attributable costs, net of any tax effects, is presented as a deduction from equity. Where such

34 32 shares are subsequently reissued, sold or cancelled, the consideration received is recognised as a change in equity. No gain or loss is recognised in the income statement. 2.9 Leases When entities within the Group are lessees of a finance lease Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases are capitalised at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their estimated useful lives. Lease payments are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the arrangement is not in the legal form of a lease. When entities within the Group are lessees of an operating lease Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred. When entities within the Group are lessors of an operating lease Rental income (net of any incentives given to lessees) from investment properties are recognised on a straight-line basis over the lease term Impairment non-financial assets The carrying amounts of the Group s non-financial assets, other than investment properties, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated. For goodwill, the recoverable amount is estimated at each reporting date, and as and when indicators of impairment are identified. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable

35 33 amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are recognised in the income statement Club memberships Club memberships are stated at cost less accumulated impairment losses Inventories Inventories are stated at the lower of cost and net realisable value. Inventories valued at cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition on a first-in-first-out basis less any applicable allowance for obsolescence. When inventories are consumed, the carrying amount of those inventories is recognised in the income statement in the year in which the consumption occurs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses Contract work-in-progress Contract work-in-progress represents the gross unbilled amount expected to be collected from customers for contract work performed to-date. Contract work-in-progress at the reporting date are recorded in the balance sheet at cost plus attributable profits less recognised losses, allowance for foreseeable losses and net of progress billings, and are presented in the balance sheet as Contract work-in-progress (as an asset) or Excess of progress billings over work-in-progress (as a liability) as applicable. Contract costs include cost of direct materials, direct labour and costs incurred in connection with the construction and an allocation of fixed and variable overheads incurred in the Group s contract activities based on normal operating activities. Allowance is made where applicable for any foreseeable losses on uncompleted contracts as soon as the possibility of the loss is ascertained. Progress billings not yet paid by the customers are included in the balance sheet under Trade receivables. Amounts received before the related work is performed are included in the balance sheet, as a liability, as Advances on construction work Employee benefits Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

36 34 Share-based payments The share option programme allows the Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the vesting period during which the employees become unconditionally entitled to the options. At each reporting date, the Company revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense and with a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transactions costs are credited to share capital when the options are exercised Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability Revenue recognition Sale of goods Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Rendering of services Revenue from rendering of services is recognised when the related services have been rendered. Rental income Rental income receivable under operating leases is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income to be received. Contingent rentals are recognised as income in the accounting period in which they are earned. Contract revenue As soon as the outcome of a construction contract can be estimated reliably, contract revenue and costs are recognised in the income statement in proportion to the stage of completion of the contract, measured by the proportion of contract costs incurred for work performed to-date to the estimated total contract costs for each contract. Contract costs consist of costs that relate directly to the specific project, costs that are attributable to contract activity in general and can be allocated to the project and such other costs as are specifically chargeable to the customer under the terms at the contract. Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense in the income statement immediately. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised in the income statement as an expense in the period in which they are incurred.

37 35 Charter income Charter income from vessel is recognised in the income statement on a straight-line basis over the respective term of the charter. Management services fees Management services fees are recognised when the related services are rendered Finance income and expenses Finance income comprises interest income on bank deposit, dividend income and gains on the disposal of availablefor-sale financial assets that are recognised in the income statement. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the Group s right to receive payment is established, which in the case of quoted securities is the ex-dividend date. Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, and impairment losses recognised on financial assets that are recognised in the income statement. All borrowing costs are recognised in the income statement using the effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and joint ventures to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised Discontinued operations A discontinued operation is a component of the Group s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation had been discontinued from the start of the comparative period.

38 36 3 Property, plant and equipment Group Cost Note Freehold building Leasehold properties Vessels Assets on board the vessels Vessels under construction Plant and equipment Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 January ,735 2,021 8,933 Additions Disposals (482) (482) Translation differences on consolidation (2) (23) (3) (28) At 31 December ,712 1,780 8,667 Additions 43,267 3,956 33, ,574 Transfer to disposal group 24 (179) (6,724) (1,799) (8,702) Translation differences on consolidation 4 12 (1,730) (158) (1,320) 2 (3,190) At 31 December ,537 3,798 31, ,349 Accumulated depreciation and impairment losses At 1 January ,666 1,690 4,372 Depreciation charge for the year Reversal of impairment loss (71) (71) Disposals (452) (452) Translation differences on consolidation (2) (2) At 31 December ,687 1,408 4,112 Depreciation charge for the year ,134 Transfer to disposal group 24 (18) (2,723) (1,474) (4,215) Translation differences on consolidation 1 1 (28) (10) (36) At 31 December Carrying amount At 1 January , ,561 At 31 December , ,555 At 31 December ,837 3,563 31, ,354

39 37 Company Cost Plant and equipment Total $ 000 $ 000 At 1 January 2006 and 2007 Additions At 31 December Accumulated depreciation and impairment losses At 1 January 2006 and 2007 Depreciation charge for the year At 31 December Carrying amount At 1 January 2006 and 31 December 2006 At 31 December (i) As discussed in note 24, the Group has disposed the property, plant and equipment under the discontinued operations. The net book value relating to the disposal amounted to $4,487,000. (ii) The vessels are pledged to secure the term loan facilities granted by financial institutions (note 16). (iii) A motor vehicle included in plant and equipment is held in trust by a director of the Company. The depreciation expense and impairment loss are charged as follows: Group $ 000 $ 000 Cost of sale 972 Administrative expenses Other credits/(charges) (71) 1,

40 38 4 Investment properties Group Note $ 000 $ 000 At 1 January Revaluation decrease included in income statement under other charges (20) Transfer to disposal group 24 (600) At 31 December 600 Rental income 17 Direct operating expense (including repairs and maintenance) arising from investment property that generated rental income during the year 13 The investment properties are stated at fair value on the existing use basis to reflect the actual market state and circumstances as of the balance sheet date and not as of either a past or future date. The fair value was based on a valuation made by CKS Property Consultants Pte Ltd, a firm of independent professional valuers. A gain or loss arising from a change in the fair value is included in the reserves except that a debit balance in the reserve account is included in the income statement for the period in which it arises. The revaluations are made yearly. Investment properties of the group are as follows: 1 A 3 rd storey warehouse unit within a 6-storey industrial development building. It is a freehold unit used as office cum store with gross floor area of 167 sq.m., located at 30 Mandai Estate #03-07 Mandai Industrial Building Singapore ; and 2 A flatted factory unit located on the 3 rd storey of a 6-storey building with semi-basement car park within a light industrial development building. It is a leasehold property with 60 years lease commencing 9 January 1995 used as office cum store with gross floor area of 160 sq.m., located at 23 Woodlands Industrial Park E1 #03-02 Admiralty Industrial Park Singapore Subsidiaries Company $ 000 $ 000 Equity investments, at cost 2,414 9,854 Impairment losses (200) (8,550) Loan to subsidiaries 41,903 3,038 44,117 4,342 Loan to subsidiaries which form part of the Company s net investments in subsidiaries are interest-free (2006: 6.375% per annum), unsecured and settlement is neither planned nor likely to occur in the foreseeable future.

41 39 Details of the subsidiaries are as follows: Name of subsidiary Principal activities Continuing operations Country of incorporation Equity held by the Group % % Teras Transporter 2 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras 335 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras 336 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Northern Offshore Pte Ltd Teras Offshore Pte Ltd Shipping agent and provision of ship chartering services, ship management services and engineering works Shipping agent and provision of ship chartering services, ship management services and engineering works Singapore 100 Singapore 100 Teras Transporter Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras 331 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras 338 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras 339 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras 3652 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras 281 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras Conquest 1 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Teras Conquest 2 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 Northern Offshore (Australia) Pty Ltd Discontinued operations MST Precision Pte Ltd Nylect Engineering Pte Ltd and its subsidiaries Shipping agent and provision of ship chartering services Customised design and manufacture of enclosures/frames for telecommunication and data communication markets Mechanical and electrical design and installation and investment holding Australia 100 Singapore 60 Singapore 100 Nylect Engineering (M) Sdn Bhd Mechanical and electrical design and installation Malaysia 70 Shanghai Nylect Engineering Consultant Co., Ltd Mechanical and electrical design and consultation services People s Republic of China 60 NEPL Pte Ltd Mechanical and electrical design and installation Singapore 100 Shanghai Nylect Engineering Co., Ltd. Mechanical and electrical design and installation People s Republic of China 100 PT Nylect Indonesia Mechanical and electrical works Indonesia 100 NT Industries Co., Ltd Mechanical and electrical design and installation People s Republic of China 100

42 40 KPMG Singapore is the auditor of all significant Singapore-incorporated subsidiaries. RSM Chio Lim was the auditor of the discontinued operations. For this purpose, a subsidiary is considered significant as defined under the Singapore Exchange Limited Listing Manual if its net tangible assets represent 20% or more of the Group s consolidated net tangible assets, or if its pretax profits account for 20% or more of the Group s consolidated pre-tax profits. 6 Joint ventures Group Company $ 000 $ 000 $ 000 $ 000 Investment in joint ventures 1,493 1,465 Loans to joint ventures 3,321 3,321 4,814 4,786 The loans to joint ventures are unsecured and settlement is neither planned nor likely to occur in the foreseeable future. These loans form part of the Company s net investments in the joint ventures. The loans bear fixed interest rate at 8% per annum. Details of significant joint ventures are as follows: Name of joint ventures Country of incorporation Equity held by the Group % % Singapore Ocean Hotels Pte Ltd and its subsidiaries: Singapore 50 Ocean H1 Ltd British Virgin Islands 50 Ocean H2 Ltd British Virgin Islands 50 Eminent Offshore Logistics Pte Ltd and its subsidiaries: Singapore 50 Eminent 237 Pte Ltd Singapore 50 Eminent 1 Pte Ltd Singapore 50 Eminent 2 Pte Ltd Singapore 50 Eminent 3 Pte Ltd Singapore 50 Eminent 4 Pte Ltd Singapore 50 Eminent 5 Pte Ltd Singapore 50 Eminent 6 Pte Ltd Singapore 50 KPMG Singapore is the auditor of all significant Singapore-incorporated joint ventures. For this purpose, a company is considered significant as defined under the Singapore Exchange Limited Listing Manual if the Group s share of its net tangible assets represent 20% or more of the Group s consolidated net tangible assets, or if the Group s share of its pre-tax profits accounts for 20% or more of the Group s consolidated pre-tax profits. The summarised financial information of the joint ventures represents the Group s share.

43 41 The financial information of the Group s interests in the joint ventures are as follows: Joint ventures $ 000 $ 000 Assets and liabilities Non-current assets 2,673 Current assets 2,488 Total assets 5,161 Current liabilities (473) Non-current liabilities Total liabilities (473) Results Revenue 152 Expenses (124) Profit after taxation 28 Capital commitments in relation to interest in joint ventures 78,202 Group s share of joint ventures capital commitments 39,101 7 Other assets Group $ 000 $ 000 Club memberships, at cost 191 Impairment losses (147) Net club memberships 44 Refundable deposits The above club memberships were held in trust by a director. 8 Inventories Group $ 000 $ 000 Raw material and consumables 63 Work-in-progress 39 Finished goods and goods for resale In 2007, raw materials and consumables, and changes in finished goods and work-in-progress, were recognised in Discontinued operations (Note 24).

44 42 9 Trade and other receivables Group Company Note $ 000 $ 000 $ 000 $ 000 Trade receivables 3,892 5, Impairment losses (260) (101) Net trade receivables 3,632 5, Long-term contract receivables 12 1,281 Unbilled contract revenue 1,566 Other receivables Deposits Prepayments Advance to suppliers Interest receivables Tax recoverable 22 Amount due from related party (trade) Amount due from subsidiaries (trade) 830 Amount due from joint venture (non-trade) Others 101 4,767 8, Trade receivables for the Group include retention sums relating to contract work-in-progress of $Nil (2006: $363,000). Outstanding balances with related party, joint venture and subsidiaries are unsecured. There is no allowance for doubtful debts arising from the outstanding balances. The Group s primary exposure to credit risk relating to trade receivables arising mainly from the chartering income undertaken by the subsidiaries. These customers are internationally dispersed, engage in a wide spectrum of offshore activities, and sell in a variety of end markets. Management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group s trade receivables. The maximum exposure to credit risk for loans and receivables at the reporting date (by type of customer) is: Group Company $ 000 $ 000 $ 000 Multi-national companies 2,368 Small-medium enterprises 1,194 Government related entities Related parties , The Group s most significant customer, a multi-national company, accounts for $811,000 of the trade receivables carrying amount at 31 December 2007.

45 43 Impairment losses The ageing of loans and receivables at the reporting date is: Group Gross Impairment Losses Gross Company Impairment losses $ 000 $ 000 $ 000 $ 000 Not past due 1,739 (260) 20 Past due 0 30 days 1, Past due days ,319 (260) 875 The change in impairment loss in respect of trade receivables during the year is as follows: Group 2007 $ 000 At 1 January 101 Impairment loss recognised 260 Transfer to disposal group (101) At 31 December 260 Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables past due up to 120 days. These receivables are mainly arising by customers that have a good record with the Group. 10 Other investment Group $ 000 $ 000 Equity securities held for trading Cash and cash equivalents Group Company Note $ 000 $ 000 $ 000 $ 000 Cash at bank and in hand 8,636 2,843 5, Fixed deposits 56,243 3,125 54,803 Bank overdrafts 16 (4,510) Restricted cash 16(b) (3,125) Cash and cash equivalents in the cash flow statement 64,879 (1,667) 64,879 5,968 60,736 61

46 44 The rate of interest for the cash on interest earning accounts is between 0.5% to 5.48% per annum, receivable from daily to monthly basis (2006: 1.70% to 5.77% per annum, receivable from monthly to yearly basis). These approximate the weighted effective interest rate. 12 Contract work-in-progress Group Note $ 000 $ 000 Aggregate amount of costs incurred and recognised profits/ (less recognised losses) to date on uncompleted contracts 32,362 Less: progress payments received and receivable to date (31,884) Net amount due from contract customers at end of year 478 Comprising: Work-in-progress 9 1,281 Excess of progress billings over work-in-progress 17 (803) Share capital Group and Company No. of shares No. of shares ( 000) $ 000 ( 000) $ 000 Issued and fully paid ordinary shares, with no par value: At 1 January 84,048 12,862 84,048 12,607 Shares issued during the year 237, ,064 Sub-division of each shares 321,989 Transfer of share premium balance 255 At 31 December 643, ,926 84,048 12,862 (a) On 22 February 2007, the Company increased its issued and paid up capital from $12,862,000 to $20,671,000 (after deducting expenses) via the placement of 145,000,000 new ordinary shares for cash at an issue price of $0.056 per share. The newly issued shares rank pari passu in all respects with the previously issued shares. (b) (c) On 4 May 2007, the Company increased its issued and paid up capital from $20,671,000 to $27,344,000 (after deducting expenses) via the placement of 16,800,000 new ordinary shares for cash at an issue price of $ per share. The newly issued shares rank pari passu in all respects with the previously issued shares. On 20 July 2007, the Company increased its issued and paid up capital from $27,344,000 to $63,979,000 (after deducting expenses) via the placement of 28,810,000 new ordinary shares for cash at an issue price of $ per share. The newly issued shares rank pari passu in all respects with the previously issued shares. (d) On 7 September 2007, the Company increased its issued and paid up capital from $63,979,000 to $83,721,000 (after deducting expenses) via the placement of 4,200,000 and 14,252,000 new ordinary shares for cash at an issue price of $ and $ per share, respectively. The newly issued shares rank pari passu in all respects with the previously issued shares.

47 45 (e) (f) (g) On 10 December 2007, the Company increased its issued and paid up capital from $83,721,000 to $117,926,000 (after deducting expenses) via the placement of 28,879,000 new ordinary shares for cash at an issue price of $1.21 per share. The newly issued shares rank pari passu in all respects with the previously issued shares. On 26 December 2007, the Company sub-divided each existing ordinary share in the capital of the Company into two ordinary shares of the Company. The Company's share capital after the share sub-division comprises of 643,978,000 issued and fully paid ordinary shares. All new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company. The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares (excluding treasury shares) rank equally with regard to the Company s residual assets. Capital management The Board s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by the average total shareholders equity excluding minority interest. There were no changes in the Group s approach to capital management during the year. The vessels owning companies are required to have a minimum share capital of $100,000 as required by the Maritime and Port Authority of Singapore. 14 Reserves Foreign currency translation reserve The foreign currency translation reserve comprises: (a) (b) (c) foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the Company; the gains or losses on instruments used to hedge the Company s net investment in foreign operations that are determined to be effective hedges; and the exchange differences on monetary items which form part of the Group s net investment in foreign operations, provided certain conditions are met. Statutory reserve The subsidiaries incorporated in the People s Republic of China ( PRC ) are required by the PRC regulations to appropriate 10% of the net profit after tax (after offsetting all recognised tax losses carried forward from previous financial years) arrived at in accordance with PRC Generally Accepted Accounting Principles each year to statutory reserve. The appropriation to statutory reserve must be made before distribution of dividends to shareholders. This statutory reserve is not distributable in the form of cash dividends. The accumulated profits of the Group includes an amount of $28,000 (2006: $Nil) attributable to joint ventures. 15 Employee share options The Employee Share Option Scheme (the Scheme) of the Company was provided by Unique Counsel Limited ( Unique Counsel ), a wholly-owned company of a controlling shareholder/director. Information regarding the Scheme are as follows: (a) The exercise price of the options shall be determined at the discretion of Unique Counsel.

48 46 (b) The options shall immediately lapse without any claims against Unique Counsel in the following situation: (i) (ii) upon the offeree ceasing to be in the employment of the Company or its subsidiaries or for any reason whatsoever; upon the bankruptcy of the offeree or the happening of any other event which results in his being deprived of the legal or beneficial rights to such Offer; or (iii) in the event of any misconduct on the part of the offeree as determined by Unique Counsel in its discretion. (c) All options are settled by physical delivery of shares by Unique Counsel. Movements in the number of share options and their related weighted average exercise prices are as follows: Weighted average exercise price* No. of options* $ ( 000) At 1 January Granted ,220 At 31 December ,220 Exercisable at 31 December No options were exercised in As at 31 December 2007, the total number of outstanding share options amounted to 2,220,000 which were granted in The exercise period ranges from 1 January 2009 to 31 December 2011 with a weighted average exercise price of $ The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the services received is measured based on a binominal model. The expected life used in the model has been adjusted, based on management s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The details of the fair value of share options and assumptions during the year ended 31 December 2007 are as follows: Weighted average fair value at measurement date $0.053 Weighted average share price at the date of grant* $0.385 Expected volatility 25.0% Expected option life Ranges from 4.6 to 4.7 years Expected dividends 0% Risk-free interest rate 2.5% The expected volatility is based on the historic volatility (calculated based on the weighted average expected life of the share options), adjusted for any expected changes to future volatility due to publicly available information. There are no market conditions associated with the share option grants. Service conditions and non-market performance conditions are not taken into account in the measurement of the fair value of the services to be received at the grant date.

49 47 * The weighted average price and the number of share options have been adjusted as a result of the share subdivision on 26 December Financial liabilities Group Company Note $ 000 $ 000 $ 000 $ 000 Non-current liabilities Secured bank loans - Bank loan (a) 20,769 - Bank loans (b) 239 Finance lease liabilities 82 Intra-group financial guarantee , Current liabilities Bills payable (secured) (b) 315 Bank overdrafts (secured) (b) 11 4,510 Secured bank loans - Bank loan (a) 5,512 - Bank loans (b) 876 Finance lease liabilities 33 Intra-group financial guarantee 145 5,512 5, Total financial liabilities 26,281 6, Total loans and borrowings 26,281 6,055 Intra-group financial liabilities 541 Total financial liabilities 26,281 6, The carrying value of long-term borrowings approximates the fair value. All the borrowings are interest bearing. The borrowings are measured using the effective interest method. (a) The bank loan was secured by corporate guarantee from the Company, first legal charge on the Group s vessel, legal assignment of the rental proceeds from the Group s vessels, assignment of insurances in respect of vessels in bank s favour and all monies standing to the credit of the Group s receiving operating account in respect of the vessel maintained by the Group with the bank. The bank loan is repayable over 45 instalments and 1 final instalment or otherwise specified or fixed by the bank and it shall be repaid in full by year (b) The bank loans were secured by corporate guarantee from the Company, first legal charge on the Group s leasehold property, legal assignment of the rental proceeds from the Group s leasehold property, deed of assignment of receivables and deed of subordination of loan from the Company and directors. The short-term borrowings were secured by fixed deposits (note 11), all monies legal mortgage over investment properties (note 4), first legal mortgage over a leasehold property (note 3), corporate guarantee of the

50 48 Company, legal assignment of rental proceeds of a leasehold property and deed of subordination of loans from the Company and directors. All the bank loans (secured), bills payable (secured) and bank overdraft (secured) were disposed together with the discontinued operations (note 24). The corporate guarantee of the Company expires when the bank loans are fully settled. The exposure of the borrowings to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows: Group $ 000 $ 000 Below 6 months 2,756 5,563 Within 6 to 12 months 2, Within 2 to 5 years 20, Total financial liabilities excluding finance lease liabilities 26,281 5,940 Finance lease liabilities As at 31 December 2006, the Group have obligations under finance leases that are payable as follows: < > Principal Interest Payments $ 000 $ 000 $ 000 Group Repayable within 1 year Repayable after 1 year but within 5 years Total Terms and debt repayment schedule Terms and conditions of outstanding loans and borrowings are as follows: Nominal < > < > interest rate Year of maturity Face value Carrying amount Face value Carrying amount Group % $ 000 $ 000 $ 000 $ 000 Bills payable US$ floating rate loans ,842 26,281 S$ floating rate loans Rmb floating rate loans S$ floating rate loans Finance lease liabilities Bank overdrafts ,510 4,510 26,842 26,281 6,055 6,055

51 49 The following are the expected contractual undiscounted cash inflows (outflows) of financial liabilities, including interest payments and excluding the impact of netting agreements: Group Carrying amount Cash flows Contractual cash flows Within 1 year Within 1 to 5 years $ 000 $ 000 $ 000 $ Non-derivative financial liabilities Variable interest rate loans 26,281 (30,028) (6,985) (23,043) Trade and other payables* 12,024 (12,024) (12,024) 38,305 (42,052) (19,009) (23,043) Company 2007 Trade and other payables* 367 (367) (367) 2006 Trade and other payables* 89 (89) (89) * Excludes excess of progress billing over work-in-progress and accrued expenses 17 Trade and other payables Group Company Note $ 000 $ 000 $ 000 $ 000 Trade payables 1,146 7,302 2 Payables to vendor/contractor of vessels 9,308 Long-term contract payable Deposits and advances 728 Other payables Amount due to related parties (trade) Amount due to a subsidiary (non-trade) 123 Amount due to a company related to a common director of a subsidiary (non-trade) 108 Ex-director Accrued interest payable 130 Accrued expenses ,865 9, Outstanding balances with related parties are unsecured, interest-free and repayable on demand.

52 50 18 Employee benefits Group Company Note $ 000 $ 000 $ 000 $ 000 At 1 January Provisions made Provision utilised (16) (16) Transfer to disposal group 24 (49) At 31 December Employee benefits relates to accrual of unutilisation employee leave entitlements. 19 Revenue Continuing operations Discontinued operations (see note 24) Consolidated $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Offshore logistics support services 10,865 _ 10,865 Marine services 2,640 _ 2,640 Sale of goods _ 684 5, ,062 Contract revenue _ 5,346 32,640 5,346 32,640 Other income _ 1 1 Rental income _ Total revenue 13,505 _ 6,140 37,873 19,645 37, Profit before income tax The following items have been included in arriving at profit before income tax: Group $ 000 $ 000 Non-audit fees paid to: - other auditors 16 Foreign exchange gains (28) Impairment losses on trade receivables 272 Staff costs 1, Employee benefits expense Contributions to defined contribution plans, included in staff costs 93 9 Operating lease expense 1,221 Staff costs include key management personnel compensation as disclosed in note 28.

53 51 21 Finance income and expense Group $ 000 $ 000 Interest income from cash at bank 520 Interest income from related corporations Finance income Interest expense on bank loans (429) Finance expense (429) Net finance income and expense recognised in income statement Income tax expense Group $ 000 $ 000 Current tax expense Current year 371 Foreign tax suffered Income tax expense - continuing operations discontinued operations Total income tax expense Reconciliation of effective tax rate Profit before income tax 4, Share of results of joint ventures (net of tax) (28) Profit before income tax excluding share of results of joint ventures 4, Tax calculated using Singapore tax rate of 18% (2006: 20%) Effect of different tax rates in other countries Income not subject to tax (460) (79) Net tax exempt income under Section 13A of Income Tax Act (890) Expenses not deductible for tax purposes Overprovision in prior years (34) Foreign tax suffered 530 Unrecognised deferred tax assets during the year 258 Others 170 (43)

54 52 23 Earnings per share Basic and diluted earnings per share for the years ended 31 December 2006 and 2007 were based on the net profit attributable to ordinary shareholders and weighted average number of ordinary shares, calculated as follows: Group $ 000 $ 000 Net profit attributable to ordinary shareholders of the Company 4, Basic and diluted earnings per share No. of shares No. of shares ( 000) ( 000) Issued ordinary shares at 1 January 168,096 84,048 Weighted average of new shares issued during the year 156,347 Effect of share split 156,347 84,048 Weighted average number of ordinary shares for the purposes of earnings per share 480, ,096 Diluted earnings per share is the same as basic earnings per share as the Company does not have any dilutive potential ordinary shares. The earnings per share for the year ended 31 December 2006 has been restated for comparable purposes as a result of the share sub-division on 26 December Earnings per share for continuing and discontinued operations For the year ended 31 December 2007, earnings per share for continuing and discontinued operations have been calculated using the profit relating to continuing operations of $3,453,000 (2006: $162,000) and the profit relating to discontinued operations of $565,000 (2006: $121,000). 24 Discontinued operations With effect from 30 June 2007, the Group sold both its entire mechanical and electrical design and fabrication of steel enclosures/frames and fasteners segments. As at 31 December 2006, the segments were not classified as held for sale. In this connection, the comparative income statement has been re-presented to show the results of the discontinued operations separately from those of the continuing operations.

55 53 The results of the discontinued operations are as follows: Group Period from 01/01/2007 Year ended to 30/06/ December 2006 $ 000 $ 000 Revenue 6,140 37,873 Expense (7,520) (37,730) (Loss)/Profit before income tax (1,380) 143 Income tax expense (11) (24) (Loss)/Profit after tax from operations (1,391) 119 Other income 1,933 2 Minority interests 93 (9) Gain on sale of discontinued operations 23 Income tax on gain on sale of discontinued operations Profit from discontinued operations Basis earnings per share (cents) Diluted earnings per share (cents) Cash flows from discontinued operations Operating activities 1,743 (782) Investing activities Financing activities (274) 862 1, The effects of the disposal on individual assets and liabilities of the Group are as follows: Note 2007 $ 000 Property, plant and equipment 3 (4,487) Investment properties 4 (600) Inventories (337) Current investments (19) Trade and other receivables (4,332) Cash and cash equivalents (6,329) Other assets (44) Bank overdraft 3,730 Trade and other payables 5,835 Financial liabilities 1,270 Employee benefits Income tax payable 154 Minority interests 233 Net identifiable assets and liabilities (4,877) Gain on disposal (23) Cash consideration received, satisfied in cash (4,900) Cash disposed of 2,599 Net cash flows (2,301)

56 54 The corporate guarantees granted by the Company to the Disposal Group of approximately $13,315,000 has been scheduled to be released by 31 March Segment reporting Segment information is presented in respect of the Group s business and geographical segments. The primary format business segment is based on the Group s management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, loans and expenses, corporate assets and head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment. Business segments The Group comprises the following main business segments: (a) (b) (c) Offshore logistics support services division: engaged in ship owning, chartering and ship management; Marine services division: engaged in procurement of equipment and provision of management and engineering services; and Mechanical, electrical and fabrication division: Services relating to mechanical and electrical design and installation, spare customised design and manufacture of enclosures/frame for the telecommunication and data communication markets (This business segment was sold in June See note 24). Geographical segments The businesses of the Group are operated in four principal geographical areas, namely, Singapore, Australia, East Asia and Europe. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

57 55 Business segments 31 December 2007 Offshore logistics support services Marine services Total continuing operations Mechanical, electrical and fabrication (Discontinued) Total operations $ 000 $ 000 $ 000 $ 000 $ 000 Revenue 10,865 2,640 13,505 6,140 19,645 Segment results 4, ,718 (1,380) 3,338 Unallocated expenses (1,059) (1,059) Unallocated income Share of results of joint ventures, net of tax Recovery of misappropriation of funds by an ex-director 1,926 1,926 Profit before income tax 4, ,907 Income tax expense (901) (11) (912) Profit after tax 3, ,995 Minority interests Gain on disposal of subsidiary companies Profit for the year 3, , December 2006 Revenue 37,873 37,873 Segment results Unallocated expense (380) (380) Unallocated income Other income 2 2 Profit before income tax Income tax expense (24) (24) Profit after tax Minority interests (9) (9) Profit for the year

58 56 Total continuing operations Mechanical electrical and fabrication (Discontinued) Offshore logistics support services Marine services Other operations Total operations $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Assets and liabilities Segment assets 83,397 1,620 4,382 85,017 4,382 15,548 85,017 19,930 Investment in joint ventures 4,814 4,814 Unallocated assets 61, , Total assets 150,991 4,443 15, ,991 19,991 Segment liabilities 37, ,267 14,950 38,267 14,950 Provision for taxation Unallocated liabilities Total liabilities 39, ,221 39,529 15,453 Other segment information Capital expenditure 80, , , Depreciation and amortisation , , Geographical segments Total continuing operations Mechanical electrical and fabrication (Discontinued) Total operations Singapore Australia East Asia Europe $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue from external customers 2,092 6,006 2,864 2,543 13,505 6,140 37,873 19,645 37,873 Segment assets 150, , , ,991 19,991 Capital expenditure 80,557 80, ,

59 57 26 Commitments (a) Capital commitment Group $ 000 $ 000 Contracted for but not provided for 126,720 (b) Operating lease commitments (as lessee) At the balance sheet dates, the Group have commitments for future minimum lease payments under noncancellable operating leases as follows: Group $ 000 $ 000 Within 1 year 2, After 1 year but within 5 years 1, After 5 years 2,358 3,430 2,767 Rental expense for the year 1, Operating lease payments for the financial year ended 31 December 2007 represents rentals payable by the Group for its office space and vessel charter. The lease from office rental and vessel charter is for two years from 1 July 2007 to 30 June Operating lease income commitments (as lessor) The Group charter out its vessels in Rental receivable in 2006 relates to rental receivable from tenants on the Group s investment properties. At the balance sheet dates, the total future minimum lease receivables under non-cancellable operating lease rentals are as follows: Group $ 000 $ 000 Within 1 year 2, After 1 year but within 5 years 8 2, Rental income for the year 10, Rental income represents rentals receivable from customer on the Group s vessels charter. The lease terms are negotiated on fixed terms till expiry of the lease.

60 58 27 Contingent liabilities (unsecured) On 14 September 2007, a potential customer took legal action against a subsidiary, Northern Offshore Pte Ltd, which is in a net liability position as at 31 December The plaintiff is claiming $3.24 million (US$2.25 million) in damages for a potential charter. Based on legal advice, the directors do not expect the outcome of the action to have a material effect on the Group s financial position. Accordingly, no provision has been made for the claim. 28 Related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Other than disclosed elsewhere in the financial statements, the transactions with related parties are as follows: Key management personnel compensation The key management personnel compensation is as follows: Group $ 000 $ 000 Short-term employee benefits The above amounts are included under staff costs. Included in the above amounts are the following items: Group $ 000 $ 000 Directors fees Directors remuneration of directors of the Company Other transactions with key management personnel Group Note $ 000 $ 000 Transactions with companies in which a director of the Company has substantial financial interests Chartering income received and receivable (a) 730 Fees paid and payable for marine services 225 Rental expense paid and payable 66 (a) The charter contracts were entered into before the appointment of the director.

61 59 Other related party transactions Group $ 000 $ 000 Transactions with joint ventures Interest income received and receivable 63 Transactions with other related parties Purchases of goods paid and payable Rental expense paid and payable 414 Purchase of a vessel from a company related to a director of a subsidiary 5,904 Marine services Accounting estimates and judgement Management assessed and reviewed the development, selection and disclosure of the Group s critical accounting policies and estimates, and the application of these policies and estimates. Key sources of estimation uncertainty and critical judgements made in applying accounting policies In the process of applying the Group s accounting policies, management has made certain judgements, which have a significant effect on the amounts recognised in the financial statements. These, together with the key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Recognition of contract revenue and expenses The Group recognises contract revenue and contract costs as revenue and expense respectively, in the income statement by reference to the stage of completion of the contract activity at the balance sheet date. Management uses judgement to estimate the physical proportion of the contract work completed to determine the stage of completion of the contracts in progress. While these estimates take into consideration the contract costs incurred for materials, direct labour and subcontractor claims, not all the projects have independent assessment by external parties on the stage of completion to consider in preparing such estimation. The stage of completion is applied on a cumulative basis in each accounting period to the current estimates of contract revenue and contract costs. Changes in the estimate of contract revenue or contract costs, or the effect of a change in the estimate of the outcome of a contract could impact the amount of revenue and expenses recognised in the income statement in the period in which the change is made and in subsequent periods. Such impact could potentially be significant. Significant judgement is required in estimating reasonable amounts of variation claims to be recognised as revenue in project budgets and in determining if the Group has to make provisions for any potential liquidated damages exposure. Useful lives and depreciation of vessels and vessel component costs The vessels are depreciated on a straight-line basis over their useful lives. Management estimates the economic useful life of the Group s vessels to be 20 years based on their age and condition, with a new vessel estimated to have a useful life of a maximum of 25 years. This is a common life expectancy applied in the shipping industry. Changes in the expected level of use of the assets and market factors could impact the economic useful lives of the vessels, therefore future depreciation charges could be revised.

62 60 The residual values of the vessels for the purpose of calculating the annual depreciation expense for the year is estimated using the scrap steel price in United States dollars per light displacement ton less estimated costs of disposal. The Group estimates the useful life of its vessel components by reference to the average historical periods between two dry-dockings of vessels of similar age, and expected usage of the vessel until its next dry-docking. Any changes in the economic useful lives and residual life of the vessels and the vessel components would impact the depreciation charges and consequently affect the Group s results. 30 Financial risk management Overview Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group s activities. The Audit Committee oversees how management monitors compliance with the Group s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group s principal financial instruments comprise cash and cash equivalents and bank loans. The main purpose of these financial instruments is to finance the Group s operations. The other financial instruments such as trade and other payables are directly from its operations. Credit risk The Group s maximum exposure to credit risk are carrying amount of trade and other receivables, amount due from joint venture, fixed deposits and cash and bank balances. The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Therefore, the Group does not expect to incur material credit losses. Fixed deposits and cash and cash equivalent are placed with regulated financial institutions. Hence, minimal credit risk exists with respect to these assets. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. Liquidity risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group s operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that

63 61 cannot reasonably be predicted, such as natural disasters. The Group s funding is obtained from shares placement, funds generated from operations and bank loans. Market risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will affect the Group s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Interest rate risk The Group interest rate exposure relates primarily to its long-term debt obligations as they are subject to fluctuating interest rates that reset according to market rates change. Surplus funds are placed in fixed deposits accounts with regulated banks that interest rate varies according to market rates. Sensitivity analysis For the variable rate financial assets and liabilities, a change of 100 bp in interest rate at the reporting date would increase / (decrease) equity and income statement by the pre-tax amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. Income statement Equity 100 bp 100 bp 100 bp 100 bp increase Decrease increase decrease $ 000 $ 000 $ 000 $ 000 Group 31 December 2007 Fixed deposits 562 (562) 562 (562) Interest-bearing loans (263) 263 (263) (299) 299 (299) Company 31 December 2007 Fixed deposits 548 (548) 548 (548) Foreign currency risk The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than Singapore dollars. The currencies giving rise to this risk are primarily United States dollar. In respect of other monetary assets and liabilities held in currencies other than the functional currencies of respective entities, the Group ensures that the net exposure is kept to an acceptable level by buying currencies at spot rates, where necessary, to address short term imbalances.

64 62 The following table entails the Group s and the Company s exposure at the reporting date to currency risk arising from financial assets and liabilities denominated in a currency other than the functional currency of the entity to which they relate. 31 December 2007 Group Singapore dollar US dollar Australian dollar $ 000 $ 000 $ 000 Loans from the Company to joint ventures 3,321 Trade and other receivables Cash and cash equivalents Trade and other payables (689) (123) (9) Overall net exposure 411 3,976 (9) Company 31 December December 2006 US dollar US dollar $ 000 $ 000 Loans from the Company to joint ventures 3,321 Trade and other receivables 25 Cash and cash equivalents 753 Trade and other payables (123) Overall net exposure 3,976 Sensitivity analysis The following table indicates the approximate change in the Group s profit before income tax and equity in response to a 10% change in the foreign exchange rates to which the Group has significant exposure at the reporting date. The sensitivity analysis includes balances between group entities where the denomination of the balances is in a currency other than the functional currencies of the lender or the borrower. A 10% strengthening of Singapore dollar against the following currencies at the reporting date would increase / (decrease) equity and income statement by the pre-tax amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Equity Group Income statement Equity Company Income statement $ 000 $ 000 $ 000 $ December 2007 S$ dollars (4,190) 41 US dollar (167) (232) (398) Australian dollar 1 A 10% weakening of Singapore dollar against the above currencies would have had the equal but opposite effect on the above currencies to the pre-tax amounts shown above, on the basis that all other variables remain constant.

65 63 Estimation of fair values The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the Group and Company. Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements. Intra-group financial guarantees The value of financial guarantees provided by the Company to its subsidiaries is determined by reference to the difference in the interest rates, by comparing the actual rates charged by the bank with these guarantees made available, with the estimated rates that the banks would have charged had these guarantees not been available. Other financial assets and liabilities The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values because of the short period to maturity. All other financial assets and liabilities are discounted to determine their fair values. 31 Changes in accounting policies (a) New/Revised FRS adopted in 2007 The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 December The adoption of these new/revised FRS did not give rise to any adjustments to the opening balance of accumulated loss of the prior and current periods or changes in comparatives. (b) New accounting standards and interpretations not yet adopted The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that have been issued as of the balance sheet date but are not yet effective: FRS 23 (revised) Borrowing Costs FRS 108 Operating Segments INT FRS 111 FRS 102 Group and Treasury Share Transactions INT FRS 112 Service Concession Arrangements FRS 23 will become effective for financial statements for the year ending 31 December FRS 23 removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The Group s current policy is consistent with the FRS 23 requirements to capitalise borrowing costs.

66 64 FRS 108 will become effective for financial statements for the year ending 31 December FRS 108, which replaces FRS 14 Segment Reporting, requires identification and reporting of operating segments based on internal reports that are regularly reviewed by the Group s Chief Executive Officer in order to allocate resources to the segment and to assess its performance. Currently, the Group presents segment information in respect of its business and geographical segments (note 25). The adoption of FRS 108 will not result in a significant difference in segment reporting by the Group. Other than the change in disclosures, relating to FRS 108, the initial application of these standards (and its consequential amendments) and interpretations is not expected to have any material impact on the Group s financial statements. The Group has not considered the impact of accounting standards issued after the balance sheet date. 32 Comparative information The comparatives in the financial statements were audited by another firm of Certified Public Accountants, RSM Chio Lim. The comparative income statement has been re-presented to show the results of the discontinued operations separately from those of the continuing operations (note 24) as a result of the disposal of its entire mechanical and electrical design and fabrication of steel enclosures/frames and fasteners segments in June 2007.

67 65 STATISTICS OF SHAREHOLDERS Statistics of Shareholders as at 19 March 2008 GENERAL INFORMATION ON SHARE CAPITAL Total no. of Shares Voting Rights : 643,978,000 ordinary shares : 1 vote per share DISTRIBUTION OF SHAREHOLDINGS Range of Shareholdings No. of Shareholders % No. of Shares % ,000-10, ,994, ,001-1,000, ,477, ,000,001 and above ,507, , ,978, SUBSTANTIAL SHAREHOLDERS Direct Interest % Deemed Interest % Unique Counsel Limited 190,000, Ezra Holdings Limited 100,000, Stichting Pensioenfonds ABP 42,000, Nylect Holdings Pte Ltd 36,072, Legg Mason, Inc ,580, Chew Thiam Keng ,000, Lee Kian Soo ,000, Lee Chye Tek Lionel ,000, Sim Hee Chew 4 1,000, ,518, Chua Ah Suai 5 3,446, ,072, Notes: 1. Mr Chew Thiam Keng is deemed interested in the shares held by Unique Counsel Limited, which is a company wholly owned by him. 2. Mr Lee Kian Soo is deemed interested in the shares held by Ezra Holdings Limited. 3. Mr Lee Chye Tek Lionel is deemed interested in the shares held by Ezra Holdings Limited. 4. In addition to his direct interest, Mr Sim Hee Chew is also deemed interested in the shares held by his spouse, Madam Chua Ah Suai and by Nylect Holdings Pte Ltd, in which he has an interest of 44.2% in its issued and paid up share capital. 5. Deemed interest arising from interest of spouse of Mr Sim Hee Chew. SHAREHOLDING HELD IN HANDS OF PUBLIC Based on the information made available to the Company as at 19 March 2008, approximately 34.01% were held in the hands of the public. Under Rule 723 of the Listing Manual of the SGX-ST, a listed issuer must ensure that at least 10% of its listed securities are at all times held by the public.

68 66 STATISTICS OF SHAREHOLDERS TOP TWENTY SHAREHOLDERS AS AT 19 MARCH 2008 S/No Name No. of Shares % 1 Unique Counsel Limited 190,000, Ezra Holdings Limited 100,000, DBSN Services Pte Ltd 47,569, Nylect Holdings Pte Ltd 36,072, DBS Nominees Pte Ltd 32,399, HSBC (Singapore) Nominees Pte Ltd 29,178, Citibank Nominees Singapore Pte Ltd 26,823, UOB Kay Hian Pte Ltd 24,839, OCBC Securities Private Ltd 18,963, United Overseas Bank Nominees Pte Ltd 15,127, Waterworth Pte Ltd 14,838, Kim Eng Securities Pte. Ltd. 6,186, Kim Seng Holdings Pte Ltd 6,000, Guan Hongwei 5,290, DBS Vickers Securities (S) Pte Ltd 4,741, Royal Bank Of Canada (Asia) Ltd 4,668, Chow Joo Ming 3,900, Chua Ah Suai 3,446, Hong Leong Finance Nominees Pte Ltd 3,179, Teo Kok Kheng 2,800, ,018,

69 67 NOTICE OF ANNUAL GENERAL MEETING EZION HOLDINGS LIMITED Company Registration No E (Incorporated in The Republic of Singapore) NOTICE IS HEREBY GIVEN that the Annual General Meeting of ( the Company ) will be held at No. 87 Science Park Drive, Science Hub, Kent Ridge Room Level 1, Singapore Science Park I, Singapore on Tuesday, 29 April 2008 at a.m. for the following purposes: AS ORDINARY BUSINESS 1 To receive and adopt the Directors Report and the Audited Accounts of the Company for the year ended 31 December 2007 together with the Auditors Report thereon. (Resolution 1) 2 To re-elect the following Directors of the Company retiring pursuant to Article 107 of the Articles of Association of the Company: Dr Wang Kai Yuen (Resolution 2) Mr Lim Thean Ee (Resolution 3) (See Explanatory Note 1) 3 To re-elect the following Directors of the Company retiring pursuant to Article 117 of the Articles of Association of the Company: Mr Lee Kian Soo (Resolution 4) Captain Larry Glenn Johnson (Resolution 5) 4 To approve the payment of Directors fees of S$106,000 for the year ended 31 December (Resolution 6) 5 To re-appoint KPMG as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration. (Resolution 7) 6 To transact any other ordinary business which may properly be transacted at an Annual General Meeting. AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: 7 Authority to issue shares in the capital of the Company That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of Section B of the Singapore Exchange Securities Trading Limited ( SGX-ST ) Listing Manual (the Catalist Rules ), the Directors of the Company be authorised and empowered to: (a) (i) issue shares in the Company ( shares ) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, Instruments ) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible into shares,

70 68 NOTICE OF ANNUAL GENERAL MEETING at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and (b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors of the Company while this Resolution was in force, provided that: (1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed one hundred per centum (100%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); (2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the percentage of issued shares shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for: (a) new shares arising from the conversion or exercise of the Instruments; (b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of this Resolution provided the share options or share awards (as the case may be) were granted in compliance with Part VIII of Chapter 8 of the Catalist Rules; and (c) any subsequent bonus issue, consolidation or subdivision of shares; (3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Catalist Rules for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association of the Company; and (4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. (See Explanatory Note 2) (Resolution 8) BY ORDER OF THE BOARD Lim Ka Bee Company Secretary Singapore, 14 April 2008

71 69 NOTICE OF ANNUAL GENERAL MEETING Explanatory Notes: 1 Dr Wang Kai Yuen will, upon re-election as Director of the Company, remain as Chairman of the Audit Committee, member of the Nominating Committee, member of the Remuneration Committee and will be considered independent. Mr Lim Thean Ee will, upon re-election as Director of the Company, remain as member of the Audit Committee, member of the Nominating Committee, member of the Remuneration Committee and will be considered independent. 2 The Ordinary Resolution (8) in item (7) above, if passed, will empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 100% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 50% may be issued other than on a pro-rata basis to existing shareholders of the Company. For determining the aggregate number of shares that may be issued, the percentage of issued shares in the capital of the Company will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of the Instruments, the exercise of share options or the vesting of share awards outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares. Notes: 1 A Member entitled to attend and vote at the Annual General Meeting (the Meeting ) is entitled to appoint not more than two proxies to attend and vote in his/her stead. A proxy need not be a Member of the Company. 2 The instrument appointing a proxy must be deposited at the Registered Office of the Company at 15 Hoe Chiang Road, #13-03 Tower Fifteen Singapore not less than forty-eight (48) hours before the time appointed for holding the Meeting.

72 Proxy Form EZION HOLDINGS LIMITED Company Registration E (Incorporated in The Republic of Singapore) PROXY FORM (Please see notes overleaf before completing this Form) IMPORTANT: For investors who have used their CPF monies to buy s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf. *I/We of being *a member/members of (the "Company"), hereby appoint Name: Address: NRIC/Passport No Proportion of Shareholdings No. of Shares % and/or (delete as appropriate) Name: Address: NRIC/Passport No Proportion of Shareholdings No. of Shares % or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the Meeting ) of the Company to be held at No. 87, Science Park Drive, Science Hub, Kent Ridge Room, Level 1 Singapore Science Park I, Singapore on Tuesday, 29 April 2008 at a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll. (Please indicate your vote For or Against with a tick [ 3 ] within the box provided.) No. Ordinary Resolutions For Against 1 Directors Report and Audited Accounts for the year ended 31 December Re-election of Dr Wang Kai Yuen as a Director 3 Re-election of Mr Lim Thean Ee as a Director 4 Re-election of Mr Lee Kian Soo as a Director 5 Re-election of Captain Larry Glenn Johnson as a Director 6 Approval of Directors fees amounting to S$106,000 7 Re-appointment of KPMG as Auditors 8 Authority to issue new shares Dated this day of 2008 Total number of Shares in: No. of Shares (a) CDP Register (b) Register of Members Signature of Shareholder(s) or, Common Seal of Corporate Shareholder *Delete where inapplicable

73 Notes : Proxy Form 1 Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. 2 A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company. 3 Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy. 4 Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting. 2nd fold Affix stamp here The Company Secretary EZION HOLDINGS LIMITED 15 Hoe Chiang Road Tower Fifteen #13-03 Singapore st fold 5 The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 15 Hoe Chiang Road, #13-03 Tower Fifteen Singapore not less than forty-eight (48) hours before the time appointed for the Meeting. 6 The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument. 7 A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore. General: The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

74 CORPORATE INFORMATION BOARD OF DIRECTORS Lee Kian Soo Chew Thiam Keng Captain Larry Glenn Johnson Dr Wang Kai Yuen Lim Thean Ee Teo Chuan Teck Tan Woon Hum AUDIT COMMITTEE Dr Wang Kai Yuen Chairman Lim Thean Ee Teo Chuan Teck Tan Woon Hum NOMINATING COMMITTEE Tan Woon Hum Chairman Dr Wang Kai Yuen Lim Thean Ee Teo Chuan Teck REMUNERATION COMMITTEE Teo Chuan Teck Chairman Dr Wang Kai Yuen Lim Thean Ee Tan Woon Hum REGISTERED ADDRESS 15 Hoe Chiang Road #13-03 Tower Fifteen Singapore Telephone Facsimile PRINCIPLE BANKERS OVERSEA-CHINESE BANKING CORPORATION LIMITED 65 Chulia Street OCBC Centre Singapore DBS BANK LTD 6 Shenton Way DBS Building Tower One Singapore UNITED OVERSEAS BANK LIMITED 80 Raffles Place UOB Plaza Singapore AUDITORS KPMG Partner-in-charge - Tan Huay Lim (Appointed since 10 December 2007) 16 Raffles Quay #22-00 Hong Leong Building Singapore SHARE REGISTRAR M&C SERVICES PRIVATE LIMITED 138 Robinson Road #17-00 The Corporate Office Singapore COMPANY SECRETARY Lim Ka Bee Website ir@ezionholdings.com

75 COMPANY ADDRESS CONTACT FACSIMILE WEBSITE EZION HOLDINGS LIMITED 15 Hoe Chiang Road Tower Fifteen #13-03 Singapore