SBI OFFSHORE LIMITED (Company Registration No.: D) (Incorporated in the Republic of Singapore on 1 October 1994)

Transcription

1 OFFER DOCUMENT DATED 4 NOVEMBER 2009 (Registered by Singapore Exchange Securities Trading Limited (the Exchange or the SGX-ST ) acting as agent on behalf of the Monetary Authority of Singapore (the Authority ) on 4 November 2009) This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s). An application has been made to the Exchange for permission for all the ordinary shares (the Shares ) in the capital of SBI Offshore Limited (the Company ) which includes the new Shares which are the subject of this Placement (the Placement Shares ), the new Shares ( PPCF Shares ) issued to PrimePartners Corporate Finance Pte. Ltd. ( PPCF, the Manager or the Sponsor ) pursuant to the Management Agreement (as defined herein) and the Shares which may be issued upon the exercise of the options to be granted under the SBI Offshore Employee Share Option Scheme (the Option Shares ) to be listed for quotation on Catalist (as defined herein). The Manager and Sponsor has submitted this Offer Document to the Exchange. Acceptance of applications will be conditional upon the issue of the Placement Shares, permission being granted by the Exchange for the listing and quotation of the Shares on Catalist and upon listing of the Shares on Catalist. Monies paid in respect of any application accepted will be returned if the Placement (as defined herein) is not completed because the admission and listing do not proceed for any reason. The dealing in and quotation of the Shares will be in Singapore dollars. This offer is made in or accompanied by an Offer Document that has been registered by the Exchange acting as agent on behalf of the Authority. We have not lodged this Offer Document in any other jurisdiction. The registration of this Offer Document by the Exchange does not imply that the Securities and Futures Act, Chapter 289 of Singapore (the SFA ), or any other legal or regulatory requirements, or requirements under the Exchange s listing rules, have been complied with. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the Shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). Neither the Authority nor the Exchange has examined or approved the contents of this Offer Document. Neither the Authority nor the Exchange assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The Exchange does not normally review the application for admission but relies on the Sponsor confirming that the Company is suitable to be listed and complies with the Rules of Catalist (as defined herein). Neither the Authority nor the Exchange has in any way considered the merits of the Shares being offered for investment. Investing in the Shares involves risks which are described in the section entitled RISK FACTORS of this Offer Document. After the expiration of six months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of the Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document. SBI OFFSHORE LIMITED (Company Registration No.: D) (Incorporated in the Republic of Singapore on 1 October 1994) Placement of 20,000,000 Placement Shares at S$0.27 for each Placement Share, payable in full on application. Manager, Sponsor and Sub-Placement Agent PRIMEPARTNERS CORPORATE FINANCE PTE. LTD. (Company Registration No.: D) (Incorporated in the Republic of Singapore) Placement Agent DBS VICKERS SECURITIES (SINGAPORE) PTE LTD (Company Registration No.: G) (Incorporated in the Republic of Singapore)

2 Our Mission: to become Asia s leading integrated provider of offshore equipment HVAC Systems from Wilhelmsen An Overview Established in 1994, SBI Offshore Limited ( SBI Offshore ) is a Singapore home-grown company supplying equipment to shipyards and rigbuilders in Asia s offshore and marine industry. We have since carved out a niche position as a significant player in the offshore equipment market and represent some of the major offshore equipment original equipment manufacturers ( OEMs ) in the world, including Aker Solutions (Norway), Wilhelmsen Callenberg (Norway), Techdrill (UK) and Jiangyin Neptune (People s Republic of China, ( PRC )). Our marketing and distribution network lies primarily in Singapore, the PRC, Malaysia, Indonesia, the Philippines and Vietnam. We also design and manufacture certified portable offshore cabins for oil services companices. We are in the process of transferring our production operations to Jiangyin, PRC and expect to commence production by end 2009 or early We will also be offering contract fabrication and assembly services to equipment OEMs. This initiative will propel SBI Offshore up the value chain expand our value-added one-stop solutions to both customers and equipment OEM principals and thus, potential additional revenue streams. Concentric Reducers from Techdrill Long sweep elbows from Techdrill Hose Loading Stations from Techflow Marine Key Business Segments Neptune Lifeboats SBI Offshore Marketing and Distribution Design and Manufacturing Contract Engineering (Future plans) Distribution High-pressure pipes, fittings and manifolds for offshore drilling rigs (Techdrill) Lifeboats and davits (Jiangyin Neptune) Marketing Offshore drilling equipment and/or packages (Aker MH & others) HVAC systems (Wilhelmsen Callenberg) Certifi ed portable offshore cabins Offshore rig equipment (A) Marketing and Distribution: our value propositions (I) Marketing Services: Our ability to bridge principals largely from Europe and the United States with shipyards and other offshore players in the Asia-Pacific region: Our principals provide specialised equipment and components to be installed onto offshore rigs and we work closely with their commercial and engineering teams in preparing proposals to our customers; We will extend our services to include contract engineering services after we complete the transfer of our product operations to Jiangyin, PRC. (II) Distribution Services: As a specialised intermediary who can offer relevant products from suppliers in Europe and the United States to shipyards in the Asia Pacific region: We purchase products from principals and on-sell to shipyards and end-users at a profit after factoring credit terms and other costs; alternatively, we aggregate and combine the various products we distribute to offer a basket of products to our customers; Compared to these principals, we can derive better economies of scale in providing credit to local customers as well as storage and supply chain management.

3 (B) Design and Manufacture of Certified Portable Offshore Cabins Our subsidiary, SBI Pacific, specialises in the design, engineering, fabrication and refurbishment of certified portable cabins for the offshore, onshore and marine industries: In-house design team continues to be based in our Singapore headquarters while production facilities are being transferred to Jiangyin, PRC; We customise our proprietary designs to oil services companies designated functions while onboard an offshore rig, e.g., diving monitoring, mud logging, measurement-while-drilling, or laboratory analysis; remote-operated-vehicle cabins, heli-portable aluminium cabins; etc Certification of cabins undertaken by internationally recognised third party certification organisations such as DNV, BV or ABS; hence worldwide applications. Order Book As at the Latest Practicable Date ( LPD ), we have secured orders that would translate into revenues for our Group of approximately S$20.3 million from the marketing and distribution of (i) lifeboats and davits, (ii) high pressure pipes, fittings and manifolds for drilling rigs (iii) offshore drilling rig equipment and/or package and (iv) HVAC systems, to rig builders in Asia. Competitive Strengths Established relationships and a wide network of customers in Asia s offshore industry Our customers include Jurong Shipyard, PPL Shipyard, COSCO (Nantong), CNOOC, China Merchants Heavy Industry (Shenzhen), Jutal Engineering Co, Baker Hughes, etc. In FY2008 and FP2009 ended 30 April 2009, approximately 42.9% and 54.9% of our revenue were derived from repeat customers. Offshore rig equipment distribution business is complemented by our expanding manufacturing business that is being transferred to Jiangyin, PRC Our lifeboat and davit distribution business is complemented and closely integrated with our manufacturing capabilities Credible track record in sales of OEM equipment and related services to the rig-building industry in Asia Niche position as a significant player in the offshore equipment market with in-depth knowledge of offshore rigs, notably technical specifications, quality standards and certification requirements Experienced and well-rounded management team Nitrogen Generation Skid from Inmaro Our directors have substantial experience in the offshore oil and gas industry and are committed to adding value to our customers and principals while enhancing our technical competencies Tec Pro Manifold Systems from Techdrill Safety Relief Valve from Techdrill Prospects We currently operate in Singapore and the PRC and represent some of the major offshore oil and gas equipment OEMs in the world. We are thus well positioned to capitalise on the following growth trends particularly in Brazil and the PRC through building on our track record and good working relationships with our customers, which are recognised worldwide leaders in rigbuilding: Long term demand is underpinned by favourable growth trends and developments within the global oil and as industry, notably in Asia Pacific & Latin America regions Exploration into deeper waters offshore will continue thereby driving the demand for deepwater rigs, production platforms and subsea development Global market for offshore operations to reach US$159 billion by 2010, of which Asia-Pacific region s 23.0% market share is expected to increase 8.0% annually to US$41.0 billion by 2010 SBI Pacific s Certified Offshore Cabin Singapore is a world leader in the global offshore oil and gas industry Approximately 70.0% of the world s jack-up rigs used for offshore oil exploration and drilling are produced in Singapore home to the world s two biggest offshore rig builders, Keppel Offshore & Marine Group and Sembcorp Marine Group Our key customers include Jurong Shipyard and PPL Shipyard, which are subsidiaries of the Sembcorp Marine Group that recently announced a net order book (excluding ship repairs) of S$7.91 billion as at 4 August 2009 Increased exploration activities in growing economies In Brazil, state-owned Petrobras January 2009 strategic plan included US$104.6 billion investment budget for Santos Basin, the largest oil find in the world in decades, to be spent on exploration and production from 2009 to For 2013 to 2017, Petrobras planned

4 Business Strategies and Future Plans hdrill s High-pressure Piping ducts Test tower for free-fall lifeboats in our Jiangyin Factory, Asia s tallest test tower Transfer our production operations to Jiangyin, PRC and expand our offshore rig equipment manufacturing capabilities Reduce material and component delivery lead times by sourcing for qualifying suppliers in the PRC Offer contract fabrication and assembly services to offshore rig equipment OEMs in Europe or the United States ( US ) for delivery to customers in Asia ( Contract Engineering business ) thereby reducing their delivery lead times and cost of transporting bulky steel structures Within the next five years, we aim to balance our revenue mix to reflect approximately 40.0% from Distribution and Marketing, 30.0% from Manufacturing and the remaining 30.0% from Contract Engineering Expand the range of products distributed Visit manufacturers in Europe and US to introduce our network of customers in Asia, and attend more industry-wide trade shows and exhibition Expand the geographical coverage of our business and customer base Appoint agents in Europe and US to market our group s lifeboats, davits and portable certified offshore cabins Expand our marketing presence in the PRC and Vietnam to intensify leverage on aspiring rigbuilders Explore joint ventures and/or strategic alliances to expand our capabilities, businesses, customer base, distribution channels and economies of scale Potential partners include manufacturers of products that we currently distribute (i.e., upstream integration), or other distributor companies for similar products and services. Seek investments into new start-ups or current manufacturers of offshore drilling equipment in Europe or US Financial Highlights (year ended 31 December) Neptune Lifeboat 1,984 Gross Profit $ (4 mths) FP09 FP08 an additional 29 drilling units to be contracted and 28 units to be leased for use in deep waters. Deepwater oil production is forecast to grow at 8.0% in 2009 and 15.0% by 2015 versus 2.0% in In addition, total offshore production capital expenditure is forecast to rise from US$260 billion in 2008 to US$360 billion in 2013 In Asia-Pacific, Chinese shipyards have emerged as players in jack-ups and semi-submersibles. Sinopec Corporation s capital expenditure plans include RMB120 billion for 2010 and 2011 to be mostly spent on exploration activities. Aspiring shipbuilders in the PRC and Vietnam are looking to move into rigbuilding and we have been getting more enquiries from them 2,323 3,441 1, Net Profit $ FY08 FY07 FY06 FP09 FP08 FY08 FY07 FY06 (4 mths)

5 CONTENTS Page CORPORATE INFORMATION... 1 DEFINITIONS... 3 GLOSSARY OF TECHNICAL TERMS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS SELLING RESTRICTIONS DETAILS OF THE PLACEMENT INDICATIVE TIMETABLE FOR LISTING OFFER DOCUMENT SUMMARY THE PLACEMENT ISSUE STATISTICS EXCHANGE RATES SUMMARY FINANCIAL INFORMATION RISK FACTORS USE OF PROCEEDS AND LISTING EXPENSES USE OF PROCEEDS LISTING EXPENSES PLAN OF DISTRIBUTION DIVIDEND POLICY SHARE CAPITAL SHAREHOLDERS OWNERSHIP STRUCTURE SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP MORATORIUM DILUTION GROUP STRUCTURE i

6 CONTENTS Page MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL INFORMATION OF OUR GROUP OVERVIEW RESULTS OF OPERATIONS REVIEW OF PAST PERFORMANCE REVIEW OF FINANCIAL POSITION LIQUIDITY AND CAPITAL RESOURCES CAPITAL EXPENDITURE AND DIVESTMENTS SEASONALITY INFLATION FOREIGN EXCHANGE MANAGEMENT SIGNIFICANT ACCOUNTING POLICY CHANGES CAPITALISATION AND INDEBTEDNESS GENERAL INFORMATION ON OUR GROUP HISTORY CERTIFICATIONS BUSINESS OVERVIEW PRODUCTION FACILITIES AND UTILISATION PROPERTIES AND FIXED ASSETS HEALTH, SAFETY AND ENVIRONMENT AND QUALITY ASSURANCE STAFF TRAINING POLICY INSURANCE MARKETING INTELLECTUAL PROPERTY GOVERNMENT REGULATIONS RESEARCH AND DEVELOPMENT MAJOR CUSTOMERS AND PRINCIPALS MAJOR SUPPLIERS CREDIT POLICY INVENTORY MANAGEMENT COMPETITION COMPETITIVE STRENGTHS PROSPECTS ii

7 CONTENTS Page ORDER BOOK BUSINESS STRATEGIES AND FUTURE PLANS INTERESTED PERSON TRANSACTIONS PAST INTERESTED PERSON TRANSACTIONS PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS GUIDELINES AND REVIEW PROCEDURES FOR ON-GOING AND FUTURE INTERESTED PERSON TRANSACTIONS POTENTIAL CONFLICTS OF INTERESTS MANAGEMENT AND CORPORATE GOVERNANCE MANAGEMENT REPORTING STRUCTURE DIRECTORS EXECUTIVE OFFICERS DIRECTORS AND EXECUTIVE OFFICERS REMUNERATION EMPLOYEES SERVICE AGREEMENTS CORPORATE GOVERNANCE SBI OFFSHORE EMPLOYEE SHARE OPTION SCHEME DESCRIPTION OF OUR SHARES TAXATION CLEARANCE AND SETTLEMENT GENERAL AND STATUTORY INFORMATION INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS SHARE CAPITAL MEMORANDUM AND ARTICLES OF ASSOCIATION MATERIAL CONTRACTS LITIGATION MANAGEMENT AND PLACEMENT ARRANGEMENTS MISCELLANEOUS CONSENTS RESPONSIBILITY STATEMENT BY OUR DIRECTORS DOCUMENTS AVAILABLE FOR INSPECTION iii

8 CONTENTS Page APPENDIX A AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2006, 2007 AND A-1 APPENDIX B UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 1 JANUARY 2009 TO 30 APRIL B-1 APPENDIX C SUMMARY OF SELECTED ARTICLES OF ASSOCIATION OF OUR COMPANY... C-1 APPENDIX D TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE... D-1 iv

9 CORPORATE INFORMATION BOARD OF DIRECTORS : Jonathan Hui (Executive Chairman and Chief Executive Officer) David Tan (Executive Director) Chen Jiayu (Alternate Director to David Tan) Giang Sovann (Lead Independent Director) Chan Lai Thong (Independent Director) Wong Kok Hoe (Independent Director) JOINT COMPANY : Tan Seow Chee, Certified Public Accountant SECRETARIES Chan Lai Yin, ACIS REGISTERED OFFICE : 31 International Business Park #05-05 Creative Resource Singapore SHARE REGISTRAR : Tricor Barbinder Share Registration Services 8 Cross Street #11-00 PWC Building Singapore MANAGER, SPONSOR AND : PrimePartners Corporate Finance Pte. Ltd. SUB-PLACEMENT AGENT 1 Raffles Place #30-03 OUB Centre Singapore PLACEMENT AGENT : DBS Vickers Securities (Singapore) Pte Ltd 8 Cross Street, #02-01 PWC Building Singapore SOLICITORS TO THE : WongPartnership LLP PLACEMENT AND LEGAL One George Street ADVISERS TO OUR #20-01 COMPANY AS TO Singapore SINGAPORE LAW LEGAL ADVISERS TO OUR : K-Bright Law Firm COMPANY AS TO PRC LAW A21/F, Huijin Plaza 198 Zhongshan Road Wuxi, Jiangsu, PRC AUDITORS AND : BDO Raffles REPORTING Public Accountants and Certified Public Accountants ACCOUNTANTS 19 Keppel Road #02-01 Jit Poh Building Singapore Partner-in-charge: Lee Joo Hai (Certified Public Accountant, a member of the Institute of Certified Public Accountants of Singapore) 1

10 CORPORATE INFORMATION RECEIVING BANKER : DBS Bank Ltd. AND PRINCIPAL BANKER 6 Shenton Way DBS Building Tower One Singapore

11 DEFINITIONS In this Offer Document and the accompanying Application Form, the following definitions apply where the context so admits: Group Companies Company or SBI Offshore : SBI Offshore Limited Group : Our Company and our subsidiaries Jiangyin Neptune : Jiangyin Neptune Marine Appliance Co., Ltd. Jiangyin SBI Offshore : Jiangyin SBI Offshore Equipment Co., Ltd. SBI Pacific : SBI Pacific Pte. Ltd. Other Corporations and Agencies ABB Miljø : ABB Miljø AS ABS : American Bureau of Shipping Aker MH : Aker MH AS Aker Solutions : Aker Solutions ASA Aker Solutions (Malaysia) : Aker Solutions Malaysia Sdn. Bhd. Asiaborders : Asiaborders Capital Pte Ltd Authority : The Monetary Authority of Singapore BV : Bureau Veritas CDP : The Central Depository (Pte) Ltd DBS Bank or Receiving Bank : DBS Bank Ltd. DBS Vickers or : DBS Vickers Securities (Singapore) Pte Ltd Placement Agent DNV : Det Norske Veritas Enterprise Fund : The Enterprise Fund Limited Jiangyin Seapower : Jiangyin Seapower Boating Co., Ltd. Jiangyin Wanjia : Jiangyin Wanjia Yacht Co., Ltd. Jurong Shipyard : Jurong Shipyard Pte. Ltd. 3

12 DEFINITIONS Manager, PPCF, Sponsor, : PrimePartners Corporate Finance Pte. Ltd. Continuing Sponsor or Sub-Placement Agent NOV : National Oilwell Varco Pte Ltd PPL Shipyard : PPL Shipyard Pte. Ltd. RB Pipetech : RB Pipetech Ltd SCCS : Securities Clearing & Computer Services (Pte) Ltd SGX-ST or Exchange : Singapore Exchange Securities Trading Limited Share Registrar : Tricor Barbinder Share Registration Services Swanlin Asia : Swanlin Asia Pte. Ltd. Techdrill : Techdrill Limited Wilhelmsen Callenberg : Wilhelmsen Callenberg AS General Application Form : The printed application form to be used for the purpose of the Placement and which forms part of this Offer Document Application List : The list of applications for subscription of the Placement Shares Articles or Articles of : The articles of association of our Company, as amended Association or modified from time to time associate : (a) In relation to any director, chief executive officer, substantial shareholder or controlling shareholder (being an individual) means: (i) (ii) (iii) his immediate family; the trustees, acting in their capacity as such trustees, of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object; or any company in which he and his immediate family together (directly or indirectly) have an interest of 30.0% or more of the aggregate of the nominal amount of all the voting shares; 4

13 DEFINITIONS (b) in relation to a substantial shareholder or a controlling shareholder (being a company) means any other company which is its subsidiary or holding company or is a fellow subsidiary of any such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30.0% or more Audit Committee : The audit committee of our Company Board or Board of Directors : The board of Directors of our Company Catalist : The sponsor-supervised listing platform of the SGX-ST Companies Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time Controlling Shareholder : As defined in the Rules of Catalist: (a) (b) a person who has an interest of 15.0% or more of the aggregate of the nominal amount of all the voting shares in our Company (unless otherwise determined by the SGX-ST); or a person who in fact exercises control over our Company David Tan : Our Executive Director, Tan Woo Thian Directors : The directors of our Company as at the date of this Offer Document EPS : Earnings per Share Executive Directors : The executive directors of our Company Executive Officers : The executive officers of our Group FP : Financial period ended 30 April FY : Financial year ended or, as the case may be, ending 31 December GST : Goods & Services Tax Independent Directors : The independent directors of our Company Jonathan Hui : Our Executive Chairman and Chief Executive Officer, Hui Choon Ho 5

14 DEFINITIONS Latest Practicable Date : 18 September 2009, being the latest practicable date for the purposes of lodgment of this Offer Document with the SGX-ST Listing : The listing of our Company and the quotation of our Shares on Catalist Listing Manual : The provisions of Sections A and B of the listing manual of the SGX-ST as from time to time amended, modified or supplemented Management Agreement : The full sponsorship and management agreement entered into between our Company and PPCF pursuant to which PPCF has agreed to sponsor and manage the Listing as set out in the sections entitled Plan of Distribution and General and Statutory Information Management and Placement Arrangements of this Offer Document Manufacturing business : The business of designing and manufacturing certified portable offshore cabins for oil services companies Market Day : A day on which the SGX-ST is open for trading in securities Marketing and Distribution : The business of marketing and distribution of (i) lifeboats business and davits, (ii) high pressure pipes, fittings and manifolds for drilling rigs, (iii) offshore drilling equipment and/or package and (iv) HVAC systems to rig builders in Asia NAV : Net asset value Nominating Committee : The nominating committee of our Company Non-executive Directors : The non-executive directors of our Company (including Independent Directors) NTA : Net tangible assets Offer Document : This offer document dated 4 November 2009 issued by us in respect of the Placement Official List : The list of issuers maintained by the SGX-ST in relation to Catalist Option Shares : The new Shares which may be issued upon the exercise of the Options Options : Options which may be granted pursuant to the Share Option Scheme 6

15 DEFINITIONS PER : Price earnings ratio period under review : The period which comprises FY2006, FY2007, FY2008 and the four months ended 30 April 2009 Placement : The placement of the Placement Shares by the Placement Agent on behalf of us for subscription at the Placement Price subject to and on the terms and conditions of this Offer Document Placement Agreement : The placement agreement entered into between our Company and DBS Vickers pursuant to which DBS Vickers has agreed to, subscribe and/or procure subscriptions for the Placement Shares at the Placement Price as set out in the sections entitled Plan of Distribution and General and Statutory Information Management and Placement Arrangement of this Offer Document Placement Price : S$0.27 for each Placement Share Placement Shares : The 20,000,000 new Shares for which we invite applications to subscribe for pursuant to the Placement, subject to and on the terms and conditions of this Offer Document PPCF Shares : The 680,100 new Shares to be issued to PPCF as part of PPCF s professional fees as the Manager and Sponsor PRC or China : People s Republic of China, excluding Macau, and Hong Kong for the purposes of this Offer Document and for geographical reference only Preference Shares : RP A Shares and RP B Shares Remuneration Committee : The remuneration committee of our Company RP A Shares : Redeemable preference shares A in the capital of our Company which have been fully redeemed on 14 September 2009 RP B Shares : Redeemable preference shares B in the capital of our Company which have been fully redeemed on 14 September 2009 Rules of Catalist : Section B of the Listing Manual dealing with the rules of Catalist, as from time to time amended, modified or supplemented Securities Account : The securities account maintained by a Depositor with CDP 7

16 DEFINITIONS Service Agreements : The service agreements entered into between our Company and our Executive Directors as set out under the section entitled Management and Corporate Governance Service Agreements of this Offer Document SFA : The Securities and Futures Act, Chapter 289 of Singapore, as amended or modified from time to time Share Option Scheme : The SBI Offshore Employee Share Option Scheme Share Split : The sub-division of each Share into 100 Shares as described in the section entitled Share Capital of this Offer Document Shareholders : Registered holders of Shares, except where the registered holder is CDP, the term Shareholders shall, in relation to such Shares, mean the Depositors whose Securities Accounts are credited with Shares Shares : Ordinary shares in the capital of our Company Singapore : The Republic of Singapore Currencies, Units and Others GBP : Great British Pound $ or S$ and cents : Singapore dollars and cents respectively RMB : PRC Renminbi % or per cent. : Per centum psi : Pounds per square inch sq m : Square metres US$ : United States Dollars The expressions Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. Any reference in this Offer Document and the Application Form to any statute or enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any word defined under the Companies Act, the SFA or any statutory modification thereof and used in this Offer Document and the Application Form shall, where applicable, have the meaning assigned to it under the Companies Act, the SFA or any statutory modification thereof, as the case may be. 8

17 DEFINITIONS Any reference in this Offer Document and the Application Form to Shares being allotted to an applicant includes allotment to CDP for the account of that Applicant. Any reference to a time of day in this Offer Document shall be a reference to Singapore time unless otherwise stated. References in this Offer Document to the Group, we, our, and us refer to our Group. Any discrepancies in the tables included herein between the listed amounts and the totals thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. Unless we indicate otherwise, all information in this Offer Document is presented on the basis of the Group. 9

18 GLOSSARY OF TECHNICAL TERMS The glossary contains explanations of certain technical terms and abbreviations used in this Offer Document in connection with our Group and our business. The terms and abbreviations and the assigned meanings may not correspond to standard industry meanings and usage of these terms. To facilitate a better understanding of the business of our Group, the following glossary provides a description (which should not be treated as being definitive of their meanings) of some of the technical terms and abbreviations used in this Offer Document relating to our business. The terms and their assigned meanings may not correspond to standard industry meanings or usage of these terms: cabin : An enclosed metallic structure, which is utilised for instance, as living accommodation or workspace davit : A small crane that projects over the side of a ship which is used to suspend, hoist or lower lifeboats HVAC : An abbreviation for heating, ventilation and air conditioning. HVAC systems are important in marine environments where humidity and temperature must be closely regulated while maintaining safe and healthy conditions within lifeboat : A small boat carried on a vessel and used to rescue or evacuate passengers in case of an emergency manifold : A cylindrical pipe fitting, having a number of lateral outlets, for connecting one pipe with several others OEM : Original equipment manufacturer offshore drilling rig : A drilling rig used for drilling oil and gas in an ocean, gulf or sea, usually on the outer continental shelf. An offshore drilling rig may be a mobile floating vessel with a ship or barge hull, a semi-submersible or submersible base, a self-propelled or towed structure with jacking legs (jackup drilling rig), or a permanent structure used as a production platform when drilling is completed rig : An offshore production or drilling structure or platform 10

19 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS All statements contained in this Offer Document, statements made in press releases and oral statements that may be made by us or our Directors, officers or employees acting on our behalf, that are not statements of historical fact, constitute forward-looking statements. You can identify some of these forward-looking statements by terms such as expects, believes, plans, intends, predicts, estimates, anticipates, may, will, would and could or similar expressions. However, you should note that these words or phrases are not the exclusive means of identifying forward-looking statements. All statements regarding our expected financial position, business strategies, plans and prospects are forward-looking statements. These forward-looking statements, including without limitation, statements as to our revenue and profitability, cost measures, planned strategy and anticipated expansion plans, expected growth in demand, expected industry trends and any other matters discussed in this Offer Document regarding matters that are not historical fact, are only predictions. These forwardlooking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, amongst others, the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) changes in political, social and economic conditions, the regulatory environment, laws and regulations and interpretation thereof in the jurisdictions where we conduct business or expect to conduct business; the risk that we may be unable to realise our anticipated growth strategies and expected internal growth; changes in currency exchange rates; changes in the availability and prices of parts and equipment which we require in our business; changes in customer preferences and needs; changes in technology; changes in competitive conditions and our ability to compete under such conditions, locally and internationally; changes in our future capital needs and the availability of financing and capital to fund these needs; and other factors beyond our control. Some of these risk factors are discussed in greater detail in this Offer Document, in particular, but not limited to, the discussions under the sections entitled Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations of this Offer Document. These forward-looking statements are applicable only as of the date of this Offer Document. 11

20 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different from that expected, expressed or implied by the forwardlooking statements in this Offer Document, undue reliance must not be placed on these statements. None of us, the Manager and Sponsor, and the Placement Agent or any other person represents or warrants that our actual future results, performance or achievements will be as discussed in those statements. All forward-looking statements by or attributable to us, or persons acting on our behalf, contained in this Offer Document are expressly qualified in their entirety by such factors. Our actual future results may differ materially from those anticipated in these forward-looking statements as a result of the risks faced by us. We, the Manager and Sponsor, and the Placement Agent disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances. We are, however, subject to the provisions of the SFA and the Rules of Catalist regarding corporate disclosure. In particular, pursuant to Section 241 of the SFA, if after the Offer Document is registered by the SGX-ST but before the close of the Placement, we become aware of: (a) (b) (c) a false or misleading statement or matter in the Offer Document; an omission from the Offer Document of any information that should have been included in it under the requirements of the Rules of Catalist; or a new circumstance that has arisen since the Offer Document was lodged with the SGX- ST and would have been required under the Rules of Catalist to be included in the Offer Document if it had arisen before the Offer Document was lodged, and that is materially adverse from the point of view of an investor, we may lodge a supplementary or replacement offer document with the SGX-ST. 12

21 SELLING RESTRICTIONS This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under the requirements of the legal or regulatory requirements of any jurisdiction, except for the lodgment of this Offer Document in Singapore in order to permit a public offering of the Placement Shares and the public distribution of this Offer Document in Singapore. The distribution of this Offer Document and the offering of the Placement Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this Offer Document are required by us, the Manager and Sponsor, and the Placement Agent to inform themselves about, and to observe and comply with, any such restrictions. 13

22 DETAILS OF THE PLACEMENT LISTING ON CATALIST An application has been made to the SGX-ST for permission to deal in, and for the listing and quotation of, all our Shares which includes the Placement Shares, the PPCF Shares and the Option Shares, on Catalist. Such permission will be granted when we have been admitted to the Official List of Catalist. Our acceptance of applications will be conditional upon, inter alia, the issue of Placement Shares and upon permission being granted by the SGX-ST to deal in, and for quotation of, all of our Shares. Monies paid in respect of any application accepted will be returned, without interest or any share of revenue or other benefit arising therefrom and at the applicant s own risk, if the completion of the Placement does not occur because the said permission is not granted or for any reason, and the applicant will not have any claim against us, the Manager and Sponsor, and the Placement Agent. No Shares will be allotted on the basis of this Offer Document later than six months after the date of registration of this Offer Document by the SGX-ST on behalf of the Authority. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor certifying that we are suitable to be listed and comply with the Rules of Catalist. Neither the Authority nor the SGX-ST has in any way considered the merits of the Placement Shares being offered for investment. Admission to the Official List of Catalist is not to be taken as an indication of the merits of the Placement, our Company, our subsidiaries, our existing issued Shares, the Placement Shares, the PPCF Shares or the Option Shares. A copy of this Offer Document has been lodged with and registered by the SGX-ST acting as agent on behalf of the Authority. Registration of the Offer Document by the SGX-ST does not imply that the SFA, or any other legal or regulatory requirements, have been complied with. The SGX-ST has not, in any way, considered the merits of our existing issued Shares or the Placement Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged this Offer Document in any other jurisdiction. This Offer Document has been seen and approved by our Directors and they individually and collectively accept full responsibility for the accuracy of the information given in this Offer Document and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and all expressions of opinion, intention and expectation in this Offer Document are fair and accurate in all material respects as at the date of this Offer Document and that there are no material facts the omission of which would make any statements in the Offer Document misleading, and that this Offer Document constitutes full and true disclosure of all material facts about the Placement and our Group. 14

23 DETAILS OF THE PLACEMENT We are subject to the provisions of the SFA and the Rules of Catalist regarding corporate disclosure. In particular, if after the registration of this Offer Document but before the close of the Placement, we become aware of: (a) (b) (c) a false or misleading statement or matter in the Offer Document; an omission from this Offer Document of any information that should have been included in it under the requirements of the Rules of Catalist; or a new circumstance that has arisen since this Offer Document was lodged with the SGX-ST which would have been required under the requirements of the Rules of Catalist to be included in the Offer Document if it had arisen before this Offer Document was lodged, that is materially adverse from the point of view of an investor, we may lodge a supplementary or replacement offer document with the SGX-ST. In the event that a supplementary or replacement offer document is lodged with the SGX-ST, the Placement shall be kept open for at least 14 days after the lodgment of such supplementary or replacement offer document. Where prior to the lodgment of the supplementary or replacement offer document, applications have been made under this Offer Document to subscribe for the Placement Shares and: (a) where the Placement Shares have not been issued to the applicants, we shall either: (i) (A) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgment of the supplementary or replacement offer document, give the applicants notice in writing of how to obtain, or arrange to receive, a copy of the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to withdraw their applications; and (B) take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document, as the case may be, to the applicants who have indicated that they wish to obtain, or have arranged to receive, a copy of the supplementary or replacement offer document; (ii) (ii) within seven days from the date of lodgment of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to withdraw their applications; or (A) treat the applications as withdrawn and cancelled, in which case the applications shall be deemed to have been withdrawn and cancelled; and (B) we shall return all monies paid in respect of any application, without interest or any share of revenue or other benefit arising therefrom and at the applicants own risk; or 15

24 DETAILS OF THE PLACEMENT (b) where the Placement Shares have been issued to the applicants, we shall either: (i) (A) within two days (excluding any Saturday, Sunday or public holiday) from the date of lodgment of the supplementary or replacement offer document, give the applicants notice in writing of how to obtain, or arrange to receive, a copy of the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to return to us the Placement Shares which they do not wish to retain title in; and (B) take all reasonable steps to make available within a reasonable period the supplementary or replacement offer document, as the case may be, to the applicants who have indicated that they wish to obtain, or have arranged to receive, a copy of the supplementary or replacement offer document; (ii) (iii) within seven days from the date of lodgment of the supplementary or replacement offer document, give the applicants the supplementary or replacement offer document, as the case may be, and provide the applicants with an option to return to us the Placement Shares which they do not wish to retain title in; or treat the issue of the Placement Shares as void, in which case the issue shall be deemed void and we shall return all monies paid in respect of any application, without interest or any share of revenue or other benefit arising therefrom and at the applicants own risk. Any applicant who wishes to exercise his option under paragraph (a)(i) or (a)(ii) to withdraw his application shall, within 14 days from the date of lodgment of the supplementary or replacement offer document, notify us of this, whereupon we shall, within seven days from the receipt of such notification, return the application monies without interest or any share of revenue or other benefit arising therefrom and at his own risk, and he will not have any claim against us, the Manager and Sponsor, or the Placement Agent. An applicant who wishes to exercise his option under paragraph (b)(i) or (b)(ii) to return the Placement Shares issued to him shall, within 14 days from the date of lodgment of the supplementary or replacement offer document, notify us of this and return all documents, if any, purporting to be evidence of title to those Placement Shares to us, whereupon we shall, within seven days from the receipt of such notification and documents, if any, pay to him all monies paid by him for those Shares, without interest or any share of revenue or other benefit arising therefrom and at his own risk, and the issue of those Shares shall be deemed to be void, and he will not have any claim against us, the Manager and Sponsor, and the Placement Agent. Neither us, the Manager and Sponsor, and the Placement Agent nor any other parties involved in the Placement is making any representation to any person regarding the legality of an investment by such person under any investment or other laws or regulations. No information in this Offer Document should be considered as being business, legal or tax advice regarding an investment in our Shares. Each prospective investor should consult his own legal, financial, tax or other professional adviser(s) regarding an investment in our Shares. No person has been or is authorised to give any information or to make any representation not contained in this Offer Document in connection with the Placement and, if given or made, such information or representation must not be relied upon as having been authorised by us, the Manager and Sponsor, and the Placement Agent. Neither the delivery of this Offer Document and the Application Form nor any documents relating to the Placement, nor the Placement 16

25 DETAILS OF THE PLACEMENT shall, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change or development reasonably likely to create any change in our affairs, conditions or prospects, or the Placement Shares or in the statements of fact or information contained in this Offer Document since the date of this Offer Document. Where such changes occur and are material or are required to be disclosed by law, the SGX- ST and/or any other regulatory or supervisory body or agency, we may make an announcement of the same to the SGX-ST and the public and if required, we may lodge a supplementary or replacement offer document with the SGX-ST and will comply with the requirements of the SFA and/or any other requirements of the SGX-ST. All applicants should take note of any such announcements and, upon the release of such an announcement, shall be deemed to have notice of such changes. Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promise or representation as to our future performance or policies. The Placement Shares are offered for subscription solely on the basis of the information contained and representations made in this Offer Document. This Offer Document has been prepared solely for the purpose of the Placement and may not be relied upon by any persons other than the applicants in connection with their application for the Placement Shares or for any other purpose. This Offer Document does not constitute an offer, solicitation or invitation of the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or unauthorised nor does it constitute an offer, solicitation or invitation to any person to whom it is unlawful to make such offer, solicitation or invitation. Copies of this Offer Document and the Application Form may be obtained on request, subject to availability during office hours, from: PrimePartners Corporate Finance Pte. Ltd. DBS Vickers Securities (Singapore) Pte Ltd 1 Raffles Place 8 Cross Street, #30-03 OUB Centre #02-01 PWC Building Singapore Singapore and members of the Association of Banks in Singapore, members of the SGX-ST and merchant banks in Singapore. A copy of this Offer Document is also available on the SGX-ST website at The Application List will open immediately upon registration of this Offer Document and will remain open until a.m. on 10 November 2009 or for such further period or periods as our Directors may, in consultation with the Manager and Sponsor, and the Placement Agent, in their absolute discretion decide, subject to any limitation under all applicable laws. In the event a supplementary offer document or replacement offer document is lodged with the SGX-ST, the Application List will remain open for at least 14 days after the lodgment of the supplementary or replacement offer document. Details of the procedures for application of the Placement Shares are set out in Appendix D to this Offer Document. 17

26 INDICATIVE TIMETABLE FOR LISTING An indicative timetable on the trading of our Shares is set out below: Indicative date/time Event 10 November 2009 at a.m. Close of Application List 11 November 2009 at 9.00 a.m. Commence trading on a ready basis 16 November 2009 Settlement date for all trades done on a ready basis The above timetable is only indicative as it assumes that the date of closing of the Application List is 10 November 2009, the date of admission of our Company to the Official List of Catalist is 11 November 2009, the shareholding spread requirement will be complied with and the Placement Shares will be issued and fully paid-up prior to 11 November The actual date on which our Shares will commence trading on a ready basis will be announced when it is confirmed by the SGX-ST. The above timetable and procedures may be subject to such modification as the SGX-ST may, in its absolute discretion, decide, including the commencement of trading on a ready basis. In the event of any changes in the closure of the Application List or the time period during which the Placement is open, we will publicly announce the same: (a) through an SGXNET announcement to be posted on the internet at the SGX-ST website at and (b) in a local newspaper(s). We will publicly announce the level of subscription and the results of the distribution of the Placement Shares pursuant to the Placement, as soon as it is practicable after the close of the Application List through channels in (a) and (b) above. Investors should consult the SGX-ST s announcement on ready trading date released on the Internet (at SGX-ST website at or the newspapers or check with their brokers on the date on which trading on a ready basis will commence. 18

27 OFFER DOCUMENT SUMMARY The following summary highlights certain information found in greater detail elsewhere in this Offer Document. Terms defined elsewhere in this Offer Document have the same meaning when used herein. In addition to this summary, we urge you to read the entire Offer Document carefully, especially the section entitled Risk Factors of this Offer Document, before deciding to invest in our Shares. Our Company Our Company was incorporated in Singapore on 1 October 1994 under the Companies Act as a private company limited by shares, under the name of Sin-China Holdings Pte Ltd. The name of our Company was changed to Seabreeze International Pte Ltd on 10 September 1996, and was subsequently changed to SBI Offshore Pte. Ltd. on 16 June Our Company was converted into a public limited company and the name of our Company was changed to SBI Offshore Limited in connection therewith on 21 October Business Overview We are principally involved in: (a) the marketing and distribution of (i) lifeboats and davits, (ii) high pressure pipes, fittings and manifolds for drilling rigs, (iii) offshore drilling rig equipment and/or package and (iv) HVAC systems, to rig builders in Asia; and (b) the design and manufacture of certified portable offshore. Our marketing and distribution network lies primarily in Singapore, Malaysia, China, Indonesia, Philippines and Vietnam, and we are in the process of transferring our production operations from Singapore to Jiangyin, PRC. Please refer to the section entitled General Information on our Group Business Overview of this Offer Document for further details. Competitive Strengths We believe that we are able to compete effectively with the following competitive strengths: we have established relationships with our customers and a wide network of customers in Asia; our offshore rig equipment distribution business is complemented by our expanding manufacturing business which we are in the process of transferring to Jiangyin, PRC; we have a credible track record of selling OEM equipment and related services to the rigbuilding industry in Asia due to our in-depth knowledge of offshore rigs, in particular, their technical specifications, quality standards and certification requirements; and we have an experienced and well-rounded management team that is focussed on delivering value to our customers, adding value to our principals and building up the technical and operational competencies of our staff. Please refer to the section entitled General Information on our Group Competitive Strengths of this Offer Document for further details. 19

28 OFFER DOCUMENT SUMMARY PROSPECTS Our Directors believe that our long term prospects are encouraging for the following reasons: the level of activities in the offshore equipment industry that we are in is driven by the demand for oil and gas. 80.0% of the net growth in oil demand from 2008 to 2030 is expected to be in developing Asia. 1 The trend towards exploration into deeper waters offshore will also continue given that the reserves in existing oil fields are depleting and that there is a need to find new sources of oil to replenish and also increase supply. 2 We currently operate in Singapore and the PRC, and therefore we expect to be well positioned to enjoy the growth in energy use in Asia-Pacific leading to demand for our products and services; the offshore sector in Singapore increased revenue by 49.1% to S$7.4 billion in The global market for offshore operations is expected to hit US$159 billion by The Asia-Pacific s market share of offshore operations of 23.0% is expected to increase at an annual growth rate of 8.0% from US$31 billion to US$41.0 billion by As we represent some of the major offshore drilling equipment OEMs in the world, we believe that we have positioned ourselves well and we will continue to participate in the growth of Singapore s marine and offshore industry and to build on our existing relationships with our local customers; and there is a growing interest and consequent increase in demand for offshore oil and gas exploration, which may translate into higher demand for offshore drilling equipment and services on an international scale. In recent years, our Directors note that the South Korean and Singaporean yards have dominated the building of semi-submersible rigs and drillships that are used in deeper waters which are advantageous for newer finds like that of Brazil s Tupi and Santos fields that are typically in deeper waters. Chinese shipyards have emerged as players in semi-submersibles as well. The close proximity of our business operations and production facilities to rig builders located in the aforementioned countries provides us with an advantage to develop and maintain continuing good working relationships with their respective commercial and engineering teams so that we can effectively capitalise on business opportunities and provide them with the right products and services that meet their requirements. Please refer to the section entitled General Information on our Group Prospects of this Offer Document for further details. ORDER BOOK As at the Latest Practicable Date, we have secured orders which would translate into revenues for our Group of approximately S$20.3 million, for the marketing and distribution of (i) lifeboats and davits, (ii) high pressure pipes, fittings and manifolds for drilling rigs, (iii) offshore drilling rig equipment and/or package and (iv) HVAC systems, to rig builders in Asia. 1 Adapted extract from Organization of the Petroleum Exporting Countries World Oil Outlook 2009 retrieved from 2 Adapted extract from Association of Singapore Marine Industry s Singapore Marine Industry Annual Report 2008 retrieved from 3 Adapted extract from The Business Time s Bullish outlook for offshore oil and gas sector dated 25 March

29 OFFER DOCUMENT SUMMARY BUSINESS STRATEGIES AND FUTURE PLANS Our principal business strategies and future plans are to: transfer our production operations to Jiangyin, PRC and expand our offshore drilling equipment manufacturing capabilities. We are in the process of transferring our production operations, hiring experienced engineering and production staff and training our staff in the PRC to raise their abilities and productivity. We intend to reduce materials and components delivery lead times by sourcing for suppliers in the PRC that can meet the quality standards of our Company and our customers, as well as certification requirements. We will also offer contract fabrication and assembly services to offshore drilling equipment OEMs in Europe or the United States who are delivering their products to customers in Asia. This will reduce their delivery lead time as well as the cost of transporting bulky steel structures from Europe or the United States to Asia ( Contract Engineering business ). Within the next five years, we aim to make the distribution of our revenue streams more even, with 40.0% coming from our Distribution and Marketing business, 30.0% from our Manufacturing business and the remaining 30.0% from our potential Contract Engineering business; expand the range of products that we distribute by attending more industry-wide trade shows and exhibitions as well as visiting offshore drilling equipment OEM, in Europe and the United States to introduce our network of customers in Asia as well as demonstrate our in-depth understanding of offshore rigs; expand the geographical coverage of our business, in particular, by appointing agents in the United States and Europe to market the lifeboats, davits and portable certified offshore cabins that we and our associated company, Jiangyin Neptune, design and build in our facilities in Jiangyin, PRC. We will also expand our marketing presence in the PRC and Vietnam as more shipyards in these two countries are moving into rig building due to the higher value added as compared to shipbuilding; and expand our capabilities and businesses through joint ventures and/or strategic alliances that can create synergy with our existing businesses as well as look for investment opportunities in the form of new start-ups or capital investment into existing manufacturers of offshore drilling equipment in Europe or the United States. Please refer to the section entitled General Information on our Group Business Strategies and Future Plans of this Offer Document for further details. Where you can find us Our registered office and principal place of business is at 31 International Business Park #05-05 Creative Resource Singapore The telephone and facsimile numbers for our registered office and principal place of business are (65) and (65) respectively. Our internet address is Information contained in our website does not constitute part of this Offer Document. 21

30 THE PLACEMENT Placement Size : 20,000,000 Placement Shares. The Placement Shares will, upon issue and allotment, rank pari passu in all respects with the existing issued Shares. Placement Price : S$0.27 for each Placement Share. The Placement : The Placement comprises a placement of 20,000,000 Placement Shares at the Placement Price, subject to and on the terms and conditions of this Offer Document. Purpose of the Placement : Our Directors believe that the listing of our Company and the quotation of our Shares on Catalist will enhance our public image locally and overseas and enable us to raise funds from the capital markets to fund the expansion of our business operations. The Placement will also provide members of the public with an opportunity to participate in the equity of our Company. In addition, the proceeds from the Placement Shares will provide us with additional capital to finance our business expansion and for general working capital of our Company. Listing status : Prior to the Placement, there had been no public market for our Shares. Our Shares will be quoted in Singapore dollars on Catalist, subject to admission of our Company to the Official List of Catalist and permission to deal in, and for quotation of, our Shares being granted by the SGX-ST. 22

31 ISSUE STATISTICS Placement Price NTA NTA per Share based on the unaudited balance sheet of our Group as at 30 April 2009: S$0.27 (a) (b) before adjusting for the estimated net proceeds from the issue of the Placement Shares and based on our pre-placement share capital of 90,680,100 Shares after adjusting for the estimated net proceeds from the issue of the Placement Shares and based on our post-placement share capital of 110,680,100 Shares 4.78 cents 7.62 cents Premium of Placement Price per Share over the NTA per Share as at 30 April 2009: (a) (b) before adjusting for the estimated net proceeds from the issue of the Placement Shares and based on our pre-placement share capital of 90,680,100 Shares after adjusting for the estimated net proceeds from the issue of the Placement Shares and based on our post-placement share capital of 110,680,100 Shares % % EPS EPS of our Group for FY2008 based on our pre-placement share capital of 90,680,100 Shares EPS of our Group for FY2008 based on our pre-placement share capital of 90,680,100 Shares had the Service Agreements been effected for FY2008 (1) PER PER based on the EPS of our Group for FY2008 PER based on the EPS of our Group for FY2008 had the Service Agreements been effected for FY2008 (2), (3) Net Operating Cash Flow Net operating cash flow per Share of our Group for FY2008 based on our pre-placement share capital of 90,680,100 Shares Net operating cash flow per Share of our Group for FY2008 based on our pre-placement share capital of 90,680,100 Shares had the Service Agreements been effected for FY cents 2.24 cents times times 0.29 cents (0.11) cents 23

32 ISSUE STATISTICS Price To Net Operating Cash Flow Ratio Ratio of Placement Price to net operating cash flow per Share for FY2008 Ratio of Placement Price to net operating cash flow per Share had the Service Agreements been effected for FY2008 Market Capitalisation Market capitalisation based on the Placement Price of S$0.27 cents per Share and our post-placement share capital of 110,680,100 Shares times n.m. (4) S$29.88 million Notes: (1) No variable bonus is assumed to have been paid to our Executive Directors in FY2008. (2) Net operating cash flow is defined as net cash generated from operating activities which is derived from profit before tax after adjustments as set out in Appendix A Audited Consolidated Financial Statements for the Financial Years ended 31 December 2006, 2007 and (3) Please refer to the section entitled Management s Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Cash flow summary for further details. (4) Not meaningful. 24

33 EXCHANGE RATES The exchange rate (1) between US$ and S$ as at the Latest Practicable Date is US$ to S$1.00. The table below sets out the highest and lowest exchange rates (1) between US$ and S$1.00 for each of the six completed months prior to the Latest Practicable Date. The table indicates how many US$ may be bought with S$1.00. US$ : S$1.00 Highest Lowest March April May June July August September 2009 (2) The following table sets out, for each of the financial years indicated, the average and closing exchange rates between US$ and S$. The average exchange rate is calculated by using the average of the exchange rates (1) on the last day of each month during each financial period. US$ : S$1.00 Average Closing FY FY FY FP The above exchange rates should not be construed as representations that the US$ amounts actually represent such S$ amounts or could be converted into S$, at the rate indicated, at any other rate or at all. Notes: (1) Source: Bloomberg L.P. (2) For the period from 1 September 2009 to the Latest Practicable Date. Bloomberg L.P. has not provided its consent, for the purposes of section 249 of the SFA, to the inclusion of the information extracted from the relevant reports and is therefore not liable for such information under sections 253 and 254 of the SFA. While we have taken reasonable actions to ensure that the information from the relevant reports issued by Bloomberg L.P. is reproduced in its proper form and context, and that the information is extracted accurately and fairly from such reports, neither we nor any party have conducted an independent review of the information contained in such reports nor verified the accuracy of the contents of the relevant information. 25

34 SUMMARY FINANCIAL INFORMATION The following financial information of our Group should be read in conjunction with our Audited Consolidated Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 and our Unaudited Condensed Consolidated Financial Statements for the Financial Period from 1 January 2009 to 30 April 2009 as set out in Appendices A and B to this Offer Document respectively. Audited Unaudited (S$ 000) FY2006 FY2007 FY2008 FP2008 FP2009 Revenue 6,260 6,258 11,720 2,706 6,306 Profit before income tax from continuing operations , ,720 Profit after income tax from continuing operations , ,364 Profit after income tax from discontinued operations Profit after income tax attributable to equity holders of the Company , ,414 Minority interest (16) (50) EPS from continuing and discontinued operations (cents) (1) EPS from continuing operations (cents) (1) Adjusted EPS from continuing and discontinued operations (cents) (2) Adjusted EPS from continuing operations (cents) (2) Notes: (1) For comparative purposes, EPS for the period under review have been computed based on the net profit attributable to Shareholders and our pre-placement share capital of 90,680,100 Shares. (2) For comparative purposes, adjusted EPS for the period under review have been computed based on the net profit attributable to Shareholders and our post-placement share capital of 110,680,100 Shares. Audited Unaudited as at as at (S$ 000) 31 December April 2009 Non-Current Assets 1,321 3,990 Current Assets 9,654 11,035 Total Assets 10,975 15,025 Current Liabilities 6,941 9,644 Non-Current Liabilities Total Liabilities 7,605 10,272 Net Assets 3,370 4,753 Equity Attributable to equity holders of the Company 3,379 4,633 Minority Interests (9) 120 NTA per Share (cents) (1) Note: (1) The NTA per Share is computed based on the NTA of our Group and the pre-placement share capital of 90,680,100 Shares. 26

35 RISK FACTORS Investors should consider carefully the following risk factors and all other information contained in this Offer Document before deciding to invest in our Shares. You should also note that certain of the statements set forth below constitute forward-looking statements that involve risks and uncertainties. If any of the following risk factors and uncertainties develops into actual events, our business, financial condition, results of operations or cash flows may be adversely affected. In such circumstances, the trading price of our Shares could decline and investors may lose all or part of their investment. To the best of our Directors belief and knowledge, all the risk factors that are material to investors in making an informed judgement have been set out below. RISKS RELATING TO THE INDUSTRY IN WHICH WE OPERATE AND OUR BUSINESS We are currently reliant upon our established business relationship with Aker Solutions Aker Solutions and its group of companies contributed to approximately 16.4% and 18.6% of our revenue for FY2008 and FP2009 respectively. We represent a number of corporate entities that belong to Aker Solutions, one of the major suppliers of offshore drilling equipment in the global offshore oil and gas equipment industry, to market various offshore drilling equipment and/or package provided by the respective corporate entities. As these companies are under Aker Solutions, they are subject to business policies and strategies as established by Aker Solutions. Please refer to the section entitled General Information on our Group History of this Offer Document for more details. In the event that there are changes to Aker Solutions business policies, offshore equipment procurement and marketing strategies in Asia for instance, resulting in them choosing a third party or themselves to market their offshore drilling equipment and/or package instead of us, our business, financial condition and results of operations may be materially and adversely affected. Our business and growth depend on our ability to retain existing principals and suppliers We enter into representative agreements, consultancy agreements or supply agreements with various principals and suppliers, pursuant to which we are appointed as one of their agents, representatives or distributors to market and/or distribute their offshore drilling and production related equipment and services in various countries in Asia. Such representative agreements, consultancy agreements or supply agreements provide for termination by either party through the provision of sufficient prior written notice to the other party. In the event that our principals and/or our suppliers terminate or decide not to renew their representative agreements, consultancy agreements or supply agreements with us or appoint other agents or establish their business operations in the countries that we are representing them, our business, financial condition and results of operations may be materially and adversely affected. We are dependent on our continued ability to retain our key management personnel for our operations and profitability Our continued success is highly dependent on our ability to retain our key management personnel including, in particular, our Executive Chairman and Chief Executive Officer, Jonathan Hui and our Executive Director, David Tan, as well as our Executive Officers. Together, our Board and Executive Officers are responsible for formulating and implementing our growth, corporate development and overall business strategies. We currently do not maintain any key man insurance. Any loss of the services of any of our key management personnel without a suitable and timely replacement could materially and adversely affect our business, financial condition and results of operations. 27

36 RISK FACTORS We are exposed to risks arising from credit terms extended to our customers We are exposed to the risk of payment delays and defaults by our customers who are granted credit terms. As at 30 April 2009, our trade receivables balance was approximately S$4.16 million, which accounted for approximately 37.8% of our current asset balance. Currently, our credit terms extended to our established customers are generally 30 days. Average trade debtors turnover days for FY2006, FY2007, FY2008 and FP2009 were 125 days, 170 days, 78 days and 60 days respectively. There is no guarantee on the timeliness of our customers payments and whether they will be able to fulfil their obligations. Any inability on the part of our customers to settle or settle promptly such amounts due to us may have a material adverse impact on our financial performance and operating cash flow. Please refer to the section entitled General Information on our Group - Credit Policy of this Offer Document for more details. A few significant major customers/principals contribute to most of our revenue, and the failure of one or more of these customers/principals to perform or make payment for the delivery of our offshore rig equipment or services could adversely affect our financial condition and results of operations We have derived, and expect to continue to derive, a significant proportion of our revenue from a few of our key major customers/principals. For instance, our top four major customers/principals accounted for 94.1%, 91.5%, 59.3% and 86.6% of our revenue for FY2006, FY2007, FY2008 and FP2009 respectively. If one or more of these major customers fails to make scheduled payments to us on time, or at all, or if we are unable to find a suitable replacement customer for our products or services, we would suffer a loss of revenue that could materially and adversely affect our financial condition and results of operations. Please refer to the section entitled General Information on our Group Major Customers of this Offer Document for more details. We face risks associated with the potential unreliability of delivery of supplies and products by our suppliers In our offshore rig equipment business, we are dependent on our suppliers for timely delivery of components and supplies such as lifeboats and davits, high pressure pipes, fittings and manifolds for drilling rigs, HVAC systems and materials required for the fabrication of our portable offshore cabins. We face the risk that our suppliers may not be able to deliver necessary spare parts and supplies on time or at all. If we are unable to source such spare parts and supplies from alternative suppliers on a timely and competitive basis or at all, our contractual obligations with our customers will in turn be affected. In addition, should our suppliers default on their contractual obligations, this is likely to compromise our own ability to deliver the offshore equipment or services to our customers in accordance with quality and timing specifications, and may adversely affect our financial condition and results of operations. 28

37 RISK FACTORS We may not be able to fulfil our contractual obligations to our customers for our portable offshore cabins We undertake the design, engineering, fabrication and assembly of certified portable offshore cabins according to the specifications of our customers on a contract basis, subject to certain terms and conditions. In the event of a substantial delay in the completion of our offshore cabins, we may be liable to pay damages under our contracts with them. Further, upon the occurrence of force majeure events such as adverse weather or other acts of God which are beyond our control, such delays may continue indefinitely beyond the time stipulated in the contracts thereby affecting our ability to complete our offshore cabins, and our customers may be entitled to rescind their contracts with us, which may adversely affect our financial condition and results of operations. We might not be paid for services rendered to existing principals Pursuant to the respective consultancy agreements and representative agreements entered into with our principals, we are only entitled to the payment of commission income when the end customers have made payments to our principals. As such, in the event that payments by the end customers to our principals are delayed and/or there are defaults in payments by the end customers, our financial condition and results of operations may be materially and adversely affected. The offshore oil and gas equipment industry is highly cyclical and may lead to volatility in the demand for our products and services, which may have a material adverse effect upon our financial condition and results of operations The demand for offshore oil and gas equipment and offshore services are dependent upon the capital expenditure plans of offshore oil and gas companies in the oil and gas industry, which is driven primarily by the following factors: demand for and price of oil and gas; global and regional economic and political conditions which could have an impact upon, among other things, the supply of, demand for and price of, oil, and the demand for various types of offshore rig equipment; environmental concerns and regulations; adverse weather conditions; the laws, regulations, policies and directives relating to energy, investment, taxation and such other laws and regulations promulgated by the governments from which our customers will need to obtain licences to engage in the exploration, development and production of oil and gas; and domestic or international regulations that may effectively cause reductions in offshore oil and gas exploration and development. Low oil and gas prices tend to reduce oil and gas exploration and production activities. When this occurs, major oil and gas companies typically reduce their capital expenditure, which may result in a decrease in demand for our offshoreoil and gas equipment, including drilling equipment, high pressure pipes and services, which could adversely affect our financial condition and results of operations. 29

38 RISK FACTORS Further, as construction of offshore drilling rigs generally takes between twenty-four to forty months, a reduction in the capital expenditure of the oil and gas companies may result in the delay of the completion of the offshore drilling rigs or substantial discounts in the prices of offshore drilling rigs and consequently the demand for and pricing of our products. The success of our business depends, in part, upon our ability to anticipate, and effectively manage, our business in the event of a reduction in the levels of activity in the exploration, development and production of oil and gas as a result of any change in capital spending by the offshore oil and gas equipment industry. We may not be able to effectively manage these risks, which could have a material adverse effect on our financial condition and results of operations. The offshore oil and gas equipment industry in which we operate is highly competitive, and we may not be able to compete with companies which have greater resources than us or resources which are more desirable to our customers The marketing and distribution of offshore oil and gas equipment and services in the offshore oil and gas equipment industry is highly competitive primarily because there are low barriers of entry for potential competitors and/or new entrants to market and distribute offshore drilling equipment and services for and on behalf of principals into countries such as Singapore, China, Malaysia and Vietnam. Some of our competitors have longer operating histories and greater financial, technical, marketing and other resources than us and may therefore be betterpositioned to expand their businesses and increase their market share. They may also engage in aggressive pricing, forcing us to lower our prices significantly in order to secure contracts, thereby lowering our profit margins and cash flow. In particular, we face intense competition from local and international offshore drilling equipment and service providers for the marketing of offshore drilling equipment and services for and on behalf of Aker Solutions in Singapore, China, Malaysia, Indonesia, Thailand and Vietnam. This is especially when there are only two major suppliers of drilling equipment packages and services in the world, and such equipment is critical in the construction of offshore rigs. As we represent some of our suppliers and principals on a non-exclusive basis, such suppliers and principals may appoint other representatives or agents to act for them in the same regions where we represent them. If we fail to compete successfully with existing competitors and new entrants in the market, our business, financial condition and results of operations will be adversely affected. We may face product liability claims In general, our products are distributed to our customers with limited product quality warranties of an average of 12 months from the date of delivery of such products or the delivery of the rig, whichever is later. We are in turn indemnified by our suppliers for any claims made by our customers on such products. However, in the event that we are unable to obtain such indemnities and/or recourse from our suppliers for such claims, our financial condition and results of operations will be adversely affected. Moreover, in the event that we are required to defend against such product liability claims and even if we are successful in doing so, we may have to incur and expend substantial costs, time and resources in the process, and we may not be able to seek an indemnity or compensation from our suppliers in relation to defending such product liability claims. Any such claims brought against us may also result in adverse publicity on our corporate name and reputation, which may in turn adversely affect our financial condition and results of operations. 30

39 RISK FACTORS We may incur liability for damages or losses due to accidents in excess of our insurance coverage We maintain insurance policies to provide insurance coverage of our business in countries in which we operate. However, the nature of our business operations, particularly the use of our high pressure pipes, fittings and manifolds for offshore oil and gas drilling purposes entails inherent risks of marine disasters such as oil spills, property loss, interruptions to operations caused by adverse weather conditions and mechanical failures. In the event that equipment and offshore structures are lost or damaged, we may be liable to repair and/or replace the defective equipment and offshore structures. Even if such damages and/or losses are provided for under our insurance coverage, there can be no guarantee that our insurers will not contest and/or pay a particular insurance claim. In addition, in the event of damages and/or losses in excess of our insurance coverage, we may be required to make up for the shortfall. The occurrence of any such events may result in reduced revenue, increased costs and increased premiums payable by us for our insurance coverage. We may not be able to obtain additional funding in the form of equity or debt required for our future growth, and such inability to obtain additional funding could have a material adverse impact on our future plans and growth We may pursue opportunities to grow our business through setting up new manufacturing facilities, expanding our current manufacturing facilities, acquisitions, joint ventures, strategic investments or alliances, shortly after the Placement. However, we cannot assure you that we will be able to obtain additional funding on terms that are acceptable to us or at all. If we are unable to do so, our future plans and growth may be adversely affected. An issue of Shares or other securities to raise funds will dilute Shareholders equity interests and may, in the case of a rights issue, require additional investments by Shareholders. Further, if new Shares are issued and placed to new and/or existing Shareholders after the Placement, they may be priced at a discount to the then prevailing market price of our Shares trading on the SGX-ST, in which case, existing Shareholders equity interest will be diluted. If we fail to utilise the new equity to generate a commensurate increase in earnings, our EPS will be diluted and this could lead to a decline in our Share price. Dilution in Shareholders equity interests may occur even if the issue of Shares is at a premium to the market price. Any additional debt funding may restrict our freedom to operate our business as it may have restrictive covenants that: limit our ability to pay dividends or require us to seek consents for the payment of dividends; increase our vulnerability to general adverse economic and industry conditions; require us to dedicate a portion of our cash flow from operations to repayments of our debt, thereby reducing the availability of our cash flow for capital expenditures, working capital and other general corporate purposes; and limit our flexibility in planning for, or reacting to, changes in our businesses and our industry. 31

40 RISK FACTORS Our products are subject to certification requirements for our operations Our products are generally subject to certifications in accordance with the requirements of our customers. For instance, our lifeboats and davits may be required to be delivered with third party certifications such as from ABS or DNV, in compliance with the International Convention for the Safety of Life at Sea (SOLAS) In addition, our portable offshore cabins are also required to be certified by international third party certification organisations such as DNV, BV or ABS, on the design and conformity of the respective portable offshore cabin to its proposed functions, prior to delivery to our customers. In the event that we or our principals and suppliers are unable to procure, or do so in a timely manner, the requisite certifications, we may be unable to deliver or may experience delays in the delivery of such products to our customers and this will have an adverse effect on our financial condition and results of operations. Some of our loan agreements contain restrictive covenants that limit the liquidity of our assets. In addition, our failure to comply with such restrictive covenants could adversely affect our operating flexibility Some of our loan agreements impose operating and financial restrictions on us. These restrictions may limit our ability to dispose of our assets. Some of our loan agreements also contain certain restrictive covenants, including, inter alia, that we will not create or permit any security interest over our assets other than in favour of the relevant lenders and that we will maintain a certain net worth. Therefore, we may, under certain circumstances, need to seek permission from lenders in order to engage in certain corporate actions. Our failure to comply with these obligations under our loan agreements could result in an event of default. An event of default, if not cured or waived, will result in repayment of outstanding indebtedness pursuant to our loan agreements and may impair our ability to obtain further advances for our working capital purposes and letters of credit, which may adversely affect our business and financial condition, as well as our results of operations. Terrorist attacks or increased hostilities could adversely affect our performance Terrorist attacks and other acts of violence or war around the world may adversely affect the regional and worldwide financial markets. The occurrence of any of these events may result in a loss of business confidence, which could potentially lead to economic recession and have an adverse effect upon our business, results of operations and financial condition. In addition, any deterioration in international relations may result in increased investor concern regarding regional stability which may, in turn, adversely affect the price of our Shares. There can be no guarantee that social and civil disturbances will not occur in the future and on a wider scale, or that any such disturbances will not, directly or indirectly, materially and adversely affect our businesses, financial conditions and results of operations. 32

41 RISK FACTORS We are exposed to risks in respect of outbreaks of influenza A (H1N1), bird flu, virus and/or other communicable diseases An outbreak of influenza A (H1N1), bird flu, virus and/or other communicable diseases in Singapore and the region could materially and adversely affect our business. In the event that an outbreak occurs at any of our facilities, we may be required to temporarily suspend part of our operations and quarantine all affected employees, which could materially and adversely affect our operations and business. RISKS RELATING TO OUR SHARES Investments in shares quoted on Catalist involve a higher degree of risk and can be less liquid than shares quoted on the Main Board of the SGX-ST An application has been made for our Shares to be listed for quotation on Catalist, a listing platform designed primarily for fast-growing and emerging or smaller companies to which a higher investment risk tends to be attached as compared to larger or more established companies. An investment in shares quoted on Catalist may carry a higher risk than an investment in shares quoted on the Main Board of the SGX-ST. Catalist was newly formed in December 2007 and the future success and liquidity in the market of our Shares cannot be guaranteed. An active trading market for our Shares may not develop and their trading price may fluctuate significantly Prior to the Placement, there has been no public market for our Shares. Although an application has been made to the SGX-ST for the listing and quotation of our Shares on Catalist, there can be no assurance that there will be a liquid public market for our Shares after the Placement. If an active public market for our Shares does not develop after the Placement, the market price and liquidity of our Shares may be adversely affected. The Placement Price may not necessarily be indicative of the market price of the Shares after the Placement is complete. The prices at which our Shares will trade after the Placement will be determined by the market and may be influenced by many factors, including: our financial results; our history and prospects, and those of the industry in which we compete; an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues and cost structures; the present state of our development; the valuation of publicly-traded companies that are engaged in business activities similar to ours; and any volatility in the securities markets of Singapore. You may be unable to resell your Shares at or above the Placement Price and, as a result, you may lose all or part of your investment. 33

42 RISK FACTORS Our plan for the use of the proceeds of the Placement to invest in manufacturing facilities and companies may not materialise We intend to use a portion of the proceeds from the Placement for expansion of manufacturing capabilities through investment in manufacturing facilities and companies supporting the offshore oil and gas equipment industry. However, we currently do not have any definite or specific commitments for any particular investments and our current intentions may not materialise. Because of the number and variability of factors that determine our use of the Placement proceeds for such investment, the actual uses of the net proceeds from the Placement may vary substantially from our current intention as described in the section entitled Use of Proceeds and Listing Expenses of this Offer Document. External factors could affect the trading price of our Shares The market price of our Shares may fluctuate significantly and rapidly as a result of, amongst others, the following factors, some of which are beyond our control: variation in our results of operations; changes in securities analysts estimates of our results of operations and recommendations; announcements by us of significant contracts, acquisitions, strategic alliances or joint ventures or capital commitments; additions or departures of key personnel; fluctuations in stock market prices and volume; involvement in litigation; general economic and stock market conditions; and discrepancies between our actual operating results and those expected by investors and securities analysts. If there is significant volatility in the price of our Shares following the Placement, Shareholders may lose all or part of their investment, and litigation may be brought against us Following the Placement, the price at which our Shares will trade may be volatile. The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices of securities. These fluctuations often have been unrelated or disproportionate to the operating performance of publicly-traded companies. In the past, following periods of volatility in the market price of a particular company s securities, litigation has sometimes been brought against that company. If similar litigation is instituted against us, it could result in substantial costs and divert management s attention and resources from our core business. 34

43 RISK FACTORS New investors will incur immediate dilution in NTA per Share The Placement Price of our Shares is substantially higher than our NTA per Share based on the post-placement issued share capital. Investors who subscribe for Shares in the Placement will therefore experience immediate and significant dilution of approximately cents per Share. If we are liquidated based on the NTA immediately following the Placement, each investor who subscribed for Shares would receive less than the price they paid for their Shares. Issue of Shares by us and sale of Shares by our existing Shareholders may adversely affect the price of our Shares In the event we issue or our Shareholders sell substantial amounts of our Shares in the public market following this Placement, the price of our Shares may be adversely affected. Such issues or sales may also make it difficult for us to issue new Shares and raise the necessary funds in the future at a time and price we deem appropriate. Except as otherwise described in the section entitled Shareholders - Moratorium of this Offer Document, there will be no restriction on the ability of our Controlling Shareholders to sell their Shares either on Catalist or otherwise. Investors may not be able to participate in future rights issues or certain other equity issues of our Shares In the event that we issue new Shares, we will be under no obligation to offer those Shares to our existing Shareholders at the time of issue, except where we elect to conduct a rights issue. However, in electing to conduct a rights issue or certain other equity issues, we will have the discretion and may also be subject to certain regulations as to the procedures to be followed in making such rights available to Shareholders or in disposing of such rights for the benefit of such Shareholders and making the net proceeds available to them. In addition, we may not offer such rights to our existing Shareholders having an address in jurisdictions outside of Singapore. Accordingly, certain Shareholders may be unable to participate in future equity offerings by us and may experience dilution in their shareholdings as a result. We may be controlled by our existing Controlling Shareholders, which may limit your ability to influence the outcome of decisions requiring the approval of Shareholders The existing Controlling Shareholders of our Company will in aggregate beneficially own approximately 81.3% of our enlarged share capital following the completion of the Placement. These Controlling Shareholders, if acting together, would be able to significantly influence our Company s affairs and business which require Shareholders approval, including the election of directors and the approval of certain transactions including mergers. In particular, our Controlling Shareholders, Jonathan Hui and David Tan, will each own approximately 40.7% of our enlarged share capital pursuant to the Placement. Jonathan Hui and David Tan hold in aggregate sufficient Shares to pass a proposed ordinary or special resolution of Shareholders by their affirmative votes on a poll or to defeat a proposed ordinary or special resolution of Shareholders by their negative votes on a poll. This concentration of ownership could have the effect of delaying or preventing a change in control of our Company or otherwise discourage a potential acquirer from attempting to obtain control of our Company at a premium over the then current market price of our Shares. 35

44 RISK FACTORS Certain transactions may dilute the ownership of holders of our Shares As a result of adjustments from stock splits and combinations, stock dividends, extraordinary cash dividends, rights offerings, certain issuances of new Shares and certain other actions we may take to modify our capital structure, Shareholders may experience a dilution in their ownership of our Shares. There can be no assurance that we will not take any of the foregoing actions, and such actions in the future may adversely affect the market price of our Shares. Negative publicity which includes those relating to any of our Directors, Executive Officers or Controlling Shareholders may adversely affect our Share price Negative publicity or announcements relating to any of our Directors, Executive Officers or Controlling Shareholders may adversely affect the market perception of our Group or the performance of the price of our Shares, whether or not it is justified. For instance, such negative publicity may arise from unsuccessful attempts in joint ventures, acquisitions or take-overs, or involvement in insolvency proceedings. 36

45 USE OF PROCEEDS AND LISTING EXPENSES USE OF PROCEEDS The net proceeds from the Placement (after deducting estimated expenses of approximately S$1.11 million (1) ) is estimated to be approximately S$4.29 million. We intend to utilise the net proceeds from the Placement to fund the following activities: Estimated amount allocated for each dollar of the gross proceeds to be raised by us from the Amount in issue of the aggregate Placement Shares Use of Proceeds (S$ million) (in cents) Expansion of manufacturing capabilities through investment in manufacturing facilities and companies supporting the offshore oil and gas equipment industry Payment for redeemed Preference Shares (2) General working capital purposes Total Notes: (1) This excludes listing expenses of approximately S$183,627 which was paid to PPCF in the form of PPCF Shares. (2) Pursuant to a supplemental agreement dated 14 September 2009 between Enterprise Fund, our Company and our Executive Directors, namely Jonathan Hui and David Tan, our Company redeemed 1,999,992 RP A Shares and 4 RP B Shares for an amount of approximately S$2.0 million. It was agreed that the outstanding redemption amount, together with interest accruing thereon, shall be paid to Enterprise Fund no later than seven days after the date of the Listing or 31 July 2010, whichever is earlier. The Preference Shares were redeemed because the proposed listing of the Company is a redemption event pursuant to the agreement dated 25 June 2008 entered into between the same parties in relation to the issue of the Preference Shares. Further details of our use of proceeds may be found in the section entitled General Information on our Group Business Strategies and Future Plans of this Offer Document. The foregoing discussion represents our best estimate of our allocation of the net proceeds of the Placement based on our current plans and estimates regarding our anticipated expenditures. Actual expenditures may vary from these estimates and we may find it necessary or advisable to reallocate the net proceeds within the categories described above or to use portions of the net proceeds for other purposes. In the event that we decide to reallocate the net proceeds of the Placement for other purposes, we will publicly announce our intention to do so through a SGXNET announcement to be posted on the internet at the SGX-ST website, Pending the deployment of the net proceeds from the issue of Placement Shares as aforesaid, the funds will be placed in short-term deposits or money market instruments, as our Directors may, in their absolute discretion, deem fit. There is no minimum amount which, in the reasonable opinion of our Directors, must be raised by the Placement. 37

46 USE OF PROCEEDS AND LISTING EXPENSES LISTING EXPENSES The estimated amount of the expenses of the Placement and of the application for listing, including the placement commission, brokerage, management fees, audit and legal fees, fees payable to the SGX-ST as well as other incidental fees is approximately S$1.30 million. A breakdown of these estimated expenses to be borne by us in relation to the Placement is as follows: As a percentage of the gross proceeds to be raised by us from the issue of the Estimated amount Placement Shares Expenses borne by us (S$ 000) (%) Listing and application fees Professional fees (1) Placement commission and brokerage (2) Miscellaneous expenses Total 1, Notes: (1) The professional fees include the management fee of S$183,627 to be paid to the Manager and Sponsor which has been satisfied in full by the issue and allotment of 680,100 new Shares to PPCF at the Placement Price, representing approximately 0.75% of the issued share capital of the Company prior to the Placement. (2) A commission of 4.0% of the Placement Price for each Placement Share is payable to DBS Vickers, as the Placement Agent. 38

47 PLAN OF DISTRIBUTION The Placement Price is determined by us, after negotiations with the Manager and Sponsor, and the Placement Agent based on, inter alia, market conditions and the estimated market demand for our Shares, determined through a book-building process. The Placement Price is the same for all Placement Shares and is payable in full on application. Investors may apply to subscribe for any number of Placement Shares at the Placement Price in integral multiples of 1,000 Shares. In order to ensure a reasonable spread of shareholders, we have the absolute discretion to prescribe a limit to the number of Placement Shares to be allotted to any single applicant and/or allot the Placement Shares above or under such prescribed limit as we shall deem fit. Pursuant to the Management Agreement entered into between us and PPCF as set out in the section entitled General and Statutory Information Management and Placement Arrangements of this Offer Document, PPCF has agreed to manage and sponsor the Listing. Placement Shares The Placement Shares are made available to retail and institutional investors who apply through their brokers or financial institutions by way of the Application Forms. Pursuant to the Placement Agreement entered into between us and DBS Vickers as set out in the section entitled General and Statutory Information Management and Placement Arrangements of this Offer Document, DBS Vickers agreed to, subscribe and/or procure subscriptions for the Placement Shares at the Placement Price for a placement commission of 4.0% of the Placement Price for each Placement Share subscribed by the Placement Agent, and/or for which the Placement Agent has procured subscriptions. DBS Vickers has appointed PPCF as a Sub-Placement Agent and may, at its absolute discretion appoint one or more subplacement agents for the Placement Shares. Subscription for Placement Shares Subscribers of the Placement Shares may be required to pay brokerage or selling commission of up to 1.0% (and any applicable taxes such as goods and services taxes as applicable) of the Placement Price to the Placement Agent or any sub-placement agent who may be appointed by the Placement Agent for their own account only. As at the Latest Practicable Date, save for our Independent Directors, none of our Directors or Controlling Shareholders intends to subscribe for the Placement Shares. To the best of our knowledge and belief, none of the members of our management or employees intends to subscribe for more than 5.0% of the Placement Shares. To the best of our knowledge and belief, we are not aware of any person who intends to subscribe for more than 5.0% of the Placement Shares. However, through a book-building process to assess market demand for our Shares, there may be person(s) who may indicate an interest to subscribe for Shares amounting to more than 5.0% of the Placement Shares. If such person(s) were to make an application for more than 5.0% of the Placement Shares pursuant to the Placement and are subsequently allotted such number of Shares, we will make the necessary announcements at an appropriate time. The final allotment of Placement Shares will be in accordance with the shareholding spread and distribution guidelines as set out in Rule 406 of the Rules of Catalist. No Shares shall be ssued and allotted on the basis of this Offer Document later than six months after the date of registration of this Offer Document by the SGX-ST. 39

48 PLAN OF DISTRIBUTION Interests of Manager, Sponsor and Sub-Placement Agent In the reasonable opinion of our Directors, the Manager, Sponsor and Sub-Placement Agent, PPCF, does not have a material relationship with our Company, save as disclosed below and in the sections entitled Interested Person Transactions Potential Conflicts of Interests and General and Statutory Information Management and Placement Arrangements of this Offer Document: (a) (b) (c) PPCF is the Manager, Sponsor and Sub-Placement Agent of the Listing; PPCF will be the Continuing Sponsor of our Company for a period of three years from the date our Company is admitted and listed on the Catalist; and Pursuant to the Management Agreement between our Company and PPCF pursuant to which PPCF shall sponsor and manage the Listing, our Company shall issue and allot to PPCF 680,100 shares of value S$183,627 credited as fully paid-up, being part of their fees as the Manager and Sponsor. Such shares will represent 0.75% of the issued share capital of our Company prior to the Placement. After completion of the relevant moratorium periods as set out in the section entitled Shareholders - Moratorium of this Offer Document, PPCF will be disposing its shareholding interest in our Company at its discretion. 40

49 DIVIDEND POLICY We declared and paid an interim dividend of S$2.00 per Share and final dividend of S$1.10 per Share for FY2008. In addition, we declared and paid interim dividends of S$ per Share and S$0.23 per Share for FY2009. In respect of the Preference Shares, we have declared and paid dividends amounting to S$153, for FY2008 and an interim dividend amounting to S$190, for FY2009. Save as disclosed above, we did not declare any dividends in FY2006, FY2007, FY2008 and FP2009. Any dividends paid historically are not necessarily indicative of our future financial performance and/or dividends declared after our admission to the Official List of Catalist (if any). We currently do not have a formal dividend policy. The form, frequency and amount of future dividends on our Shares will depend on our earnings and financial position, our results of operations, our capital needs, our plans for expansion and other factors as our Directors may deem appropriate. Future dividends (if any) will be paid by us as and when approved by our Shareholders and Directors. We may, by ordinary resolution of our Shareholders, approve dividends at a general meeting, but we may not pay dividends in excess of the amount recommended by our Directors. The declaration and payment of final dividends will be determined at the sole discretion of our Directors subject to the approval of our Shareholders. Our Directors may also declare and pay an interim dividend without the approval of our Shareholders. Subject to the above, our Directors intend to recommend and distribute a final dividend of S$300,000 for FY2009 after the Placement (the Proposed Dividends ). However, investors should note that all the foregoing statements, including the statements on the Proposed Dividends, are merely statements of our present intention and shall not constitute legally binding statements in respect of our future dividends, which may be subject to modification (including reduction or non-declaration thereof) in our Directors sole and absolute discretion. Investors should not treat the Proposed Dividends as an indication of our Group s future dividend policy. No inference should or can be made from any of the foregoing statements as to our actual future profitability or ability to pay dividends in any of the periods discussed. For information relating to taxes payable on dividends, please refer to the section entitled Taxation of this Offer Document. 41

50 SHARE CAPITAL Our Company (Company Registration Number: D) was incorporated in Singapore on 1 October 1994 under the Companies Act as a private company limited by shares, under the name of Sin-China Holdings Pte. Ltd. The name of our Company was changed to Seabreeze International Pte Ltd on 10 September 1996, and was subsequently changed to SBI Offshore Pte. Ltd. on 16 June Our Company was converted into a public limited company and the name of our Company changed to SBI Offshore Limited in connection therewith on 21 October As at the Latest Practicable Date, our issued and paid-up ordinary share capital was S$900,000 comprising 900,000 Shares. At an extraordinary general meeting held on 28 September 2009, our Shareholders approved, inter alia, the following: (a) (b) (c) (d) (e) (f) (g) the sub-division of each Share into 100 Shares; the conversion of our Company into a public limited company and the change of our name to SBI Offshore Limited ; the adoption of a new set of Articles of Association; the allotment and issue of the Placement Shares which are the subject of the Placement, on the basis that the Placement Shares, when allotted, issued and fully-paid, will rank pari passu in all respects with the existing Shares; the allotment and issue of the PPCF Shares pursuant to the Management Agreement, on the basis that the PPCF Shares, when allotted, issued and fully paid, will rank pari passu in all respects with the existing Shares; the adoption of the Share Option Scheme, and the authorisation of our Directors, pursuant to Section 161 of the Companies Act, to allot and issue Shares upon the exercise of Options granted under the Share Option Scheme and that authority be given to our Directors to grant Options at a discount up to a maximum discount of 20.0%; the authorisation of our Directors, pursuant to Section 161 of the Companies Act, to: (i) (ii) allot and issue Shares whether by way of rights, bonus or otherwise (including Shares as may be issued pursuant to any Instrument (as defined below) made or granted by our Directors while this resolution is in force notwithstanding that the authority conferred by this resolution may have ceased to be in force at the time of issue of such Shares), and/or 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 warrants, debentures or other instruments convertible into Shares, at any time and upon such terms and conditions and for such purposes and to such persons as our Directors may in their absolute discretion deem fit, provided that the aggregate number of Shares issued pursuant to such authority (including Shares to be issued pursuant to any Instrument but excluding Shares which may be issued pursuant to any adjustments ( Adjustments ) effected under any relevant Instrument, which 42

51 SHARE CAPITAL Adjustment shall be made in compliance with the provisions of the Rules of Catalist for the time being in force (unless such compliance has been waived by the SGX-ST) and our Articles of Association for the time being), shall not exceed 100.0% of our issued ordinary share capital (excluding treasury shares) immediately after the Placement, and provided that the aggregate number of such Shares to be issued other than on a pro rata basis in pursuance to such authority (including Shares to be issued pursuant to any Instrument but excluding shares which may be issued pursuant to any Adjustment effected under any relevant Instrument) to the existing Shareholders shall not exceed 50.0% of our issued ordinary share capital (excluding treasury shares) immediately after the Placement, and, unless revoked or varied by our Company in general meeting, such authority shall continue in force until the conclusion of the next annual general meeting of our Company or the date by which the next annual general meeting of our Company is required by law to be held, whichever is the earlier; and (h) without prejudice to the generality of, and pursuant and subject to the approval of the general mandate to issue Shares set out in paragraph (g) above, authorisation of our Directors, pursuant to Section 161 of the Companies Act, to issue Shares other than on a pro rata basis, at a discount to the weighted average price of the Shares for trades done on the SGX-ST for the full market day on which the placement or subscription agreement is signed (or if not available, the weighted average price based on trades done on the preceding market day), exceeding 10.0% but not more than 20.0%, at any time and upon such terms and conditions and for such purposes and to such persons as our Directors may in their absolute discretion deem fit. As at the date of this Offer Document, there is only one class of shares in the capital of our Company, being the Shares. A summary of our Articles of Association relating to, amongst others, the voting rights of our Shareholders is set out under Appendix C entitled Summary of Selected Articles of Association of our Company to this Offer Document. There are no founder, management, deferred or unissued Shares reserved for issuance for any purpose. Save for the share options which may be granted under the Share Option Scheme, no person has been, or is permitted to be, given an option to subscribe for any securities of our Company or any of our subsidiaries. Details of changes in our issued and paid-up ordinary share capital in the past three years prior to the Latest Practicable Date and immediately after the Placement are as follows: Shares Number of Shares S$ Issued and fully paid Shares as at 1 January , ,000 Issued and fully paid Shares as at 31 December , ,000 Share Split 90,000, ,000 Issue of the PPCF Shares pursuant to the Management Agreement 680, ,627 Issued and paid-up share capital immediately before the Placement 90,680,100 1,083,627 New Shares issued pursuant to the Placement 20,000,000 5,400,000 Post-Placement issued and paid-up share capital 110,680,100 6,483,627 43

52 SHARE CAPITAL Details of changes in our issued and paid-up preference share capital in the past three years prior to the Latest Practicable Date are as follows: Preference Shares Number of Preference Shares S$ Issued and fully paid Preference Shares as at 22 July ,000,000 (1) 1,000,000 Issued and fully paid Preference Shares as at 28 August ,000,000 (2) 2,000,000 Issued and fully paid Preference Shares as at 3 October ,000,000 (3) 3,000,000 Issued and fully paid Preference Shares as at 31 December ,000,000 (3) 3,000,000 Issued and fully paid Preference Shares as at 30 January ,999,997 (4) 2,999,997 Issued and fully paid Preference Shares as at 23 July ,999,994 (5) 2,999,994 Issued and fully paid Preference Shares as at 17 August ,999,996 (6) 1,999,996 All outstanding Preference Shares are fully redeemed as at 14 September Notes: (1) The issued and fully paid Preference Shares comprise 999,996 RP A Shares and 4 RP B Shares. (2) The issued and fully paid Preference Shares comprise 1,999,992 RP A Shares and 8 RP B Shares. (3) The issued and fully paid Preference Shares comprise 2,999,988 RP A Shares and 12 RP B Shares. (4) The issued and fully paid Preference Shares comprise 2,999,988 RP A Shares and 9 RP B Shares. (5) The issued and fully paid Preference Shares comprise 2,999,988 RP A Shares and 6 RP B Shares. (6) The issued and fully paid Preference Shares comprise 1,999,992 RP A Shares and 4 RP B Shares. Please refer to the section entitled General and Statutory Information Share Capital of this Offer Document for details of changes in the issued and paid-up capital of our subsidiaries and our associated company within the three years preceding the Latest Practicable Date. Save as disclosed above, there were no changes in the issued and paid-up ordinary share capital and issued and paid-up preference share capital of our Company within the three years preceding the Latest Practicable Date. 44

53 SHARE CAPITAL The shareholders equity of our Company as at 30 April 2009, after adjustments to reflect the PPCF Shares pursuant to the Management Agreement and the issue of the Placement Shares pursuant to the Placement are set out below. This should be read in conjunction with the financial statements: After the issue As at of PPCF Shares 30 April 2009 and the Placement Equity (S$ 000) (S$ 000) Share capital 900 6,484 Foreign currency translation account (327) (327) Accumulated profits 4,060 4,060 Total 4,633 10,217 45

54 SHAREHOLDERS OWNERSHIP STRUCTURE The interests in Shares of our Directors and Controlling Shareholders immediately before and after the Placement are set out below: Immediately Before the Placement Immediately After the Placement Direct Interest Deemed Interest Direct Interest Deemed Interest Number Number Number Number of Shares % of Shares % of Shares % of Shares % Directors Jonathan Hui 45,000, ,000, David Tan (1) 45,000, ,000, Chen Jiayu (Alternate Director to David Tan) (1) Giang Sovann Chan Lai Thong Wong Kok Hoe Others PPCF (2) 680, , ( Public New public investors 20,000, Total 90,680, (3) 110,680, Notes: (1) Our Executive Director, David Tan, is the father of Chen Jiayu, the alternate Director to David Tan. (2) Pursuant to the Management Agreement entered into between our Company and PPCF pursuant to which PPCF shall sponsor and manage the Listing, our Company shall allot and issue to PPCF, 680,100 Shares of value S$183,627 credited as fully paid up as part of their fees as the Manager and Sponsor, such Shares shall represent 0.75% of the issued share capital of the Company prior to the Placement. (3) Does not add up due to rounding. (4) Our Independent Directors, Mr Giang Sovann, Mr Chan Lai Thong, and Mr Wong Kok Hoe, each intends to subscribe for 10,000 Placement Shares at the Placement Price. In the event that our Independent Directors subscribe for any Placement Shares, they may dispose or transfer any or all of their Shares after the admission of our Company to the Official List of Catalist. Save as disclosed above, there are no other relationships between our Directors and Controlling Shareholders. Save as disclosed above, to the best of the knowledge of our Directors, we are not directly or indirectly owned or controlled, whether severally or jointly, by any other corporation, any government or other natural or legal person. The Shares held by our Directors and Controlling Shareholders do not carry different voting rights from the Placement Shares which are the subject of the Placement. Our Directors are not aware of any arrangement the operation of which may, at a subsequent date, result in a change in control of our Company. 46

55 SHAREHOLDERS SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP The significant changes in the percentages of ownership of our Directors and Controlling Shareholders in our Company for the last three years prior to the Latest Practicable Date are as follows: As at As at As at the Latest 31 December October 2008 Practicable Date Number of Number of Number of Shares % Shares % Shares % Directors Jonathan Hui 450, , David Tan (1) 900, , , Chen Jiayu (alternate Director to David Tan) (1) Giang Sovann Chan Lai Thong Wong Kok Hoe Total 900, , , Note: (1) Our Executive Director, David Tan, is the father of Chen Jiayu, the alternate Director to David Tan. Save as disclosed above, there were no significant changes in the percentages of ownership of our Directors and Controlling Shareholders in our Company for the last three years prior to the Latest Practicable Date. MORATORIUM Controlling Shareholders Each of Jonathan Hui and David Tan has undertaken not to, amongst others, sell, contract to sell, realise, transfer, pledge, grant any option to or otherwise dispose of any part of their interests in our Company for a period of six months commencing from the date of our admission to the Official List of Catalist (the Initial Period ) and at least 50.0% of each of their original shareholdings for a period of six months following the Initial Period. Others PPCF has undertaken not to sell, contract to, amongst others, sell, realise, transfer, pledge, grant any option to or otherwise dispose of any part of its interest in our Company for the Initial Period and at least 50.0% of its original shareholding for a period of six months after the Initial Period. After completion of the aforesaid moratorium periods, PPCF will be disposing its shareholding interest in our Company at its discretion. 47

56 DILUTION Dilution is the amount by which the Placement Price paid by the subscribers of our Shares in this Placement exceeds our NTA per Share after the Placement. Our NTA per Share as at 30 April 2009 before adjusting for the estimated net proceeds due to us from the Placement and based on our pre-placement issued and paid-up share capital of 90,680,100 Shares was 4.78 cents per Share. Pursuant to the Placement in respect of 20,000,000 Placement Shares at the Placement Price, our NTA per Share as at 30 April 2009 after adjusting for the estimated net proceeds due to us from the Placement and based on our post-placement issued and paid-up share capital of 110,680,100 Shares would have been 7.62 cents. This represents an immediate increase in NTA per Share of 2.84 cents or approximately 59.41% to our existing Shareholders and an immediate dilution in NTA per Share of cents or approximately 71.77% to our new public investors. The following table illustrates the dilution per Share based on the Placement Price of S$0.27 per Share: Cents Placement Price per Share NTA per Share based on the pre-placement ordinary share capital of 90,680,100 Shares 4.78 Increase in NTA per Share attributable to existing shareholders 2.84 NTA per Share after the Placement of Placement Shares and the issue of PPCF Shares, and based on the post-placement share capital of 110,680,100 Shares 7.62 Dilution in NTA per Share to new public investors The following table summarises the total number of Shares acquired by our existing Shareholders (taking into account the Share Split) as at the date of lodgment of this Offer Document, the total consideration paid by them and the effective cash cost per Share to our existing Shareholders of Shares acquired by them from the date of incorporation, and to PPCF for the PPCF Shares and the public Shareholders who subscribe for the Placement Shares at the Placement Price pursuant to the Placement: Existing shareholders Effective Number Total cash cost of Shares consideration per Share (S$) (cents) David Tan 45,000, , Jonathan Hui 45,000, , PPCF (1) 680, , New public investors 20,000,000 5,400, Note: (1) Pursuant to the Management Agreement entered into between our Company and PPCF pursuant to which PPCF shall sponsor and manage the Listing, our Company shall issue and allot to PPCF 680,100 Shares of value S$183,627 credited as fully paid-up as part of their fees as the Manager and Sponsor, such shares shall represent 0.75% of the issued share capital of the Company prior to the Placement. 48

57 GROUP STRUCTURE Our Group structure as at the Latest Practicable Date is as follows: Company 80.0% 35.0% 90.0% SBI Pacific Jiangyin Neptune Jiangyin SBI Offshore The details of our subsidiaries and associated company as at the date of this Offer Document are as follows: Date and place Principal business/ % effective Name of company of incorporation Principal place of business ownership SBI Pacific (1) 3 November 2006 / Designing, engineering, fabrication and 80.0% Singapore assembly of certified offshore portable cabins / Singapore Jiangyin Neptune (2) 28 January 2003 / Manufacturing of marine equipment, 35.0% Jiangsu Province, PRC fittings and boats / PRC Jiangyin SBI 3 March 2009 / Manufacturing of offshore rig equipment 90.0% Offshore (3) Jiangsu Province, PRC such as offshore cabins / PRC Notes: (1) With effect from July 2008, pursuant to the completion of acquisition of 80.0% of the share capital of SBI Pacific by our Company. Please refer to the section entitled General Information on our Group History of this Offer Document for more details. The remaining 20.0% of its share capital is owned by Swanlin Offshore Pte. Ltd., a company incorporated in Singapore and engaged in the business of being sub-contractors to rig builders for services such as electrical and instrumentation installation. Please refer to the section entitled General Information on our Group History of this Offer Document for more details. (2) With effect from March 2009, pursuant to the completion of acquisition of 35.0% of the equity interest of Jiangyin Neptune by our Company. The remaining 65.0% of its equity interest is owned by Jiangyin Wanjia, a company incorporated in the PRC and engaged in the business of investment holdings. All future capital injection in Jiangyin Neptune will be subject to the approval of the majority of the Directors, one of which shall be an Independent Director. Please refer to the section entitled General Information on our Group History of this Offer Document for more details. (3) The remaining 10.0% of its equity interest is owned by Jiangyin Wanjia. Please refer to the section entitled General Information on our Group History of this Offer Document for more details. None of the above subsidiaries or associated company is listed on any stock exchange. 49

58 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL INFORMATION OF OUR GROUP The following discussion of our business, financial condition and results of operations for our Group should be read in conjunction with Audited Consolidated Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 and our Unaudited Condensed Consolidated Financial Statements for the financial period from 1 January 2009 to 30 April 2009 as set out in Appendices A and B to this Offer Document respectively, and the related notes elsewhere in this Offer Document. Operating Results of Our Group Audited Unaudited (S$ 000) FY2006 FY2007 FY2008 FP2008 FP2009 CONTINUING OPERATIONS Revenue 6,260 6,258 11,720 2,706 6,306 Cost of sales (5,557) (5,474) (8,279) (2,311) (4,322) Gross profit , ,984 Other income General and administrative expenses (426) (395) (684) (87) (338) Other expenses (59) (102) - Finance costs (24) (32) (187) (11) (11) Share of results of an associate 14 Profit before income tax from continuing operations , ,720 Income tax expense (39) (59) (536) (51) (356) Profit after income tax from continuing operations , ,364 DISCONTINUED OPERATIONS Profit after income tax from discontinued operations , ,364 Attributable to: Equity holders of the Company , ,414 Minority interest (16) (50) , ,364 EPS from continuing and discontinued operations (cents) (1) EPS from continuing operations (cents) (1) Adjusted EPS from continuing and discontinued operations (cents) (2) Adjusted EPS from continuing operations (cents) (2)

59 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Notes: (1) For comparative purposes, our EPS has been calculated based on our profit for the year and our pre- Placement issue share capital of 90,680,100 Shares. (2) For comparative purposes, our adjusted EPS has been calculated based on our profit for the year and our post-placement issued share capital of 110,680,100 Shares. Financial Position of our Group Audited as at Unaudited as at (S$ 000) 31 December April 2009 Non-current assets Property, plant and equipment 1,032 1,068 Investment in an associate 2,623 Intangible asset ,321 3,990 Current assets Inventories Trade and other receivables 7,385 6,710 Cash and cash equivalents 2,017 3,908 Total current assets 9,654 11,035 10,975 15,025 Less: Current liabilities Trade and other payables 3,317 5,775 Finance lease payable Bank borrowing Redeemable preference shares 3,000 2,944 Current income tax payable ,941 9,644 Net current assets 2,713 1,391 Non-current liabilities Finance lease payable Bank borrowing Deferred tax liabilities Net assets 3,370 4,753 Capital and reserves Share capital Foreign currency translation account (425) (327) Accumulated profits 2,904 4,060 Equity attributable to equity holders of the Company 3,379 4,633 Minority interests (9) 120 Total equity 3,370 4,753 NTA per Share (cents) (1) Adjusted NTA per Share (cents) (2)

60 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Notes: (1) The NTA per Share is computed based on the NTA of our Group and our pre-placement share capital of 90,680,100 Shares. (2) The adjusted NTA per Share is computed based on the NTA of our Group and our post-placement share capital of 110,680,100 Shares. OVERVIEW We are principally involved in: (a) the marketing and distribution of (i) lifeboats and davits, (ii) high pressure pipes, fittings and manifolds for drilling rigs, (iii) offshore drilling equipment and/or package and (iv) HVAC systems, to rig builders in Asia; and (b) the design and manufacture of certified portable offshore cabins for oil services companies. Our marketing and distribution network lies primarily in Singapore, Malaysia, China, Indonesia, Philippines and Vietnam, and we are in the process of transferring our production operations to Jiangyin, PRC. For further details, please refer to section entitled General Information on our Group Business Overview of this Offer Document. Revenue We derive our revenue from our Marketing and Distribution business and Manufacturing business. The revenue from our Marketing and Distribution business is derived from agency commissions received from our principals for services rendered in relation to marketing of offshore oil and gas equipment and services (such as offshore drilling equipment and/or package, and HVAC systems), from the sale of lifeboats and davits, high pressure pipes, fittings and manifolds for offshore rigs and the trading of timber products (such as wooden mouldings and floor pieces for the home-building industry) and these in total accounted for approximately 100.0%, 100.0%, 93.7% and 99.0% of our total revenue for FY2006, FY2007, FY2008 and FP2009 respectively. We discontinued our timber business in April The revenue from our Manufacturing business is derived from the sale of certified offshore cabins to our customers and accounted for approximately 6.3% and 1.0% of our total revenue for FY2008 and FP2009 respectively. No revenue was derived from our Manufacturing business in FY2006 and FY2007 as we only acquired SBI Pacific in July Revenue from our Marketing and Distribution business is recognised upon passage of title to the customer which coincides with the delivery and acceptance. Revenue from our Manufacturing business is recognised when the services have been performed and accepted by the customers in accordance to the relevant terms and conditions of the contracts. Our revenue is affected by, amongst others, the following key factors: (a) fluctuations in oil and gas prices may affect demand for offshore rigs which in turn affect demand for the services provided by rig builders whom we sell our products and services to; 52

61 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (b) (c) (d) our ability to compete successfully with our competitors and new entrants to our industry; our ability to retain existing principals and customers and secure new principals and customers; and our ability to meet customers requirements in a satisfactory and timely manner. Please refer to section entitled Risk Factors of this Offer Document for further details. Cost of sales Cost of sales comprises mainly purchases of finished goods from our suppliers, direct labour costs, agents commissions, and freight, insurance and handling charges. Cost of sales were approximately S$5.56 million, S$5.47 million, S$8.28 million and S$4.32 million in FY2006, FY2007, FY2008 and FP2009 respectively and accounted for approximately 88.8%, 87.5%, 70.6% and 68.5% of our total revenue respectively. Our Group s purchases comprise mainly finished products such as lifeboats and davits, high pressure pipes, fittings and manifolds for offshore rigs. In addition, SBI Pacific purchases raw materials and components required for the manufacture of certified offshore cabins. Purchases were approximately S$5.34 million, S$5.28 million, S$6.85 million and S$3.68 million in FY2006, FY2007, FY2008 and FP2009 respectively and accounted for approximately 96.0%, 96.4%, 82.8% and 85.1% of our total cost of sales respectively. Direct labour costs comprise mainly wages, overtime and government levies for our workers. Direct labour costs were approximately S$247,000 and S$79,000 in FY2008 and FP2009 respectively and accounted for approximately 3.0% and 1.8% of our total cost of sales respectively. There were no direct labour costs in FY2006 and FY2007 as we only commenced our manufacturing operations in July Agents commissions comprise fees paid for services rendered by our agents engaged to assist us in the marketing of our principals products and services. We pay these agents commissions when we have received the corresponding commission incomes from our principals. Agents commissions were approximately S$14,000, S$2,000, S$597,000 and S$350,000 in FY2006, FY2007, FY2008 and FP2009 respectively and accounted for approximately 0.3%, 0.0%, 7.2% and 8.1% of our total cost of sales respectively. Freight, handling and insurance costs are incurred to transport finished products such as lifeboats and davits, high pressure pipes, fittings and manifolds for offshore rigs, and certified offshore cabins to our warehouse and/or to our customers. Freight, handling and insurance costs were approximately S$0.13 million, S$0.19 million, S$0.36 million and S$0.12 million in FY2006, FY2007, FY2008 and FP2009 respectively and accounted for approximately 2.4%, 3.5%, 4.4% and 2.8% of our total cost of sales respectively. Our cost of sales is affected by, amongst others, the following key factors: (a) (b) Fluctuations in the cost of finished goods purchased from our suppliers; Fluctuations in the cost of raw materials purchased for the manufacture of certified offshore cabins such as steel-based materials and fibre glass; 53

62 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (c) (d) Fluctuations in foreign currencies in which we make payments for our purchases, direct labour costs and freight costs, in particular S$, GBP and other foreign currencies, as our functional currency is US$. 25.4%, 49.4%, 32.4% and 3.2% of our purchases were denominated in S$ in FY2006, FY2007, FY2008 and FP2009 respectively, 51.4%, 44.3%, 1.2% and 0.0% of our purchases were denominated in GBP in FY2006, FY2007, FY2008 and FP2009 respectively, and 0.3% of our purchases were denominated in other foreign currencies in FP2009. There were no purchases denominated in other foreign currencies in each of FY2006, FY2007 and FY2008; and Timing of delivery of finished products to our customers. Generally, if a customer places an order for delivery more than 12 months after the order date, the cost of purchasing the finished product from our supplier will be higher than if the delivery date is within 12 months of the order date. The higher cost is due to our supplier factoring in cost inflation in his price quotation to us. Please refer to section entitled Risk Factors of this Offer Document for further details. Gross profit margin Our gross profit margins were approximately 11.2%, 12.5%, 29.4% and 31.5% in FY2006, FY2007, FY2008 and FP2009 respectively. The gross profit margins relating to our Marketing and Distribution business were approximately 11.2%, 12.5%, 28.6% and 32.9% in FY2006, FY2007, FY2008 and FP2009 respectively. The gross profit/(loss) margins relating to our Manufacturing business were approximately 0.8% and (1.4)% in FY2008 and FP2009 respectively. We acquired SBI Pacific in July 2008 (which had commenced operations in January 2008) and is currently yet to be running at full production capacity. Accordingly, our Manufacturing business has a lower profit margin as it currently does not enjoy the economies of scale of manufacturing in larger volumes. Other income Other income comprises mainly rental income, interest income and foreign currency exchange gains, and amounted to approximately S$60,000, S$112,000, S$289,000 and S$71,000 in FY2006, FY2007, FY2008 and FP2009 respectively and accounted for approximately 1.0%, 1.8%, 2.5% and 1.1% of our total revenue respectively. General and administrative expenses General and administrative expenses, comprising mainly remuneration of Directors and employees and depreciation charges, amounted to approximately S$0.43 million, S$0.40 million, S$0.68 million and S$0.34 million in FY2006, FY2007, FY2008 and FP2009 respectively and accounted for approximately 6.8%, 6.3%, 5.8% and 5.4% of our total revenue respectively. Other expenses Other expenses comprise mainly loss from disposal of equipment and foreign currency exchange losses. These other expenses were approximately S$59,000 in FY2006 and accounted for approximately 0.9% of our total revenue. We have no other expenses incurred for FY2007, FY2008 and FP

63 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Finance costs Finance costs comprise mainly finance lease interest, interest on bank loan and dividends on redeemable preference shares. These finance costs were approximately S$24,000, S$32,000, S$187,000 and S$11,000 in FY2006, FY2007, FY2008 and FP2009 respectively and contributed to less than 1.0% of our total revenue in each of FY2006, FY2007 and FP2009, and approximately 1.6% of total revenue in FY2008. Income tax expense Our Company and our Singapore incorporated subsidiary, SBI Pacific, are subject to income tax at the statutory tax rate in Singapore. Our PRC incorporated subsidiary, Jiangyin SBI Offshore, is subject to income tax at the statutory tax rate in the PRC. Jiangyin SBI Offshore was incorporated on 3 March 2009 and there was no taxable income from the date of incorporation to 30 April Our effective tax rates were approximately 15.4%, 12.6%, 18.8% and 20.7% for FY2006, FY2007, FY2008 and FP2009 respectively. In FY2006 and FY2007, our effective tax rates were lower than the Singapore statutory tax rate of 20.0% and 18.0% respectively. This was because we enjoyed a taxation exemption in FY2006 and FY2007 on the first S$100,000 and S$300,000 taxable income respectively which we were able to maximise due to our lower profits in FY2006 and FY2007. In FY2008 and FP2009, our effective tax rates were higher than the Singapore statutory tax rate of 18.0% and 17.0% respectively. The higher effective tax rates in FY2008 and FP2009 were due to the non-recognition of deferred tax assets arising from unabsorbed tax losses of SBI Pacific and non-deductibility of certain expenses for tax purposes. RESULTS OF OPERATIONS Breakdown of our past performance by geographical markets Our operations are substantially based in Singapore and we derive our revenue and profits substantially from Singapore, PRC and Europe. We set out below the breakdown of our revenue by geographical region for FY2006, FY2007, FY2008, FP2008 and FP2009: Audited Unaudited FY2006 FY2007 FY2008 FP2008 FP2009 S$ 000 % S$ 000 % S$ 000 % S$ 000 % S$ 000 % Singapore 6, , , , , People s Republic of China 2, Southeast Asia other than Singapore Europe , , Others Total 6, , , , ,

64 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In FY2006 and FY2007, we derived our revenue substantially from Singapore as we distributed our lifeboats and davits, high pressure pipes and fittings primarily to customers in Singapore. Pursuant to our appointments as representatives of several entities within Aker Solutions, 21.6% and 32.1% of our revenue in FY2008 and FP2009 respectively were derived in Europe. In addition, we procured new customers in the PRC as our Marketing and Distribution business expanded through our marketing efforts. In FY2008, we made a non-recurring sale to a customer in Malaysia that contributed to 7.6% of our revenue. Breakdown of our past performance by business segments We set out below the breakdown of our revenue by business segment for FY2006, FY2007, FY2008, FP2008 and FP2009: Audited Unaudited FY2006 FY2007 FY2008 FP2008 FP2009 S$ 000 % S$ 000 % S$ 000 % S$ 000 % S$ 000 % Marketing and Distribution 6, , , , , Manufacturing Total 6, , , , , Our Manufacturing business was acquired in July 2008 and our plans are to expand our manufacturing operations gradually over the next few years. We set out below the breakdown of our gross profit by business segment for FY2006, FY2007, FY2008, FP2008 and FP2009: Audited Unaudited FY2006 FY2007 FY2008 FP2008 FP2009 S$ 000 % S$ 000 % S$ 000 % S$ 000 % S$ 000 % Marketing and Distribution , , Manufacturing (93) (4.7) Total , ,

65 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our Manufacturing business was acquired in July 2008 and is currently yet to be running at full production capacity. Accordingly, our Manufacturing business has a lower profit margin as it currently does not enjoy the economies of scale of manufacturing in larger volumes. We set out below the breakdown of our gross profit margin by business segment for FY2006, FY2007, FY2008, FP2008 and FP2009: Audited Unaudited Gross profit /(loss) margin FY2006 FY2007 FY2008 FP2008 FP2009 Marketing and Distribution (%) Manufacturing (%) 0.8 (1.4) REVIEW OF PAST PERFORMANCE FY2006 vs FY2007 Revenue Our total revenue remained relatively consistent at approximately S$6.26 million for each of FY2006 and FY2007. Cost of sales and gross profit margins Our cost of sales decreased marginally by approximately S$0.09 million or approximately 1.5% from approximately S$5.56 million in FY2006 to approximately S$5.47 million in FY2007. Gross profit margins increased by approximately 1.3% from approximately 11.2% in FY2006 to approximately 12.5% in FY2007. The increase was generally consistent with the decrease in our cost of sales of 1.5% from FY2006 to FY2007. Other income Our other income increased by approximately S$52,000 or 86.0% from approximately S$60,000 in FY2006 to approximately S$112,000 in FY2007. The increase was mainly due to foreign exchange gains of S$71,000 in FY2007. General and administrative expenses Our general and administrative expenses decreased by approximately S$31,000 or approximately 7.4% from approximately S$426,000 in FY2006 to approximately S$395,000 in FY2007. The decrease was mainly due to an approximate S$76,000 decrease in remuneration of Directors, which was partially offset by an increase of approximately S$22,000 and S$15,000 in remuneration and expenses for medical benefits of employees respectively in FY2007. Other expenses Our other expenses amounted to approximately S$59,000 in FY2006. There were no other expenses recorded in FY2007. Other expenses comprised mainly foreign currency exchange losses of approximately S$58,000 in FY2006. Foreign currency exchange gain of approximately S$71,000 in FY2007 was recorded in other income. Finance costs Our finance costs in each of FY2006 and FY2007 contributed to less than 1.0% of total revenue. 57

66 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Profit before income tax from continuing operations Our profit before income tax from continuing operations increased by approximately S$0.22 million or 84.6% from approximately S$0.25 million in FY2006 to approximately S$0.47 million in FY2007. The increase was mainly due to increases in gross profit of approximately S$0.08 million and net foreign currency exchange gains of approximately S$0.07 million, and decreases of approximately S$0.03 million in general administrative expenses and approximately S$0.06 million in other expenses. Income tax expense Our effective tax rate decreased from approximately 15.4% in FY2006 to approximately 12.6% in FY2007. Our effective tax rate decreased primarily due to the increase in exemption on taxable income from S$100,000 in FY2006 (year of assessment 2007) to S$300,000 in FY2007 (year of assessment 2008). Profit after income tax from discontinued operations Our profit after income tax from discontinued operations decreased by approximately S$26,000 or 58.2% from approximately S$44,000 in FY2006 to approximately S$18,000 in FY2007. This profit after income tax from discontinued operations was derived from the trading of timber products (such as wooden mouldings and floor pieces for the homebuilding industry). We discontinued the sale of timber products in April 2007 to focus on our Marketing and Distribution business due to increasing rig orders globally following sharp increases in oil prices in FY2007. FY2007 vs FY2008 Revenue Our total revenue increased by approximately S$5.46 million or 87.3% from approximately S$6.26 million in FY2007 to approximately S$11.72 million in FY2008. The increase in revenue was contributed by an approximate S$4.72 million increase in revenue from our Marketing and Distribution business and an approximate S$0.74 million increase in revenue from our Manufacturing business. The increase in revenue contribution from our Marketing and Distribution business is due mainly to an increase of approximately S$2.82 million in agency commission primarily as a result of to our appointment as a representative of Aker MH which started in FY2008 as well as approximately S$1.90 million increase in sales of lifeboats and davits, high pressure pipes, fittings and manifolds as we were able to secure new customers. The increase in revenue contribution from our Manufacturing business is due to the acquisition of our certified offshore cabin manufacturing business in July Cost of sales and gross profit margins In line with the increase in our revenue, our cost of sales increased by approximately S$2.81 million or 51.2% from approximately S$5.47 million in FY2007 to approximately S$8.28 million in FY2008. The increase in cost of sales was attributable to an approximate S$2.16 million and S$0.65 million increase in cost of sales incurred by our Marketing and Distribution business and Manufacturing business respectively due to increases in purchases of lifeboats and davits, high pressure pipes, fittings and manifolds following increases in sales volume. 58

67 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Gross profit margins increased by approximately 16.9% from approximately 12.5% in FY2007 to approximately 29.4% in FY2008. The increase was primarily due to the increase in agency commissions which generally commanded higher profit margins as no purchases of goods were necessary. Other income Our other income increased by approximately S$0.18 million or 157.8% from approximately S$0.11 million in FY2007 to approximately S$0.29 million in FY2008. The increase was mainly due to an increase in interest received of S$0.15 million from an advance made to Jiangyin Neptune and an increase in foreign exchange gains of approximately S$31,000. General and administrative expenses Our general and administrative expenses increased by approximately S$289,000 from approximately S$0.40 million in FY2007 to approximately S$0.68 million in FY2008. The increase was mainly due to increases in remuneration to Directors and salaries paid to new hires of approximately S$0.13 million. Finance costs Our finance costs increased by approximately S$0.16 million or 478.5% from approximately S$32,000 in FY2007 to approximately S$187,000 in FY2008. The increase was mainly due to dividends paid to redeemable preference shareholder of S$0.15 million. Profit before income tax from continuing operations Our profit before income tax from continuing operations increased by approximately S$2.39 million or 510.1% from approximately S$0.47 million in FY2007 to approximately S$2.86 million in FY2008. The increase was mainly due to increases in gross profits of approximately S$2.66 million and other income of approximately S$0.18 million. This increase was partially offset by an increase in finance costs of approximately S$0.15 million and general administrative expenses of approximately S$0.29 million. Income tax expense Our effective tax rate increased from approximately 12.6% in FY2007 to approximately 18.8% in FY2008 as a result of our taxable income increasing in line with the increase in our profit before income tax from continuing operations and diluting the effects from the taxation exemption on the first S$300,000 of taxable income. FP2009 vs FP2008 Revenue Our total revenue increased by approximately S$3.60 million or 133.0% from approximately S$2.71 million in FP2008 to approximately S$6.31 million in FP2009. The increase in total revenue was contributed by an approximate S$3.54 million increase in revenue from our Marketing and Distribution business and an approximate S$0.10 million increase in revenue from our Manufacturing business. The increase in revenue contribution from our Marketing and Distribution business was due to an increase of approximately S$2.02 million in agency commissions as well as approximately S$1.52 million in higher sales of lifeboats and davits, high pressure pipes, fittings and manifolds. The increase in revenue contribution from our Manufacturing business is due to the acquisition of SBI Pacific only in July

68 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cost of sales and gross profit margins In line with the increase in our total revenue, our cost of sales increased by approximately S$2.01 million or 87.0% from approximately S$2.31 million in FP2008 to approximately S$4.32 million in FP2009. The increase was mainly due to higher level of sales activity in FP2009. The increase in cost of sales was attributable to an approximately S$1.86 million and S$0.15 million increase in cost of sales contributed by our Marketing and Distribution business and Manufacturing business respectively. Gross profit margins increased by 16.9% from approximately 14.6% in FP2008 to approximately 31.5% in FP2009. The increase was primarily due to the increase in agency commissions which generally commanded higher profit margins as no purchases of goods were necessary. Other income Our other income increased by approximately S$59,000 or 495.1% from approximately S$12,000 in FP2008 to approximately S$71,000 in FP2009. The increase was mainly due to higher foreign currency exchange gains of approximately S$15,000 and interest income of approximately S$44,000. General and administrative expenses Our general and administrative expenses increased by approximately S$251,000 or 289.7% from approximately S$87,000 in FP2008 to approximately S$338,000 in FP2009. The increase was mainly due to increases in remuneration to Directors and salaries paid to new hires. Our Executive Chairman and Chief Executive Officer, Jonathan Hui, only commenced receiving remuneration with effect from July Other expenses Our other expenses amounted to approximately S$102,000 in FP2008 due to foreign currency exchange loss. There were no other expenses incurred in FP2009. Finance costs Our finance costs remained stable at approximately S$11,000 for FP2008 and FP2009. Share of results of an associate Our share of results of an associate amounted to approximately S$14,000 in FP2009. This was derived from our associate, Jiangyin Neptune, which we acquired a 35% shareholding interest on 3 March Profit before income tax Our profit before income tax increased by approximately S$1.51 million or 731.8% from approximately S$0.21 million in FP2008 to approximately S$1.72 million in FP2009. The increase was mainly due to increases in gross profit of approximately S$1.59 million, other income of approximately S$0.06 million, approximately S$0.01 million in share of results from our associated company, Jiangyin Neptune, and a decrease in approximately S$0.10 million of other expenses. This increase was partially offset by an increase in general and administrative expenses of approximately S$0.25 million. 60

69 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Income tax expense Our effective tax rate decreased from approximately 24.5% in FP2008 to approximately 20.7% in FP2009 mainly due to the unrealised foreign currency exchange losses in FP2008 which were not deductible for income tax purpose thereby resulting in a higher effective tax rate in FP2008. REVIEW OF FINANCIAL POSITION Non-current assets Non-current assets comprised mainly property, plant and equipment, investment in an associated company and intangible asset. As at 30 April 2009, our non-current assets of approximately S$3.99 million accounted for approximately 26.6% of our total assets and comprised mainly the following: (a) (b) (c) net book value of property, plant and equipment amounting to approximately S$1.07 million; carrying amount of investment in our associated company, Jiangyin Neptune, amounting to approximately S$2.62 million; and carrying amount of intangible asset amounting to approximately S$0.30 million. As at 31 December 2008, our non-current assets of approximately S$1.32 million accounted for approximately 12.0% of our total assets and comprised mainly the following: (a) (b) net book value of property, plant and equipment amounting to approximately S$1.03 million; and carrying amount of intangible asset amounting to approximately S$0.29 million. Current assets Current assets comprised mainly inventories, trade and other receivables, and cash and cash equivalents. As at 30 April 2009, our current assets of approximately S$11.03 million accounted for approximately 73.4% of our total assets and comprised mainly the following: (a) (b) (c) inventories, comprising mainly raw materials and work-in-progress, amounting to approximately S$0.42 million; trade and other receivables amounting to approximately S$6.71 million, comprising mainly trade receivables of approximately S$4.16 million, and amount due from an associate of approximately S$2.46 million; and cash and cash equivalents amounting to approximately S$3.90 million. 61

70 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As at 31 December 2008, our current assets of approximately S$9.65 million accounted for approximately 88.0% of our total assets and comprised mainly the following: (a) (b) (c) inventories, comprising mainly raw materials and work-in-progress, amounting to approximately S$0.25 million; trade and other receivables amounting to approximately S$7.38 million, comprising mainly trade receivables of approximately S$2.11 million and amount due from third parties of approximately S$5.17 million (of which, S$4.90 million was due from Jiangyin Neptune, which subsequently became an associated company of our Group in March 2009); and cash and cash equivalents amounting to approximately S$2.02 million. Non-current liabilities Non-current liabilities comprised mainly bank borrowings and finance lease payable. As at 30 April 2009, our non-current liabilities of approximately S$0.63 million accounted for approximately 6.1% of our total liabilities and comprised mainly the following: (a) (b) bank borrowings amounting to approximately S$0.61 million; and finance lease payable of approximately S$0.02 million. As at 31 December 2008, our non-current liabilities of approximately S$0.66 million accounted for approximately 8.7% of our total liabilities and comprised mainly the following: (a) (b) bank borrowings amounting to approximately S$0.64 million; and finance lease payables of approximately S$0.02 million. Current liabilities Current liabilities comprised mainly trade and other payables, finance lease payable, bank borrowings, redeemable preference shares and current income tax payable. As at 30 April 2009, our current liabilities of approximately S$9.64 million accounted for approximately 93.9% of our total liabilities and comprised mainly the following: (a) (b) (c) trade and other payables amounting to approximately S$5.77 million, mainly comprising of trade payables of approximately S$2.82 million, advance payments from customers of approximately S$0.32 million, accrued operating expenses of approximately S$1.24 million, dividend payable of approximately S$0.36 million, amounts due to Directors of approximately S$0.66 million, and non-trade amounts due to related parties of approximately S$0.34 million; finance lease payable amounting to approximately S$0.02 million; bank borrowings amounting to approximately S$0.06 million; 62

71 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (d) (e) redeemable preference shares amounting to approximately S$2.94 million (1) ; and current income tax payable amounting to approximately S$0.85 million. Note: (1) Our actual total redeemable preference shares amount outstanding is approximately S$3.00 million based on the source currency. Our carrying value of S$2.94 million as at 30 April 2009 is lower due to the translation of the outstanding amount from the source currency to the functional currency and then to the presentation currency. As at 31 December 2008, our current liabilities of approximately S$6.94 million accounted for approximately 91.3% of our total liabilities and comprised mainly the following: (a) (b) (c) (d) (e) trade and other payables amounting to approximately S$3.32 million, comprising of trade payables of approximately S$1.60 million, advance payments from customers of approximately S$0.50 million, accrued operating expenses of approximately S$0.68 million, dividend payable of approximately S$0.20 million, non-trade payable to our Executive Chairman and Chief Executive Officer, Jonathan Hui, of S$0.18 million, and non-trade amounts due to related parties of approximately S$0.16 million; finance lease payable amounting to approximately S$0.02 million; bank borrowings amounting to approximately S$0.05 million; redeemable preference shares amounting to S$3.00 million; and current income tax payable amounting to approximately S$0.55 million. Capital and reserves As at 30 April 2009, our capital and reserves amounted to approximately S$4.75 million. This comprised issued share capital of S$0.90 million, foreign currency translation account of approximately S$(0.33) million, accumulated profits of approximately S$4.06 million and minority interests of approximately S$0.12 million. As at 31 December 2008, our capital and reserves amounted to approximately S$3.37 million. This comprised mainly issued share capital of S$0.90 million, foreign currency translation account of approximately S$(0.42) million, accumulated profits of approximately S$2.90 million and minority interests of approximately S$(0.01) million. 63

72 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Cash flow summary The following table sets out a summary of our Group s cash flow for FY2006, FY2007, FY2008 and FP2009: (S$ 000) FY2006 FY2007 FY2008 FP2009 Net cash from/(used in) operating activities 440 (325) 261 4,474 Net cash (used in)/from investing activities (6) 50 (312) (2,666) Net cash from/(used in) financing activities 304 (38) 1,091 (135) Net change in cash and cash equivalents 738 (313) 1,040 1,673 Cash and cash equivalents at the beginning of financial year/period 446 1, ,586 Currency translation differences (85) (169) (71) 212 Cash and cash equivalents at the end of financial year/period 1, ,586 3,471 FY2006 In FY2006, we generated net cash flows from operating activities of approximately S$0.44 million. Our operating cashflows before working capital changes amounted to approximately S$0.33 million. The net working capital inflow was mainly due to: (a) (b) (c) (d) (e) increase in inventories of approximately S$1.18 million; increase in trade and other receivables of approximately S$0.20 million; increase in trade and other payables of approximately S$1.49 million; net interest receipts of approximately S$3,000; and income tax paid of approximately S$9,000. The increase in inventories of approximately S$1.18 million was primarily due to purchases of timber products (such as wooden mouldings and floor pieces for the homebuilding industry) towards the end of FY2006 in anticipation of new orders to be received in FY2007. These inventories were classified as assets of disposal group classified as held for sale as at 31 December 2006 as our Group disposed of our timber business in April The increase in trade and other receivables of approximately S$0.20 million was in line with the increase in our revenue in FY2006. The increase in trade and payables of approximately S$1.49 million of which approximately S$1.03 million was due to an increase in trade payables arising from higher purchases which was in line with the increase in our revenue in FY2006 as well as an increase in purchases of timber products towards the end of FY2006 in anticipation of new orders to be received in FY2007. In FY2006, we utilised approximately S$6,000 in investing activities for the purchase of plant and equipment and currency translation differences. 64

73 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net cash generated from financing activities amounted to approximately S$0.30 million, of which approximately S$0.35 million was attributable to a decrease in the amount of fixed deposits pledged to DBS Bank as collateral for the term loan obtained for the financing of our property at Paya Ubi Industrial Park and was partially offset by the repayment of bank borrowing of approximately S$0.05 million. FY2007 In FY2007, we used net cash flows from operating activities of approximately S$0.32 million. Our operating cash flows before working capital changes amounted to approximately S$0.54 million. The net working capital outflow was mainly due to: (a) (b) (c) (d) (e) decrease in inventories of approximately S$1.18 million; increase in trade and other receivables of approximately S$1.22 million; decrease in trade and other payables of approximately S$0.79 million; net interest payments of approximately S$14,000; and income tax paid of approximately S$18,000. The decrease in inventories of approximately S$1.18 million was primarily due to the disposal of approximately S$1.18 million of timber products in April This disposal of inventories was made in conjunction with the disposal of our timber business in April The increase in trade and other receivables of approximately S$1.22 million was primarily due to an increase of approximately S$1.29 million in other receivables resulting mainly from net advances of approximately S$0.92 million and S$0.23 million made to Jiangyin Neptune and our Executive Director, David Tan, respectively. This was partially offset by a decrease in trade receivables of approximately S$0.08 million due to higher amounts owing by a customer in FY2006. The decrease in trade and other payables of approximately S$0.79 million of which approximately S$0.98 million was due to a decrease in trade payables due to a reduction in our purchases following the discontinuation of our timber business. There was also a reduction in amount due to our Executive Director, David Tan, of approximately S$0.04 million. These were offset by an increase in advance payments from customers of approximately S$0.23 million. In FY2007, we generated approximately S$0.05 million in investing activities primarily from currency translation differences of approximately S$0.06 million which was partially offset by purchase of plant and equipment of approximately S$0.01 million. Net cash used in financing activities amounted to approximately S$0.04 million, of which approximately S$0.05 million was used for the repayment of bank borrowing and was partially offset by a decrease in the amount of fixed deposits pledged to DBS Bank as collateral for the term loan obtained for the financing of our property at Paya Ubi Industrial Park of approximately S$0.01 million. 65

74 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FY2008 In FY2008, we generated net cash flows from operating activities of approximately S$0.26 million. Our operating cash flows before working capital changes amounted to approximately S$2.93 million. The net working capital outflow was mainly due to: (a) (b) (c) (d) (e) increase in inventories of approximately S$0.16 million; increase in trade and other receivables of approximately S$2.85 million; increase in trade and other payables of approximately S$0.42 million; net interest payments of approximately S$17,000; and income tax paid of approximately S$58,000. The increase in inventories of approximately S$0.16 million was primarily due to purchases of materials and components for our cabin manufacturing business which we acquired only in July The increase in trade and other receivables of approximately S$2.85 million was primarily due to an increase of approximately S$3.99 million additional advances made to Jiangyin Neptune and partially offset by a decrease in trade receivables of approximately S$0.77 million, a decrease in non-trade receivables from a related party, Jiangyin Seapower, of approximately S$0.14 million and a decrease in amount due to our Executive Director, David Tan, of approximately S$0.23 million. The increase in trade and other payables of approximately S$0.42 million was primarily due to an increase of approximately S$0.53 million in accrued operating expenses, an increase in amounts owing to our Executive Chairman and Chief Executive Officer, Jonathan Hui, of S$0.18 million and approximately S$0.32 million in trade payables, which were partially offset by approximately S$0.08 million arising from a decrease in amounts due to related parties and a decrease of approximately S$0.53 million in advance payments from customers. The increase in accrued operating expenses arose from an increase in freight and handling charges for new orders made in line with the increase in our sales volume. In FY2008, we utilised approximately S$0.31 million in investing activities primarily for purchase of plant and equipment amounting to approximately S$0.01 million and an investment in SBI Pacific of approximately S$0.30 million. Net cash generated from financing activities amounted to approximately S$1.09 million, of which S$3.00 million were proceeds from the issuance of redeemable preference shares which was offset by dividends paid amounting to approximately S$1.60 million, repayment of bank borrowing approximately of S$0.05 million, and an increase in fixed deposits pledged with OCBC Bank of approximately S$0.25 million for proposed banking facilities to be extended, which we did not execute. The pledged deposits were subsequently withdrawn by us in May

75 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FP2009 In FP2009, we generated net cash flows from operating activities of approximately S$4.47 million. Our operating profit before working capital changes amounted to approximately S$1.69 million. The net working capital inflow was mainly due to: (a) (b) (c) (d) (e) increase in inventories of approximately S$0.17 million; decrease in trade and other receivables of approximately S$0.72 million; increase in trade and other payables of approximately S$2.30 million; net interest payments of approximately S$12,000; and income tax paid of approximately S$60,000. The increase in inventories of approximately S$0.17 million was primarily due to an increase in our work-in-progress balance in our Manufacturing Business. The decrease in trade and other receivables of approximately S$0.72 million was a result of the capitalisation of approximately S$2.44 million of advances made to Jiangyin Neptune in FY2008 (our Group acquired a 35.0% shareholding interest in Jiangyin Neptune in March 2009), decreases in other receivables from a third party of approximately S$0.26 million and accrued interest receivable of approximately S$0.09 million, which were partially offset by an increase in non-trade receivables from related parties of approximately S$0.02 million and in trade receivables of approximately S$2.05 million. The increase in trade and other payables of approximately S$2.30 million of which approximately S$1.22 million was due to an increase in trade payables, increase in accrued operating expenses of approximately S$0.56 million, amount payable to directors of approximately S$0.48 million and amounts payable to related parties approximately S$0.18 million. These were partially offset by a decrease in advance payments to suppliers of approximately S$0.17 million. In FP2009, we utilised approximately S$2.67 million in investing activities primarily for the investment in our associate, Jiangyin Neptune. The consideration for the investment was satisfied in full by the capitalisation of approximately S$2.61 million of advances made to Jiangyin Neptune. Net cash used in financing activities amounted to approximately S$0.14 million, of which approximately S$0.10 million was used to repayment of dividends to our existing shareholders and repayment of bank borrowing of approximately S$0.03 million. Source of Liquidity Our Directors are of the reasonable opinion that, after having made due and careful enquiry and after taking into account the cash flows generated from our operations and our existing cash and cash equivalents, the working capital available to us as at the date of lodgment of this Offer Document is sufficient for present requirements and for at least 12 months after the listing of our Company on Catalist. 67

76 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Sponsor is of the reasonable opinion that, after having made due and careful enquiry and after taking into account the cash flows generated from our Group s operations and existing cash and cash equivalents, the working capital available to our Group as at the date of lodgment of this Offer Document is sufficient for present requirements and for at least 12 months after the listing of our Company on Catalist. CAPITAL EXPENDITURE AND DIVESTMENTS Capital expenditure For the period from 1 May 2009 to Latest FY2006 FY2007 FY2008 FP2009 Practicable Date (S$ 000) (S$ 000) (S$ 000) (S$ 000) (S$ 000) Plant and equipment (1) Jiangyin Neptune (2) 2,608 Total , Notes: (1) This relates to costs of plant and equipment acquired from 1 May 2009 to Latest Practicable Date to increase our production capacity. (2) Our Company acquired 35.0% equity interest of Jiangyin Neptune on 3 March Please refer to the section entitled General Information On Our Group History of this Offer Document for more details. The above capital expenditures were financed by internally generated resources. Capital divestment We have not made any material capital divestments for each of FY2006, FY2007, FY2008 and FP2009. Commitments As at the Latest Practicable Date, we have the following finance lease commitments: (S$ 000) Within 1 year 15 After 1 year but within 5 years 12 More than 5 years Total 27 SEASONALITY Our business is not affected by any seasonality factors. 68

77 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INFLATION Inflation did not have a material impact on our business in FY2006, FY2007, FY2008 and FP2009 as we were generally able to pass on any increase in costs to our customers. FOREIGN EXCHANGE MANAGEMENT Due to the nature of our operations, we conduct our business predominantly in US$ and S$. Our functional currency is US$ and our reporting currency is S$. Our financial condition and results of operations are exposed to transaction and translation risks relating to foreign exchange rates. Please refer to section entitled Risk Factors of this Offer Document for further details. The percentage of our revenue and purchases denominated in US$, S$ and other foreign currencies for FY2006, FY2007, FY2008 and FP2009 are set out below: As a percentage of revenue (%) FY2006 FY2007 FY2008 FP2009 US$ S$ GBP Total As a percentage of purchases (%) FY2006 FY2007 FY2008 FP2009 US$ S$ GBP Other foreign currencies Total Our net foreign exchange (losses) / gains for FY2006, FY2007, FY2008 and FP2009 are set out below: FY2006 FY2007 FY2008 FP2009 Net foreign exchange (losses) / gains (S$ 000) (58) As a percentage of our profit before income tax from continuing operations (%) Currently, we do not have a formal foreign currency hedging policy with respect to our foreign exchange exposure. We will continue to monitor our foreign exchange exposure and may consider using foreign currency instruments to hedge our foreign exchange if necessary. An adoption of any foreign exchange hedging policy will require the approval of our Board. Our hedging procedures will also be subject to review and approval by our Audit Committee. 69

78 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SIGNIFICANT ACCOUNTING POLICY CHANGES The accounting policies have been consistently applied by our Group during the period under review, except for the changes in accounting policies and related notes as discussed in our Audited Consolidated Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 and our Unaudited Condensed Consolidated Financial Statements for the financial period from 1 January 2009 to 30 April

79 CAPITALISATION AND INDEBTEDNESS The following table, which should be read in conjunction with our Audited Consolidated Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 and our Unaudited Condensed Consolidated Financial Statements for the financial period from 1 January 2009 to 30 April 2009 as set out in Appendices A and B to this Offer Document respectively, shows our cash and bank balances, capitalisation and indebtedness as at 31 August 2009: (i) (ii) on a proforma basis before adjustments; and as adjusted to give effect to the allotment and issuance of the PPCF Shares, net proceeds from the Placement and application of the net proceeds from the Placement for the repayment of the redeemed Preference Shares. (S$ 000) As at 31 August 2009 As adjusted Cash and bank balances 3,801 5,903 Short term debt Trade and other payables 4,111 4,111 Bank borrowings Finance lease payable Redeemed preference shares 2,000 Current income tax payable 1,035 1,035 7,664 5,664 Long term debt Bank borrowings 2,114 2,114 Finance lease payable Deferred tax liabilities 6 6 2,133 2,133 Equity attributable to Shareholders 4,231 8,517 Minority interests Total capitalisation and indebtedness 14,204 16,490 We finance our operations and capital expenditures through a combination of Shareholders equity, net cash generated from operating activities and borrowings from financial institutions and credit facilities extended by suppliers, as well as banking facilities comprising bridging loan, term loan and credit financing or letter of credit. As at the Latest Practicable Date, the total banking facilities available to us amounted to S$3.32 million, of which S$2.68 million has been utilised. 71

80 CAPITALISATION AND INDEBTEDNESS As at the Latest Practicable Date, our banking facilities from the financial institutions are as follows: Outstanding amounts as at the Latest Financial Nature Practicable Date Purpose of institutions of facility (S$ 000) Borrower facility DBS Bank Bridging Loan 1,925 SBI Offshore Working Capital DBS Bank Term Loan 650 SBI Offshore Mortgage DBS Bank Credit Financing/ 100 SBI Offshore As and when Letter of Credit requested by customer We do not have any unsecured banking facilities. As at the Latest Practicable Date, our hire purchase facility is as follows: Outstanding amounts as at the Latest Practicable Financial institutions Purpose of facility Date (S$ 000) Borrower United Overseas Bank Limited Financing of Fork Lift 27 SBI Pacific We are not in breach of the terms and conditions or covenants associated with any credit arrangement or bank loan which could materially affect our financial position and results or business operations, or the investments by holders of the shares. Commitments As at the Latest Practicable Date, our Group has commitments for future minimum lease payments under non-cancellable operating leases as follows: (S$ 000) As at Latest Practicable Date Within 1 year 152 After 1 year but within 5 years 291 Contingent Liabilities As at the Latest Practicable Date, our Group does not have any contingent liabilities. 72

81 GENERAL INFORMATION ON OUR GROUP HISTORY Our Company was incorporated in Singapore on 1 October 1994 under the Companies Act as a private company limited by shares, under the name of Sin-China Holdings Pte Ltd. The name of our Company was changed to Seabreeze International Pte Ltd on 10 September 1996, and was subsequently changed to SBI Offshore Pte. Ltd. on 16 June Our Company was converted into a public limited company and the name of our Company was changed to SBI Offshore Limited in connection therewith on 21 October We commenced business operations in September 1996 principally to represent European and American offshore oil and gas equipment manufacturers in the distribution of their equipment in countries such as Singapore and Malaysia. In August 1999, we secured a turnkey contract worth US$2.6 million from JV Vietsovpetro in Vietnam. This contract involved the supply of equipment and materials for a 70-men living quarters module in the White Tiger Field to support its offshore rigs. As part of the contract, we sourced for piping, electrical and lighting, fire fighting and outfittings systems. In November 1999, we entered into a consultancy agreement pursuant to which we were appointed as an agent to ABB Miljø, which provides design engineering and commission services in relation to HVAC systems and products, ( ABB Miljø Appointment ) to sell and distribute its offshore HVAC systems and products to shipyards in Singapore, China, Philippines, Malaysia, Indonesia, Vietnam and South Korea. In December 2003, the aforesaid ABB Miljø Appointment was assigned to AC Marine AS. After subsequent acquisition of AC Marine AS, the consultancy agreement is now under Wilhelmsen Callenberg, a specialist in HVAC equipment and turnkey solutions. We currently represent Wilhelmsen Callenberg to sell and distribute its offshore HVAC systems and products to shipyards in Singapore, China, Philippines, Malaysia, Indonesia, Vietnam and South Korea. Our representation in South Korea is on a project by project basis. In October 2005, we were appointed as the consultant to a multi-national corporation and successfully brokered the supply and delivery of the diesel electric propulsion system (a system which utilises electric power, generated by diesel generators to drive the propulsion motor of vessels) and drilling package for the construction of five semi-submersible drilling rigs undertaken at Jurong Shipyard. In January 2006, we identified opportunities in the timber business and commenced trading of timber products (such as wooden mouldings and floor pieces for the home-building industry). We imported the timber products from Indonesia and exported them to traders in the PRC. In April 2007, we disposed of our timber business to focus on our Marketing and Distribution business due to increasing rig orders globally following sharp increases in oil prices in FY2007. In May 2008, we were appointed as a representative of a group entity of Aker Solutions to market its marine drilling risers in China. In June 2008, we were appointed as representative of another group entity of Aker Solutions, Aker MH, to market on a non-exclusive basis, its drilling equipment and/or package to shipyards in Singapore, China, Vietnam, Malaysia, Thailand and Indonesia. For FY2008, our Company had secured more than US$670 million in orders for Aker MH from customers, such as Jurong Shipyard, COSCO (Nantong) Shipyard Co., Ltd. and CNOOC Limited in Singapore and China. 73

82 GENERAL INFORMATION ON OUR GROUP In July 2008, in order to add more value to our principals as well as customers, we commenced our Manufacturing business by acquiring 80.0% of the share capital of SBI Pacific, a company incorporated in November 2006 for the design and manufacture of certified offshore cabins, from our Executive Chairman and Chief Executive Officer, Jonathan Hui. Please refer to the section entitled Interested Person Transactions Past Interested Person Transactions of this Offer Document for more details. In 2008, we issued S$3.0 million of redeemable preference shares to Enterprise Fund for working capital purposes. In March 2009, we acquired 35.0% equity interest in Jiangyin Neptune, a company incorporated in January 2003 in the PRC, for the manufacturing of lifeboats and davits, for a consideration of US$1.75 million. We have been acting as the sole agent for Jiangyin Neptune for selling, improving, maintaining, repairing and servicing lifeboats and davits in Singapore since In the same month, Jiangyin SBI Offshore was incorporated in the Jiangyin, PRC to expand our capability into the manufacturing and assembly of offshore rig equipment in PRC, with our Company holding 90.0% equity interest in Jiangyin SBI Offshore. As at 27 May 2009, we had invested approximately US$1.0 million in Jiangyin SBI Offshore. Since July 2009 to the Latest Practicable Date, we have secured more than US$270,000 in orders from a customer in PRC for high pressure pipes and fittings from Techdrill. In August 2009, we entered into a supply agreement with Techdrill to purchase high pressure pipes, fittings, valves and manifolds exclusively from Techdrill unless Techdrill is unable or unwilling to supply any of the high pressure pipes, fittings, valves and manifolds ordered by us pursuant to the terms of the supply agreement. At the same time, Techdrill agrees not to sell, directly or indirectly, any of its products to our customers as listed in the supply agreement. We are the exclusive distributor of Techdrill s products to such customers. In September 2009, we redeemed all outstanding redeemable preference shares, the payment of which shall be made out of the net proceeds of the Placement. The Preference Shares were redeemed because the proposed listing of the Company is a redemption event pursuant to the agreement dated 25 June 2008 entered into between our Company and Enterprise Fund in relation to the issue of the Preference Shares. Our present appointments as representatives, consultants and/or distributor to our principals and/or suppliers to sell and/or distribute their products and services include: Principal / Duration of Brief profile of Products Option No. Suppliers appointment principals/suppliers / services to renew 1. Wilhelmsen from 23 Wilhelmsen Callenberg, Products and N.A. Callenberg December 2003 (1) which is a group entity of systems related Wilh. Wilhelmsen ASA, to HVAC specialises in HVAC equipment and turnkey solutions 2. Aker MH 2 years, from Aker MH, which is a group Marketing of Renewable 20 June 2008 entity of Aker Solutions ASA, drilling equipment every two to 20 June 2010 is a contractor and provider and marine years of drilling equipment and drilling risers solutions for the highefficiency drilling market 74

83 GENERAL INFORMATION ON OUR GROUP Principal / Duration of Brief profile of Products Option No. Suppliers appointment principals/suppliers / services to renew 3. Jiangyin 3 years, from Jiangyin Neptune, which is Selling, improving, Renewable Neptune 1 January 2009 based in the PRC, maintaining, upon expiry to 30 December manufactures lifeboats and repairing and 2011 davits serving series of lifeboats and davits 4. Techdrill 5 years, from Techdrill is a supplier of high Supply of pipes, Renewable 1 August 2009 pressure pipes, fittings and fittings, valves upon expiry to 31 July 2014 valves, as well as designing and manifolds for and supplying drilling manifold packages successive three years period Note: (1) After a series of acquisitions of AC Marine AS, which we entered into the consultancy agreement with, we now represent Wilhelmsen Callenberg. The appointment may be terminated by either party at any time subject to a six months written notice to the other party. OUR PRESENT CERTIFICATIONS Our Group has received the following certifications: Awarding Date/Period Certificate Organisation Certifications of SBI Pacific Pte Ltd 5 January 2009 Certificate for Offshore Service Container (DNV 2.7-2) for DNV SP.N January 2009 Design Verification Report (DNV 2.7-2) for SP.N DNV 18 December 2008 Certificate for Offshore Service Container (DNV 2.7-2) for DNV SP.N December 2008 Certificate for Offshore Container (DNV 2.7-1) for SP.N DNV 10 December 2008 Design Verification Report (DNV 2.7-2) for SP.N DNV 19 November 2008 Certificate for Offshore Container (DNV 2.7-1) for DNV SP.N October 2008 Design Verification Report (DNV 2.7-1) for SP.N DNV 29 September 2008 Certificate of Conformity (DNV 2.7-2) for SP.N DNV 5 September 2008 Certificate for Offshore Container (DNV 2.7-1) for SP.N DNV 18 July 2008 Design Verification Report (DNV 2.7-1) for SP.N DNV 18 July 2008 Design Verification Report (DNV 2.7-1) for SP.N DNV 75

84 GENERAL INFORMATION ON OUR GROUP Awarding Date/Period Certificate Organisation Certifications of Jiangyin Neptune 29 November 2006 Certificate of Design Assessment (Certificate Number: 06-SQ ABS PDA) for 9.5M totally enclosed lifeboat 23 October 2008 Certificate of Design Assessment (Certificate Number: 06-SQ ABS /2-PDA) for davit, gravity luffing marine davit 23 October 2008 Certificate of Design Assessment (Certificate Number: 06-SQ ABS /1-PDA) for davit, gravity luffing marine davit 24 October 2008 Certificate of Design Assessment (Certificate Number: 05-SQ ABS /2-PDA) for platform davit 24 October 2008 Certificate of Design Assessment (Certificate Number: 07-SQ ABS /2-PDA) for platform davit 16 May 2009 Certificate of Confirmation of Product Type Approval (Certificate ABS Number: 09-SQ PDA) for 150P totally enclosed lifeboat (NPT150F/C) BUSINESS OVERVIEW Principal products and services We are principally involved in: (a) the marketing and distribution of (i) lifeboats and davits, (ii) high pressure pipes, fittings and manifolds for drilling rigs, (iii) offshore drilling equipment and/or package and (iv) HVAC systems, to rig builders in Asia; and (b) the design and manufacture of certified portable offshore cabins. The following diagram illustrates our Group s business model: SBI Offshore Marketing and Distribution Manufacturing Distribution - pipes and fittings - lifeboats/davits Revenue from actual sales Marketing - offshore drilling equipment - HVAC Revenue from agency commissions Certified portable offshore cabins Our marketing and distribution network lies primarily in Singapore, Malaysia, China, Indonesia, Philippines and Vietnam, and we are in the process of transferring our production operations from Singapore to Jiangyin, PRC. 76

85 GENERAL INFORMATION ON OUR GROUP Our business activities are segmented into the following divisions: (a) Marketing and Distribution (i) Marketing - Our value proposition in marketing services For marketing, our value proposition lies in our ability to bridge principals largely from Europe and the United States with shipyards and other offshore players in the Asia-Pacific region primarily in Singapore, Malaysia, China, Indonesia, Philippines and Vietnam. We will be able to provide contract engineering services to our principals after we complete the transfer of our production operations to Jiangyin, PRC. These principals provide specialised equipment and components to be installed onto offshore rigs which the shipyards build for offshore drilling contractors. While these principals have strong products and services, they often lack depth and reach of marketing presence in the Asian region. Due to strategic and cost reasons, such principals believe their marketing needs may be better served by trusted distribution and marketing partners which have strong local knowledge, industry experience and established relationships with regional shipyards. The process of matching the specialised equipment from the principals with the requirements of the shipyards can take months, involving assessing technical specifications, engineering capabilities, certification and ability to meet deadlines. Once a prospective shipyard is identified, principals may turn to their marketing agents to liaise with engineers on both sides and to guide the negotiation process. Subsequent to the conclusion of negotiations, we play an active role in after-sales marketing support to ensure smooth execution and rapport between our principal and end-customer. The time taken from marketing, sale and conclusion of the project may take years, involving frequent visits to each shipyard. This support and liaison needs to be handled by personnel with deep knowledge of shipyards in the region, a role which our Executive Director, David Tan, fills ably in view of his experience. In view of the time and resources required, and relative lack of familiarity with the region, these principals believe they will derive better service, efficiency and greater speed in a highly competitive industry by appointing a marketing agent such as ourselves. In exchange for our efforts, the principal pays us agency commissions based on delivery and acceptance of each piece of equipment and/or package. (ii) Distribution our value proposition in distribution services As with our marketing model, one of our value propositions in the distribution business lies in our role as a specialised intermediary who can offer products from suppliers in Europe and the United States to shipyards in Singapore, Malaysia, China, Indonesia, Philippines and Vietnam. Many of the products we distribute are lower in absolute value compared to specialised offshore equipment which we market (as described above). The suppliers often do not have economies of scale or resources to engage full-time personnel to market, distribute and collect payment for these products. By working with a distributor, the supplier does not have to be concerned with providing credit terms to the shipyards, or storage and supply chain management issues. 77

86 GENERAL INFORMATION ON OUR GROUP As distributor, we purchase products such as high pressure pipes and fittings, lifeboats and davits and on-sell them to shipyards and end-users at a profit after factoring credit terms and other costs, or aggregate and combine the various products we distribute to offer a basket of products to our customers. We market the following products: (i) Offshore Drilling Equipment and/or Package The offshore drilling equipment and/or package which we market for Aker MH, and other principals, include: complete drilling equipment package or module; top drive system; torque master; drill floor equipment; drawwork; mud pump; mud mixing skid; hydraulic power unit; drilling control and monitoring system; and subsea products (such as marine drilling risers). We represent Aker MH to market these products and services to offshore rig builders and oil companies in Singapore, China, Malaysia, Indonesia, Thailand and Vietnam. In addition, we also represent a multi-national corporation to market its products such as diesel electric propulsion systems for the construction of semi-submersible drilling rigs undertaken at Jurong Shipyard. As the representative of the abovementioned principals, we collect a commission income for projects secured with our marketing support. 78

87 GENERAL INFORMATION ON OUR GROUP Hydraulic Power Units Mud Pump Mud Mixing Skid Torque Master (ii) HVAC systems The HVAC systems that we assist to market for Wilhelmsen Callenberg to our customers and projects situated in Singapore, China, Philippines, Malaysia, Indonesia, Vietnam and South Korea include the following: Chilled water plant for air-conditioning system Dehumidification and condensing units Refrigeration plant in evaporators Air handling units Mechanical ventilation fans Chilled water expansion tanks Chilled water pumps and valves Electric duct heaters Air intake louvres Control panels As the representative of Wilhelmsen Callenberg, we collect a commission income for projects secured with our marketing support. 79

88 GENERAL INFORMATION ON OUR GROUP Chiller Chiller We distribute the following products: (i) Lifeboats and Davits We distribute mainly the following lifeboats and davits: totally enclosed lifeboats; partially enclosed lifeboats; rescue / fast rescue boats; free fall lifeboats; and launching davits. We distribute lifeboats and davits purchased primarily from Jiangyin Neptune under the brand name Neptune. From time to time, we may also purchase davits manufactured by other companies located in Europe in accordance with the requirements of our customers. Neptune lifeboats and davits are designed to comply with the International Convention for the Safety of Life at Sea (SOLAS) 1974 and the International Life- Saving Appliance (LSA) Code. They are also delivered with third party certifications such as from ABS, procured by Jiangyin Neptune, in accordance with the requirements of our customers. Neptune lifeboats and davits are distributed to our customers with limited quality defects liability warranties of an average of 12 months from the date of delivery of such lifeboats or delivery of the rig, whichever is later. We are in turn indemnified by Jiangyin Neptune for any claims made by our customers on the lifeboats pursuant to the warranties provided. 80

89 GENERAL INFORMATION ON OUR GROUP Lifeboat Davit (ii) High Pressure Pipes, Fittings and Manifolds for Offshore Drilling Rigs We purchase high pressure pipes, fittings, valves and manifolds exclusively from Techdrill and distribute them to rig owners and shipyards mainly in Singapore, Malaysia, Vietnam, Indonesia, Thailand and the PRC. These products include: manifolds; valves to control fluid flow such as relief valve; fittings to join high pressure pipes such as elbows, tees and hammer lug unions; hose and coupling packages; and hubs and clamps. High pressure pipes, fittings, valves and manifolds are required to support the drilling operations of offshore drilling rigs. They are found mainly in the mud and cement lines, oil transfer as well as blow out prevention systems which are required to operate the blowout preventers under varying rig and well conditions, where they are required to withstand high fluid pressures of between 5,000 psi and 20,000 psi. Manifold Barred Tee 81

90 GENERAL INFORMATION ON OUR GROUP Long Sweep Elbow Long Sweep Fittings Long Sweep Tee Studded Buffer Block (b) Design and Manufacture of Certified Portable Offshore Cabins Our subsidiary, SBI Pacific, specialises in the design, engineering, and fabrication of certified portable cabins for the offshore, onshore and marine industries. These portable cabins are certified by internationally recognised third party certification organisations such as DNV, BV or ABS. We have the capability to manufacture, supply and refurbish a wide-range of portable cabins such as: measurement-while-drilling cabins; mud logging cabins; laboratory cabins; remote-operated-vehicle cabins; office cabins; workshop cabins; 82

91 GENERAL INFORMATION ON OUR GROUP storage cabins; and heli-portable aluminium cabins. These cabins are used by oil services companies to house their operations while onboard an offshore rig. Depending on the outfit of equipment in the cabins in accordance with the respective specifications of the cabins, such cabins can function as office workspace, storage facilities as well as allow the specialists of the oil services companies to perform functions such as diving monitoring, mud logging, measurement while drilling, or laboratory analysis services. External view Internal view Implementation Process for Our Marketing and Distribution Business The typical implementation process for the products and services that are supplied by our suppliers, and in turn provided by our Group to our customers is set out below. There may be minor deviations from this process depending on the specific requirements of the product and/or service to be provided. Suppliers Marketing Enquiry reply Quotation/Offer pricelist Order Acceptance/Sales contract Negotiation Comments/Revert back for technical evaluation Shipping advice Delivery/Shipment Invoice Customers After sales follow-up (certificates, warranty) 83