Wired for. Growth GAYLIN HOLDINGS LIMITED

Transcription

1 Wired for Growth GAYLIN HOLDINGS LIMITED Annual Report 2013

2 Contents 01 Vision and Mission 13 Corporate Information 02 Corporate Profile 14 Corporate Structure 03 Our Presence 15 Business Highlights 04 Our Businesses 16 Financial Highlights 06 Key Corporate Milestones 17 Operating and Financial Review 08 Message to Shareholders 22 Corporate Social Responsibility 10 Board of Directors 25 Corporate Governance 12 Senior Management 36 Financial Contents

3 Vision A Safe And Stable Lifting & Rigging Environment Mission A Global Company Trusted For Providing Safe And Innovative Solutions In Lifting & Rigging For The Offshore And Marine Industry Gaylin Holdings Limited 01

4 CORPORATE PROFILE A One-Stop Specialist Provider of Rigging and Lifting Solutions to the Global Offshore O&G Industry With a history that began in 1974, Gaylin Holdings Limited (the Company or Gaylin and together with its subsidiaries, the Group ) is one of the largest Singaporebased multi-disciplinary specialist providers of rigging and lifting solutions to the global oil and gas ( O&G ) industry. Our comprehensive range of inventory, years of experience in the business and engineering capabilities allow us to respond to the needs of our customers quickly and efficiently, making Gaylin a one-stop solutions provider. We are trusted by our customers who typically include oil rig and vessel owners and operators, shipbuilders, charterers and drilling and mooring contractors. As part of our business, we manufacture and supply a wide range of rigging and lifting equipment such as heavy lift slings and grommets, wire rope slings, crane wire, mooring equipment and related fittings and accessories. We also provide related services including load testing, spooling services, rental services and other fabrication services to our customers globally. In addition, as part of our value-added customer service, we provide ship supplies such as ship stores and equipment to ships and oil rigs, which we source from third party suppliers all over the world. Headquartered in Singapore, we have three warehouses and one manufacturing facility in Singapore, one manufacturing facility in Vietnam and an upcoming new facility in Malaysia, which together, occupy an aggregate of approximately 441,031 square feet. From these strategic bases, we sell and distribute our products and services to global markets spanning Asia, Oceania, Europe, the Middle East and Africa. As testament of Gaylin s commitment to safety, we were awarded the bizsafe STAR by the Workplace Safety and Health Council, Ministry of Manpower as well as the SS506: Part 1:2009, OHSAS 18001:2007 certification by DAS Certification Singapore for the manufacture of wire rope slings in This is in addition to our ISO 9002 certification for the manufacture of wire rope slings, which we obtained in 1998, as well as our ISO 9001:2008 certification in 2012 in recognition of our quality management system. In addition, we were conferred the Enterprise 50 (E50) Award in 2009, the 2011 Singapore Brand Award and the Promising SME 500 Award in the platinum category in Annual Report

5 Europe Middle East Asia Africa Oceania Malaysia Singapore Manufacturing Facility Global Market Vietnam OUR PRESENCE Gaylin Holdings Limited 03

6 OUR BUSINESSES A Comprehensive Range of Products At A Glance Gaylin supplies and manufactures a wide range of rigging and lifting equipment that comprises heavy lift slings and grommets, wire rope slings, crane wire, mooring equipment and related fittings and accessories. We also provide a range of engineering services to our customers who require customisation or manufacturing of products specific to their requirements, that includes the design, fabrication, testing and certification of rigging and lifting equipment. As part of our value-added customer service, we supply a wide range of ship stores and equipment to ships and oil rigs. Heavy Lift Slings and Grommets We are a pioneer in the manufacture of heavy lift slings and grommets, which are fabricated from synthetic or steel wire ropes. These products are typically used for lifting heavy and complex structures and procedures such as the installation of offshore jacket platforms. Some of the heavy lift slings and grommets we provide: Cable laid slings and grommets Synthetic heavy lift sling: Samson (USA) and Slingmax (USA) Gator laid slings and grommets: Slingmax (USA) Wire Ropes We have a well-stocked inventory of wire rope products produced by established manufacturers around the world. Within our wide range, we are able to offer wire ropes measuring up to 152mm in diameter which is the largest in size (diameter) available in the market. Our wire rope products: Crane wire rope: Diepa (Germany) and TEUFELBERGER (Austria) Steel wire rope: Kiswire (South Korea) and Usha Martin (India) Mooring Equipment We supply different grades of anchor chains, mooring components and parts for use in the global offshore O&G industry, such as ASAC anchor chains, to suit the requirements of different mooring systems. Annual Report

7 Related Fittings and Accessories We offer a comprehensive range of rigging and lifting fittings and accessories for the global offshore O&G industry from wellknown international brands: Shackles: Crosby (USA), GN Rope Fittings (Netherlands) and Green Pin (Netherlands) Sockets: Crosby (USA) and GN Rope Fittings (Netherlands) Alloy chains: Gunnebo (Sweden), pewag (Austria) and Yoke (Taiwan) Connecting links: Gunnebo (Sweden), pewag (Austria) and Yoke (Taiwan) Master links: GN Rope Fittings (Netherlands), Gunnebo (Sweden) and Yoke (Taiwan) Hooks: GN Rope Fittings (Netherlands), Gunnebo (Sweden) and Yoke (Taiwan) Lever hoist / Chain hoist: Titan (Australia) and Vital (Japan) Snatch blocks: Crosby (USA) and Yoke (Taiwan) Remotely operated vehicle (ROV) hooks: Crosby (USA), GN Rope Fittings (Netherlands), Triton (UK) and Yoke (Taiwan) Related Services Load Testing We are equipped with a test facility of 2,600 tonnes by 330 ft and load cells ranging from five tonnes to 1,000 tonnes and are able to carry out both in-house and on-site testing and inspection. We also provide re-certification services. Spooling Services Supported by an experienced spooling team, we have in-house and mobile spooling machines capable of handling steel and synthetic ropes with cumulative weight ranging from 15 tonnes to 250 tonnes. Rental Services We offer a wide range of rigging and lifting equipment for rental, such as spooling machines, heavy lift slings and grommets, anchors and related fittings and accessories such as lifting gears, mooring gears, load cells and water load bags. Other Fabrication Services We also offer fabrication services to produce custom-made items to meet the customers requirements and specifications. Ship Supply Business As part of our commitment to value-added customer service, we also provide ship supplies such as ship stores and equipment to ships and oil rigs, which are sourced from third party suppliers around the world. Gaylin Holdings Limited 05

8 KEY CORPORATE MILESTONES 1970s: Our early years Gaylin Trading Company established in 1974 with 5 personnel at a 300 sq ft premise. Acquired first splicing machine in 1978 to cater to strong customer demand. 1980s: Significant expansion of business Acquired warehouses at Kian Teck Drive and Joo Koon Way between 1981 and Set up ship supply department to complement product and service range in Expanded inventory range between 1986 and 1989 to include wire ropes with up to 103mm in diameter and 1,000m in length. Began developing offshore markets for products and services in s: Evolution of Gaylin to become a one-stop specialist provider of rigging and lifting solutions Started manufacturing cable laid slings; Largest to date produced is 321mm diameter. Started manufacturing cable laid grommets; Largest to date produced is 270mm diameter. Expanded services to include load testing services, inspections and spooling services. Recognised with international ISO 9002 certification for the manufacture of wire rope slings in Annual Report

9 Further Business Expansion 2000s: Renamed Gaylin International Pte Ltd in Expanded capability in load-testing services between 2001 and 2005, including the purchase of a 2,600 tonne by 330 feet test machine. Set up representative office in Vietnam in 2001 and commenced full operations in Vietnam in 2008 with a press machine and a test machine. Acquired 7 Gul Avenue in 2003 to house present head office, warehouse and fabrication facilities. Began distribution of high performance synthetic ropes manufactured by Samson Rope (USA) in 2004 and subsequently Slingmax (USA) in Implemented online inventory database system and secured long term contracts with customers in Conferred the Enterprise 50 (E50) award in : Received the Promising SME 500 Award and Circle of Excellence in Offshore & Marine Industry. Commenced construction of new facilities in Malaysia. Listed on the Mainboard of the Singapore Exchange Securities Trading Limited ( SGX- ST or SGX or Singapore Exchange ) on 25 October : Expanded ship chandling business with the acquisition of Allseas Marine Services Pte Ltd. Awarded the Certificate of Approval (SS506: Part 1:2009, OHSAS 18001:2007) by DAS Certification Singapore. Accorded the bizsafe STAR by the Workplace Safety and Health Council, Ministry of Manpower. 2011: Conferred the 2011 Singapore Brand Award. Gaylin Holdings Limited 07

10 MESSAGE TO SHAREHOLDERS Desmond Teo Executive Director and Chief Executive Officer Dear Shareholders, It is with great pleasure that I present to you the inaugural annual report of Gaylin Holdings Limited. The past one year has been an exciting journey for the Group with our listing debut on the Mainboard of Singapore Exchange and the inroads we have made in growing the footprint of Gaylin in the region. Our initial public offering ( IPO ) in October last year was very warmly received by the investment community in Singapore. At S$0.35 a piece, our Offering of 110 million new shares was approximately 5.5 times subscribed. In addition, we over-allotted an additional 22 million shares, all of which were allocated to the Placement tranche. We are very heartened by this overwhelming response and would like to thank all of you for choosing to invest in Gaylin. From our humble beginnings in 1974 as a small business operating out of a shophouse in Beach Road with just five employees, Gaylin has evolved into its status today as a one-stop specialist provider of rigging and lifting solutions to the global offshore O&G industry. Our name is recognised worldwide for reliability, quality and efficiency, thanks to over 30 years of experience in the business as well as our comprehensive inventory of products, engineering expertise and strategically located offices. Needless to say, our successful listing on the Singapore Exchange has not only elevated our position as a key player in the rigging and lifting solutions industry, but has provided a springboard for us to grow our business further. FY2013 Financial Performance For the 12 months ended 31 March 2013 ( FY2013 ), the Group reported a 7.9% increase in revenue to S$77.1 million, underpinned by a strong fourth quarter performance. Our topline for the year was lifted by contributions from Allseas Marine Services Pte Ltd ( Allseas Marine ), a ship supply company we acquired in January 2013 for S$1.5 million, as well as stronger orders from key customers based in Malaysia, Other Asia and Europe for their projects. Our net profit attributable to shareholders, however, slipped from S$13.0 million in the 12 months ended 31 March 2012 ( FY2012 ) to S$10.5 million in FY2013. This was largely due to higher distribution costs and administrative costs associated with our expanding operations, higher IPO expenses as well as acquisition-related costs. Annual Report

11 Dividend Payout of 32.9% With this set of results, the Board of Directors of the Company (the Board ) is pleased to recommend a first and final cash dividend of 0.8 Singapore cents per share for FY2013. This translates to a dividend payout of 32.9%, which is aligned to what we had stated during our IPO. Future Outlook and Strategies The demand for our products and services is closely linked to the offshore O&G sector and our business generally moves in tandem with the level of exploration, development and production activities in the upstream energy value chain. Prices of crude oil have been proven to be resilient in the past decade and this has fuelled upstream O&G companies to increase exploration and production spending. Underlining this strong capital spending, Singapore s top two rig builders have been awarded US$3.59 billion in newbuild drilling rig orders in 2013 while further afield, Chinese yards have secured approximately US$4.6 billion of newbuild rig orders 1. Moreover, the industry is witnessing a trend towards deepwater O&G exploration, which requires more sophisticated rigging and lifting solutions and equipment as well as more frequent maintenance services. In addition, China and India, often dubbed the twinengines of growth, are expected to lead the pack in global demand for oil in this decade. Asia, the largest consumer of petroleum, will also be in the forefront of investments in deepsea O&G exploration and production, with projected increase in investments by more than 50% over the next four years 2. All these industry trends are hugely favourable to Gaylin as we continue to expand and deepen our operations within the Asia-Pacific region, with its proliferation of active offshore O&G projects, and we are cautiously optimistic that our outlook will remain positive for the coming year. Growth Through Acquisitions and Collaborations The Group s main priority going forward will be to look out for suitable merger and acquisition opportunities in Asia and other markets which are complementary to our business and where we can derive synergistic benefits across business units. Our key objective is to enhance Gaylin s competitive edge by being in close proximity to our customers, thereby enabling us to respond faster and serve them better. Having successfully established a strong foothold in Singapore, Malaysia and Vietnam, we are currently exploring opportunities in North Asia, South East Asia, the Middle East, Europe, Australia and South America. Underscoring our commitment to grow inorganically, we have set aside S$20 million of our IPO proceeds for this purpose. As per our announcement in March 2013, the Group will not be proceeding with the proposed acquisition of the South Korean company that is engaged in the supply of wire ropes and related fittings to Korean customers in the offshore and marine industry, as we have not been able to come to an agreement with the proposed vendors. We have turned our focus to China, which we believe is another exciting market given that Chinese yards have been snapping up newbuild rigs contracts of late. We entered into a framework agreement in March this year for the proposed acquisition of People s Republic of China ( PRC )-based Lv Yang (Tianjin) Offshore Equipment Co. Ltd ( 绿洋 ( 天津 ) 油田设备有限公司 )( Lv Yang ) for S$3.5 million. Lv Yang is involved in the supply and manufacture of rigging and lifting equipment and provision of related services. To date, clearance with the relevant PRC authorities on the transfer of shares is still in progress and we will provide further updates when appropriate. In Malaysia, we expect full operations of our new 103,145 sq ft Tanjung Langsat facility, located in Johor, to commence in the second half of calendar year This facility is an important strategic chess piece for the Group as not only does Malaysia have a brisk offshore O&G sector with a good number of on-going upstream projects, many of our key customers are also active there. Our facility puts the Group in the right place at the right time to respond to their needs within a short lead time. At home, we strengthened our position with the acquisition of Allseas Marine during the year which, we believe, sits well with our over-arching strategy to expand our operations in the region. Moving forward, we plan to leverage Singapore s position as one of the busiest ports and marine hub in the world to grow our ship chandling business. In Appreciation In summary, I would like to express my deepest appreciation to each and everyone of you for your confidence in the Group. To our shareholders thank you for your continued faith and support in Gaylin and I look forward to meeting some of you at our upcoming annual general meeting. To the board of directors, management team and employees thank you for soldiering through the ups and downs all these years with us. To our customers, suppliers and business partners thank you for your trust and support and we look forward to many years of strong collaboration ahead. To all other stakeholders who played a role in making Gaylin what it is today, I appreciate your efforts and support. Yours sincerely, Desmond Teo Executive Director and Chief Executive Officer 1. The Business Times: S pore rigbuilders regain order momentum dated 5 June Industry Report titled The Offshore Oil and Gas Industry Singapore prepared by the Independent Market Researcher, Converging Knowledge dated 4 June 2012, Gaylin Holdings Limited IPO Prospectus Gaylin Holdings Limited 09

12 BOARD OF DIRECTORS from left to right sitting down Desmond Teo Ang Mong Seng Teo Bee Kheng standing behind Teo Bee Hoe Lau Lee Hua Wu Chiaw Ching Ng Sey Ming Ang Mong Seng Independent Non-Executive Chairman Mr Ang Mong Seng was appointed as our Independent Non-Executive Chairman on 26 September He was the Chief Operating Officer of EM Services Pte Ltd between 2002 and 2011 and has recently retired. Prior to that, he held the post of General Manager in EM Services Pte Ltd between 1988 and Mr Ang has more than 30 years of experience in estate management. He is currently an independent director of United Fiber System Ltd, ecowise Holdings Limited, Hoe Leong Corporation Ltd., AnnAik Limited and Chip Eng Seng Corporation Ltd. Mr Ang was a former Member of Parliament for the Bukit Gombak single-member constituency from 1997 to 2001 and Hong Kah Group Representation Constituency from 2001 to He served as Chairman for the Hong Kah Town Council from 1997 to 2011 and was a member of the House Committee in Parliament until 2011 when he retired from politics. Mr Ang obtained a Bachelor of Arts degree from Nanyang University, Singapore in Desmond Teo Executive Director and Chief Executive Officer (CEO) Backed by more than 30 years of experience in the offshore O&G industry, Mr Desmond Teo is responsible for the overall management and strategic direction of the Group. As part of his role, he spearheads the formulation of the Group s expansion plans, the development and maintenance of customer and supplier relationships, as well as oversees the Group s general operations. Mr Teo joined the Group in 1979 and was involved in various aspects of the business through the years before Annual Report

13 being appointed the managing director of Gaylin International in the late 1990s. Since his appointment as managing director, Mr Teo has been instrumental in the regional expansion of the Group and continually sources for investment opportunities to promote the growth of the Group s business. He is the honorary president/ president/trustee of the Singapore Ship-Chandlers Association. Also, he was awarded the Public Service Medal (Pingat Bakti Masyarakat) in Teo Bee Kheng Executive Director and Chief Operating Officer (COO) Mr Teo Bee Kheng joined the Group in 1974 and is responsible for managing the operations of the production department, which include key aspects such as production, fabrication, logistics and delivery as well as related services. As part of his role, he also assists the Group s Executive Director and CEO in managing the Group s day-today business operations. He brings with him more than 35 years of operational experience in the supply of rigging and lifting equipment and related services. Teo Bee Hoe Executive Director and Deputy Chief Operating Officer Mr Teo Bee Hoe is responsible for overseeing the technical and services aspects of the operations of the production department. He joined the Group in 1974 and has more than 35 years of operational experience in the supply of rigging and lifting equipment and related services. His role and responsibilities overlap and are complementary to Mr Teo Bee Kheng s. Together, they lead the Group s production department. Wu Chiaw Ching Independent Director Appointed as an Independent Director of the Group on 26 September 2012, Mr Wu Chiaw Ching is the proprietor of Wu Chiaw Ching & Company, since He is a fellow member of the Institute of Certified Public Accountants of Singapore, the Association of Chartered Certified Accountants, United Kingdom and Certified Public Accountants, Australia and a member of the Singapore Institute of Directors. Mr Wu is currently an independent director of SGX-ST Mainboardlisted Goodland Group Limited and LHT Holdings Limited, and SGX-ST Catalist-listed Natural Cool Holdings Limited and GDS Global Limited. He obtained a Bachelor of Commerce (Accountancy), Singapore from Nanyang University, Singapore in 1980 and a Post-graduate Diploma in Business and Administration from Massey University, New Zealand in Mr Wu also obtained a Diploma in Management Consultancy from the National Productivity Board, Singapore in 1988 and a Master of Arts (Finance and Accounting) from Leeds Metropolitan University, United Kingdom in Ng Sey Ming Independent Director Mr Ng Sey Ming was appointed as an Independent Director of the Group on 26 September He is currently a partner in the Banking & Finance practice group in Rajah & Tann LLP ( R&T ). He commenced his legal practice in R&T in 2000 and was made a partner of R&T in He was admitted as a Solicitor of England and Wales, and an Advocate and Solicitor of the High Court of Malaya, in Currently, Mr Ng is an independent director of SGX-ST Catalist-listed Hiap Tong Corporation Ltd., and SGX- ST Mainboard-listed XMH Holdings Ltd. Mr Ng obtained a Bachelor of Laws (Honours) from the National University of Singapore in 1999 and is a member of the Singapore Academy of Law and the Law Society of Singapore. Lau Lee Hua Independent Director Ms Lau Lee Hua was appointed as an Independent Director of the Group on 26 September She has been the proprietor-auditor of Lau Lee Hua & Co., a certified public accounting firm, since She is a practising member of Institute of Certified Public Accountants of Singapore and a Fellow of the Association of Chartered Certified Accountants having been admitted in 1995 and 1997 respectively. Ms Lau was awarded the Long Service Award by the People s Association in 2001 and the MINDS Meritorious Service Award by Movement for the Intellectually Disabled of Singapore in Gaylin Holdings Limited 11

14 SENIOR MANAGEMENT Steven Teo Chief Administrative Officer (CAO) Mr Steven Teo assists the Group s CEO in all matters in relation to the Company s general management and administration and, in particular, he is responsible for the inventory management and procurement functions of the Group. He was previously involved in the marketing and sales functions of the Group and was instrumental in improving its inventory management system. He joined the Group in May 1983 and has more than 25 years of experience in the business of supplying rigging and lifting equipment and related services. Patrick Teo Deputy Chief Executive Officer Mr Patrick Teo joined the Group in June 2012 and is in charge of its corporate affairs and business development. Prior to joining the Group, Mr Teo was the Assistant CEO of Excalibur Resorts Pte. Ltd where he led the property development, corporate affairs and business development teams. He began his professional career in JTC Corporation in February 1982, after completing his studies on a JTC scholarship. Rising through the ranks in 11 years, Mr Teo was promoted to the position of Senior Executive Surveyor in JTC. He had also held the position of General Manager in Jurong Country Club. Mr Teo graduated from Western Australian Institute of Technology in 1981 with a Bachelor s Degree in Applied Science (with Distinction). He is a member of the Singapore Institute of Surveyors and Valuers and formerly a member of the Institute of Surveyors, Australia and a Registered Surveyor with the Land Surveyors Board of Singapore. For his active contribution to community service, he was conferred the Public Service Medal (PBM) in 1997 and the Public Service Star (Bintang Bakti Masyarakat) in 2004 by the President of Singapore. Chia Wei Ho Finance Director Mr Chia Wei Ho joined the Group in September 2012 and is responsible for the investor relations, corporate governance, corporate regulatory compliance and reporting of the Group. He has a finance and general management background spanning both technology and other industries. In the past twenty years, he has held senior regional appointments such as COO, CFO and Finance Director with various companies like Compaq, Dell, Maxtor, Citibank Technology, Tri-M Technologies, Chamberlain Computime Electronics (Shenzhen) and Medtecs. The experience also included four years stationed directly in China. He is a Certified Management Accountant of the Australian Institute of Certified Management Accountants since 2001 and a Senior Associate of the Australian Institute of Banking & Finance since He obtained a Bachelor of Arts (Economics Major) from the University of Singapore in 1980 and a Master of Applied Finance from the University of Western Sydney, Australia in Goh Guat Bee Chief Financial Officer (CFO) Ms Goh Guat Bee joined the Group in March 2011 and is responsible for the financial accounting and reporting function of the Group s business. She also oversees the Group s treasury functions as well as its day to day accounting and all financial operations. Apart from these duties, she assists the Finance Director with the Group s compliance with regulatory bodies. She started her career in 1999 at Deloitte & Touche LLP in audit and was an audit supervisor prior to leaving in Subsequently in April 2004, she worked as a finance manager with Singapore Telecommunications Limited and was promoted to senior finance manager in She was further promoted in 2010 to deputy director of National Broadband Network Strategy team. Ms Goh graduated with a degree of Bachelor of Accountancy (Banking and Finance Minor) from the Nanyang Technological University (NTU) in 1999 and has been a nonpracticing member of the Institute of Certified Public Accountants of Singapore since Jessica Teo Marketing and Sales Director Ms Jessica Teo joined the Group in June 2003 and leads the Marketing and Sales Department of the Group where her responsibilities include assisting the CEO in formulating marketing and sales strategies, conducting marketing activities to promote the Group s products and services to local and overseas markets, as well as sourcing sales opportunities. She began her career in November 2001 as an assistant manager responsible for marketing function in PSA Singapore. She obtained a degree of Bachelor of Social Sciences with Honours (Economics Major) from the National University of Singapore in Annual Report

15 CORPORATE INFORMATION BOARD OF DIRECTORS Ang Mong Seng (Independent Non-Executive Chairman) Desmond Teo Bee Chiong (Executive Director and CEO) Teo Bee Kheng (Executive Director and COO) Teo Bee Hoe (Executive Director and Deputy COO) Wu Chiaw Ching (Independent Director) Ng Sey Ming (Independent Director) Lau Lee Hua (Independent Director) REGISTERED OFFICE 7 Gul Avenue Singapore Tel: Fax: WEBSITE INVESTOR RELATIONS Paul Chia (Finance Director) Tel: paulchia@gaylin.com Audit Committee Wu Chiaw Ching (Chairman) Ang Mong Seng Ng Sey Ming Lau Lee Hua Remuneration Committee Ang Mong Seng (Chairman) Ng Sey Ming Wu Chiaw Ching Lau Lee Hua Nominating Committee Ng Sey Ming (Chairman) Ang Mong Seng Wu Chiaw Ching Desmond Teo COMPANY SECRETARY Yeoh Kar Choo Sharon, ACIS SHARE REGISTRAR Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore AUDITORS Deloitte & Touche LLP Certified Public Accountants Singapore 6 Shenton Way Tower Two #32-00 Singapore Partner-in-charge: Ong Bee Yen Date of Appointment: 25 October 2011 Gaylin Holdings Limited 13

16 CORPORATE STRUCTURE Gaylin Holdings Limited 100% 100% Gaylin International Pte Ltd Gaylin Vietnam Pte. Ltd. 100% Gaylin Marine Supply Pte. Ltd. 100% Allseas Marine Services Pte Ltd 100% Gaylin Power Pte. Ltd. 100% Bridge Testing Centre (Pte) Ltd. 100% Gaylin Malaysia Sdn. Bhd. 100% Gaylin Korea Pte. Ltd. 100% GI Offshore Engineering Pte. Ltd. 90% Lv Yang (Tianjin) Offshore Equipment Pte Ltd Annual Report

17 BUSINESS HIGHLIGHTS Growth Through Acquisitions The Group s focus for much of FY2013 was to grow Gaylin s operations in Singapore and the region through organic expansion and acquisitions. In January 2013, the Group successfully acquired Allseas Marine, a Singapore-based ship chandling business for S$1.5 million. This acquisition, which is aligned to the Group s plans to grow its ship supply business in Singapore, one of the busiest ports and marine hubs in the world, has contributed approximately S$2.0 million to the Group s FY2013 revenue. In addition, the Group has laid the groundwork to gain a foothold in the PRC market through a framework agreement for the proposed acquisition of Lv Yang for S$3.5 million in March 2013, a PRC-based company involved in the supply and manufacture of rigging and lifting equipment and provision of related services. As at to-date, clearance with the relevant PRC authorities on the transfer of shares is still in progress. Maintained A Strong and Diversified Customer Base The Group has a diversified pool of more than 800 customers from the global offshore O&G industry which include blue-chip names such as Acteon Group, Bourbon Group, Britoil Offshore, DOF Group, Technip Group and Sapura Acergy Sdn. Bhd. Gaylin has been servicing some of these customers for over ten years and continues to enjoy strong relationships with them. Gaylin s business is largely project-based and is directly linked to the activity levels of its customers. In FY2013, the Group achieved substantially higher sales from Malaysia, Other Asia and Europe due to more orders awarded to certain customers in these regions. Strengthened Presence and Capabilities in Malaysia The Group began the construction of its new facilities in Tanjung Langsat in the State of Johor, Malaysia, in February Spanning approximately 103,145 sq ft, the Group s Malaysian facilities has the largest test bed in South East Asia with a capacity of 3,000 tonnes and an effective testing length of up to 80 m. Due to the stringent on-site foundation works requirements for the test bed, the Group encountered a delay in the commencement of the facilities operations. That has been ironed out and the facility is expected to come on-line in the second half of The Group s Kuala Lumpur sales office, which it launched in September 2012 in a bid to expand its sales and marketing capabilities, has made good progress. Through this strategic office, the Group has successfully won new projects as well as forged stronger ties with existing customers, which has helped boost FY2013 revenue from Malaysia by 55% to S$8.7 million. The Group s enhanced presence in Malaysia in FY2013 has strategically positioned Gaylin to serve its Malaysiabased customers faster and better as it substantially shortens its time to market response. Gaylin Holdings Limited 15

18 FINANCIAL HIGHLIGHTS REVENUE TOTAL SHAREHOLDERS EQUITY FY ,117 FY ,691 FY ,447 FY ,962 FY ,119 FY ,327 FY2013 FY2012 FY2011 Income Statement (S$ 000) Revenue Gross profit Net profit Gross profit margin (%) Net profit margin (%) 77,117 24,884 10, ,447 23,674 12, ,119 24,954 13, Balance Sheet (S$ 000) Total assets Total liabilities Total shareholders equity Cash and cash equivalents 165,028 75,337 89,691 21, ,316 84,354 34,962 4, ,931 60,604 44, Cashflow (S$ 000) Operating cashflow Capital expenditure (11,770) (2,134) 12,126 (3,144) (6,220) (407) Key Ratios Revenue growth (%) Net profit growth (%) Net gearing (1) (times) Return on shareholders equity (%) Return on total assets (%) Dividend payout (%) 7.9 (19.1) (3.1) (2) NA Per Share Information (cents) Earnings per share Net asset value per share Dividend per share (2) NA Market Capitalisation (3) (S$ 000) 224,640 NA NA (1) Net gearing calculation: Net debt divided by total equity (2) For comparative purpose only; the Company was listed on 25 October 2012 (3) Closing price as at end of financial year Annual Report

19 OPERATING AND FINANCIAL REVIEW For FY2013, the Group reported a net profit attributable to shareholders of S$10.5 million on the back of a 7.9% increase in revenue to S$77.1 million. The improved topline in FY2013 was boosted by a robust fourth quarter, which saw revenue of the Group rise 33.2% year-on-year to S$24.1 million, compared to S$18.1 million in the fourth quarter of FY2012. This was mainly due to revenue contribution from Allseas Marine, as well as stronger orders from customers based in Malaysia, Other Asia and Europe for their projects. (S$ 000) FY2013 FY2012 Change (%) Revenue: Mainly due to the acquisition of Allseas Marine and the project based nature of some key customers. Revenue Cost of sales 77,117 (52,233) 71,447 (47,773) Gross profit: In line with higher revenue in FY2013. Gross profit margin: Decreased from 33.1% in FY2012 to 32.3% in FY2013 mainly due to a higher write back of the carrying value of inventories as a result of higher net realisable value of the inventories assessed by an independent valuer in FY2012. Gross profit Other income Distribution costs 24, (2,900) 23, (2,142) 5.1 (56.4) 35.4 Other income: Due to gain on disposal of motor vehicles of S$0.3 million recorded in FY2012. Distribution costs: Mainly due to rise in advertising and marketing expenses of S$0.3 million and staff costs of S$0.5 million from higher headcount to support business expansion. Administrative expenses: Mainly due to an increase in IPO expenses of S$0.7 million; an increase in donation of S$0.4 million; an increase in staff cost of S$1.3 million to support business expansion and accrual of performance bonus for executive directors and CAO of S$0.2 million; an increase in acquisition-related costs of S$0.2 million; an increase in travelling expenses of S$0.2 million and directors' fee of S$0.1 million. Other operating expenses: Due to higher foreign exchange loss incurred. Administrative expenses Other operating expenses Interest expenses Profit before income tax Income tax expense Profit for the year Attributable to: Non-controlling interests (7,566) (319) (1,834) 12,472 (1,981) 10,491 - (4,643) (212) (1,518) 15,634 (2,663) 12, (20.2) (25.6) (19.1) NM Interest expenses: Mainly due to higher average bank borrowings. Shareholders of the Company 10,491 12,971 (19.1) Profit before income tax: Mainly due to higher expenses as detailed above. Gaylin Holdings Limited 17

20 OPERATING AND FINANCIAL REVIEW Analysis of Revenue by Segments Revenue Breakdown by Business Segments The Group has two business segments comprising its Rigging and Lifting business and Ship Supply business. The main revenue contributor is its Rigging and Lifting business, which accounted for 92.6% and 96.5% of the Group s total revenue in FY2013 and FY2012 respectively. The balance of the revenue was contributed by its Ship Supply business. Revenue Breakdown by Location of Customers (S$ 000) Percentage Revenue Breakdown by Location of Customers (%) FY2013 FY2012 Change (%) Singapore Malaysia 32,433 8,737 37,080 5,635 (12.5) % 13.5% Other Asia (1)(2) Europe (1) Others (1) 14,639 13,849 7,459 9,935 9,170 9, (22.5) 17.9% FY % 42.1% 12.8% 13.9% FY % Total Revenue 77,117 71, % 7.9% Note: (1) Revenue from countries in Other Asia, Europe and Others include revenue from customers in countries that individually account for less than 10% of the Group s revenue. (2) Revenue from Other Asia excludes revenue from Singapore and Malaysia. Singapore Malaysia Other Asia Europe Others Gaylin s main geographical markets are Singapore, Malaysia, Other Asian countries (including Vietnam), Europe and Others. The Group typically experiences a fluctuation in revenue contribution from each customer in each financial year due to the project-based nature of the Group s business and industry. In general, customers projects typically differ in scope and size, and their occurrence is irregular, resulting in the supply of different products to them from the Group on an irregular basis. In FY2013, sales to the Group s Europe-based customers increased by S$4.7 million mainly due to a major project for an existing customer based in Europe. Similarly, sales to Gaylin s Malaysia- and Other Asia- based customers increased by S$3.1 million and S$4.7 million respectively in FY2013 as more orders were awarded to existing and new customers in these regions. At the same time, the Group s on-site presence in Malaysia via its Kuala Lumpur sales office also played a part in boosting its revenue from this market. On the other hand, revenue contribution from Singapore and Others decreased by S$4.6 million and S$2.2 million respectively mainly due to the project based nature of some of the Group s key customers. Annual Report

21 Financial Position (S$ 000) As at 31 March 2013 As at 31 March 2012 Change (%) Current assets by S$43.3 million to S$153.7 million: Mainly due to increases in cash and bank balances of S$17.2 million largely from IPO proceeds; in inventories of S$17.1 million in line with the strategy to be an inventory specialist; and higher trade receivables of S$8.6 million mainly due to higher sales in fourth quarter of FY2013 ( 4Q FY2013 ). Total Assets - Cash and bank balances - Trade receivables - Other receivables - Inventories 165,028 21,408 27, , ,316 4,200 18, , Non-current assets by S$2.4 million to S$11.3 million: Mainly from higher building costs of S$1.9 million and intangible asset relating to customer relationships of S$0.2 million resulting from the acquisition of Allseas Marine. - Property, plant and equipment - Long term assets - Intangible asset - Subsidiaries 10, , NM NM NM Current liabilities by S$3.5 million to S$58.4 million: Mainly due to a decrease in bank borrowings of S$9.4 million from bank bill payables of S$5.3 million and short term loans of S$4.1 million and a decline in income tax payable by S$1.4 million; and partially offset by an increase in trade payables of S$6.5 million mainly due to higher purchases in 4Q FY2013 and an increase in other payables of S$0.8 million mainly from accrued operating expenses for performance bonus for executive directors and CAO, employee bonus, unutilised annual leave and directors' fee. Non-current liabilities by S$5.5 million to S$16.9 million: Mainly due to repayment of bank borrowings and finance leases. Total Liabilities - Trade payables - Other payables - Current portion of bank borrowings - Current portion of finance leases - Income tax payable - Bank borrowings - Finance leases - Deferred tax liability Total Shareholders Equity 75,337 16,417 1,311 37,690 1,011 1,956 15, ,691 84,354 9, , ,405 20,693 1, ,962 (10.7) (20.1) 7.9 (42.6) (23.8) (43.0) Gaylin Holdings Limited 19

22 OPERATING AND FINANCIAL REVIEW Cash and Cash Equivalents With financing activities generating net cash of S$32.1 million, the Group s cash position for the year increased by S$17.2 million to S$21.4 million as at the end of FY2013. (S$ 000) FY2013 FY2012 Net cash used in operating activities of S$11.8 million mainly resulted from working capital outflow of S$23.5 million, partially offset by net cash of S$15.9 million generated from operating activities. We paid income tax of S$3.4 million and interest of S$0.8 million on bank bills. Net cash used in investing activities of S$3.1 million mainly due to the purchase of plant and equipment of S$1.8 million and acquisition of Allseas Marine of S$1.2 million in 4Q FY2013. Net cash flows generated from financing activities of S$32.1 million mainly due to net proceeds from the issuance of new shares of S$44.2 million which was partially offset by the net repayment of bank borrowings and related interest of S$11.2 million; and the repayment of obligations under finance leases of S$1.0 million. Net cash (used in)/ from operating activities Net cash (used in) investing activities Net cash from/ (used in) financing activities Net change in cash and cash equivalents Cash and cash equivalents at end of the year (11,770) (3,096) 32,071 17,205 21,408 12,126 (1,295) (3,140) 7,691 4,200 Annual Report

23 Borrowings (S$ 000) FY2013 FY2012 Certain bank borrowings are secured by a legal mortgage over the Group's leasehold land and buildings, joint and several personal guarantees of the executive directors and CAO, a floating charge over certain inventories of the Group and a corporate guarantee of a certain subsidiary. Current liabilities - Current portion of bank borrowings - Current portion of finance leases Non-current liabilities 37,690 1,011 47, Finance leases are secured by charges over the leased assets. - Bank borrowings - Finance leases 15, ,693 1,628 Total Borrowings 55,387 70,421 Shareholders Returns Although the Group does not have a formal dividend policy, it intends to recommend and distribute dividends of not less than 30% of its net profits attributable to shareholders for each of FY2013 and the financial year ended 31 March 2014 ( FY2014 ). For FY2013, the Group declared a total dividend of 0.8 Singapore cents per share, which represented a payout ratio of 32.9%. Update on Use of IPO Proceeds The Group raised net proceeds of approximately S$43.0 million from its IPO which have been utilised as follows as at 31 March 2013: Use of Net Proceeds Allocation of Net Proceeds (S$ 000) Net Proceeds utilised as at 31 March 2013 (S$ 000) Balance of Net Proceeds as at 31 March 2013 (S$ 000) Expansion of operations into Asian and/or other markets 20,000 1,628 18,372 Expansion of operations into Malaysia 2, ,186 General working capital 21,042 21,042 - Total 43,042 23,484 19,558 Breakdown of General Working Capital (S$ 000) Inventories Trade and other payables Income tax Total 7,778 11,497 1,767 21,042 Gaylin Holdings Limited 21

24 CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility ( CSR ) has become one of the most important pillars of corporate reputation in the world today. While corporate and financial performances are important aspects of an organisation, they should not be at the expense of social and environmental well-being. At Gaylin, our focus is to achieve growth and progress responsibly and sustainably. From the management team (the Management ) down to every single one of our employees, the Gaylin Group is committed to conducting our business in a way that best serves the interests of our stakeholders, including the Community, the Environment, our Employees, our Shareholders and Business Partners. Underscoring our continued commitment to CSR, Gaylin was awarded the PSME 500 Corporate Social Responsibility Achievement award under the Outstanding Achievement Award Category in Shareholders Community Employees Environment Commitment to the Community The Group is involved in many extra-curricular activities aimed at helping the elderly and the less privileged in Singapore including charitable donations toward their care and education. Our on-going efforts to help the community have seen donations from the Group increase by approximately S$0.4 million in FY2013. The Group s adopted beneficiaries in FY2013 include: Associated Wire Rope Fabricators Scholarship Beyond Social Services Kwang Eng Health Care Centre Kwong Wai Shiu Hospital Lions Home For The Elders Maha Karuna Buddhist Society Myanmar Mawbee School National Council of Social Service POSB Passion Kids Fund Presbyterian Community Services Ren Ci Hospital Senior Citizen Health Care Information Shan You Counselling Centre The Disabled People s Association of Singapore In FY2013, Gaylin participated in two major charitable events, namely OCBC Cycle Singapore 2012 and the SGX Bull Charge A team of four cyclists from Gaylin took part in the OCBC Cycle Singapore 2012 in support of Dover Park Hospice ( DPH ), a non-profit organisation founded in 1992 to meet the growing need in Singapore for hospice care for terminally-ill patients. Since opening its doors to the first patient, DPH has brought care and comfort to more than 7,500 terminally-ill patients and their families through a programme of active and compassionate service. 11 runners from Gaylin participated in the SGX Bull Charge 2012 to raise funds for four charities, namely the Asian Women s Welfare Association (AWWA), Autism Association (Singapore), Fei Yue Community Services and Shared Services for Charities. The event raised some S$1.388 million towards supporting disadvantaged children, youths, elderly and families in need. Gaylin is proud to have played a part in supporting these charitable initiatives. Commitment to the Environment Care for the environment is also an essential part of our responsibility. We are fully committed to reducing the amount of Green House Gas and CO2 emission for a greener and cleaner environment. As part of our on-going efforts, we have also implemented Solacoat on our buildings for improving Energy, Efficiency and Conservation. Commitment to Employees As at 31 March 2013, Gaylin has 181 employees of which 171 are based in Singapore and the rest from the Group s other offices in Malaysia and Vietnam. We believe that our employees are our biggest asset and we are focused on our employees social well-being as well as their personal safety at the work place. Staff Development and Training All new employees are required to undergo on-the-job training under a senior staff who trains and equips them with the necessary knowledge and practical skills to perform their tasks. Our operations personnel are required to undergo compulsory training on safety and product handling, as Annual Report

25 our products are used in areas where safety standards are stringent. All operations personnel are also required to undergo compulsory in-house basic training to operate splicing and testing machines. Selected operations personnel are sent for external training to operate splicing and testing machines for certain products. When we acquire new products, the supplier of these products will also send trainers to train our warehouse and operations personnel on the operation of these new products. On-the-job training is also provided for our non-operational personnel in the area of general management, finance, communications and any other relevant areas. This allows them to improve their work performance in their respective business units. Occupational Health & Safety We have a strong and on-going commitment to Occupational Health & Safety ( OHS ) at our workplace and integrate OHS policies into our daily business operations. We are committed to prevent ill health and injury in and around the workplace and are dedicated to maintain the OHS of all employees, suppliers / contractors, customers, neighbours and other stakeholders. As part of our OHS programme, we are committed to: Conduct on-going identification of hazards, the assessment of risk, and the implementation of necessary control measures Minimise incidents and manage hazards through conducting OHS inspection and appropriate training regularly Comply with local OHS legislations and other requirements Continual review and improvement in OHS management and performance This commitment is supported by the Group s top management and is the individual and collective responsibility of all employees. To help provide a safe and healthy workplace for all our employees, contractors and visitors, we have implemented a Workplace Safety and Health Policy. Safety measures include ensuring that our staff are properly and adequately equipped with personal protective equipment such as helmets and boots at all times, fire safety equipment are well-maintained and fire safety procedures are made known to all staff. We believe that work accidents are preventable, therefore employees are constantly reminded to identify potential hazards and to maintain and ensure compliance with all regulatory requirements. In recognition of our strong pursuit in achieving OHS excellence, we were awarded the Certificate of Approval (SS506: Part 1:2009, OHSAS 18001:2007) by DAS Certification Singapore for the manufacture of wire rope slings in January Furthermore, the Group was also accorded the bizsafe STAR by the Workplace Safety and Health Council, Ministry of Manpower in April Whistle-Blowing Policy Good corporate governance is an integral element of a sound corporation and enables a company to be more transparent and forward-looking, and also acts as an effective safeguard against fraud and dubious financial engineering. With this in mind, we expect honesty, integrity and accountability at every level of the Company. The Board and the Management believe that an effective whistle-blowing arrangement will act as a deterrent to malpractice and wrongdoing, encourage openness, promote transparency, underpin our risk management systems and enhance business practice, thereby increasing the reputation of Gaylin and its management. The purpose of this whistle-blowing policy is to put in place an arrangement providing guidance on suspicion, reporting and investigation of fraudulent practices within the Group. The objectives of the policy are: To maintain a high standard of corporate governance To provide a channel of communication to the employees of the Group to report fraudulent practices and to guide employees on actions to address their concerns on suspicious fraudulent activities To provide a process for investigations and management reporting This policy deals with concerns on improprieties and wrongdoings: Affecting the financial position of the Company; Relating to the honesty and integrity of the Company s dealings; Relating to the honesty and integrity of any employee Gaylin Holdings Limited 23

26 CORPORATE SOCIAL RESPONSIBILITY or director in the course of his or her employment or dealings with or on behalf of the Company, including: Conflicts of interest: An employee or officer should always act in the best interest of the Company. A conflict of interest occurs when an individual s personal interests interferes or appears to interfere with the interests of the Company. Taking advantage of corporate opportunities: Employees and directors are prohibited from taking advantage of corporate property, information, or position, or opportunities arising from these, for personal gain or to compete with the Company. Confidentiality: Employees and directors must maintain the confidentiality of information entrusted to them by the Company or its customers, except when disclosure is authorised or legally mandated. Fair dealing: Each employee and director should endeavour to deal fairly with the Company s customers, suppliers, competitors and employees. None should take unfair advantage of anyone through dishonesty, misrepresentation of material facts or any other unfair practice. Protection and proper use of company assets: All employees and officers should protect the Company s assets and ensure their efficient use for legitimate business purposes. Compliance with laws, rules and regulations (including insider trading laws): We actively promote compliance with laws, rules and regulations, including insider trading laws. Insider trading is both unethical and illegal. Unethical behaviour: We actively promote ethical behaviour and encourage employees to report any misconduct in this regard. This policy applies to any of the above actions involving employees, vendors/contractors, consultants, and/or any other parties whom the Group has a business relationship with. Employees of the Group are responsible to highlight any suspicion of fraudulent practices and inappropriate activities within the Group and bring them immediately to the attention of the Chairman of Audit Committee. Commitment to Shareholders The Group is committed to providing the investment community with transparent, timely and accurate information. Our aim as a public-listed company is to keep our existing and potential investors updated on the Group s performance and strategic initiatives, in order to help them evaluate the Group and make informed investment decisions. As part of our Investor Relations initiatives, our corporate announcements, press releases and presentation slides are released on the Singapore Exchange s SGXNET and on our corporate website ( com) simultaneously. We maintain a dedicated investor relations section within our corporate website, where investors can easily access up-to-date information relating to the Group. We have disclosed the name and contact information of our dedicated IR contact person on our website, and in addition, investors can also sign up for an alert service which informs them whenever an announcement is posted on the website. Annual Report

27 CORPORATE GOVERNANCE Gaylin is committed to maintaining good corporate governance to enhance and protect the interests of the Company s shareholders. After being listed on 25 October 2012 on the Mainboard of SGX-ST, the Company has complied with certain corporate practices recommended by the Code of Corporate Governance 2012 which was issued on 2 May 2012 by the Ministry of Finance (the 2012 Code ). This report describes the Company s corporate governance processes and structures for FY2013 with specifi c reference to the principles of the 2012 Code. Specifi c reference is also made to the Code of Corporate Governance 2005 (the Code ) where relevant. The 2012 Code is effective for annual reports from fi nancial year commencing on or after 1 November 2012 (the 2012 Code Effective Date ). In its spirit to uphold and maintain good corporate practices in the interest of the Group and the shareholders, the Company endeavors to have an early compliance of the 2012 Code whenever practicable and possible. The Board is pleased to report on the compliance of the Company with the Code and the 2012 Code except where otherwise stated. Such compliance is regularly reviewed to ensure transparency and accountability. Principle 1: The Board s Conduct of its Affairs The Board is collectively responsible for the long-term success of the Group and is accountable to its shareholders. The functions of the Board include: deciding on strategic objectives, key business initiatives, major investments and funding matters; monitoring the performance of management and reviewing the fi nancial performance of the Group; implementing effective risk management systems including safeguarding of shareholders interest and the Company s assets; ensuring the adequacy of the internal controls; considering sustainable issues; ensuring compliance with the Code, the Companies Act (Cap 50) of Singapore, the Company s Articles of Association, the Listing Manual of the SGX-ST ( Listing Manual ), accounting standards and other relevant statutes and regulations. The Board meets quarterly in a year to approve, among others, announcements of the Group s quarterly and full year fi nancial results. The Board may have informal discussions on matters requiring urgent attention, which would then be formally confi rmed and approved by circulating resolutions in writing. Ad-hoc meetings are also convened as and when they are deemed necessary. As provided in the Company s Articles of Association, the Board may convene telephonic and videoconferencing meetings. Matters specifi cally reserved for the Board s approval are those involving material acquisitions and disposal of assets, corporate or fi nancial restructuring, share issuances, dividends to shareholders and interested person transactions. Clear directions have been imposed on Management that such matters must be approved by the Board. To facilitate effective management, the Board delegates certain functions to the various Board committees. The Board delegates such functions and authority to the Board committees without abdicating its responsibility. These committees which include the Audit Committee ( AC ), the Nominating Committee ( NC ) and the Remuneration Committee ( RC ) ( Board Committee ), operate within clearly defi ned terms of reference and functional procedures. Each of these committees reports its activities regularly to the Board. The Board ensures that incoming new Directors are familiarised with the Group s businesses and corporate governance practices upon their appointment, to facilitate the effective discharge of their duties. Newly appointed Directors will be provided a formal letter setting out their duties and obligations. Directors are constantly kept abreast of developments in regulatory, legal and accounting frameworks that are of relevance to the Group through participation in the relevant training courses, seminars and workshops. Please also refer to Principle 4 regarding the NC s plan for the Directors training and professional development programmes. Gaylin Holdings Limited 25

28 CORPORATE GOVERNANCE The number of Board and Board Committee meetings held during FY2013 and the attendance of each Director are set out as follows: Board Audit Committee Nominating Committee Remuneration Committee No. of Meetings Held (1) No. of Meetings Attended No. of Meetings Held (1) No. of Meetings Attended No. of Meetings Held (1) No. of Meetings Attended No. of Meetings Held (1) No. of Meetings Attended Mr Ang Mong Seng Mr Desmond Teo (2) (2) Mr Teo Bee Kheng (2) 1 1 (2) 1 1 (2) Mr Teo Bee Hoe (2) 1 1 (2) 1 1 (2) Mr Wu Chiaw Ching Mr Ng Sey Ming Ms Lau Lee Hua (2) 2 2 (1) Represents the number of meetings held as applicable to each individual Director. (2) Attendance at meetings that were held on a By Invitation basis. Principle 2: Board Composition and Guidance The Board currently comprises seven (7) Directors, four (4) of whom are Independent Non-Executive Directors (the Independent Non-Executive Directors or the Independent Directors or each the Independent Non-Executive Director or the Independent Director ), and three (3) are Executive Directors (the Executive Directors or each the Executive Director ) Directors Board Membership Audit Committee Nominating Committee Remuneration Committee 1 Mr Ang Mong Seng Independent Non-Executive Chairman Member Member Chairman 2 Mr Desmond Teo Executive Director and CEO Member 3 Mr Teo Bee Kheng Executive Director and COO 4 Mr Teo Bee Hoe 5 Mr Wu Chiaw Ching 6 Mr Ng Sey Ming 7 Ms Lau Lee Hua Executive Director and Deputy COO Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Chairman Member Member Member Chairman Member Member Member The NC has reviewed and is satisfi ed that the current composition and board size is appropriate for effective decision making, having taken into consideration the nature and scope of the Group s operations. The four (4) Independent Directors who made up more than half of the board composition, provide the Board with independent and objective judgement on corporate affairs of the Company. Annual Report

29 CORPORATE GOVERNANCE Each of the Independent Directors has confi rmed that he/she does not have any relationship with the Company or its related corporations, its 10% shareholders or its offi cers including confi rming not having any relationships and circumstances provided in Guideline 2.3 of the 2012 Code, that could interfere, or be reasonably perceived to interfere, with the exercise of independent judgement in carrying out the functions as an independent director with a view to the best interests of the Company. The NC has reviewed, determined and confi rmed the independence of the Independent Directors. The Board comprises Directors who are qualified and experienced in various fields including business and management, accounting and fi nance, investor relations and legal practices. The NC is of the view that the current Board comprises persons who as a group, have core competencies necessary to lead and manage the Company effectively. Principle 3: Chairman and Chief Executive Officer The 2012 Code advocates that there should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the Company s business and no one individual should represent a considerable concentration of power. The Chairman of the Board and the Chief Executive Offi cer (the CEO ) are two separate persons to ensure an appropriate balance of power, increased accountability and greater capacity for independent decision making. Mr Ang Mong Seng is an Independent and Non-Executive Director and also the Chairman of the Board. He assumes responsibility for the smooth functioning of the Board and ensures timely fl ow of information between the Management and the Board; sets agenda and ensures that adequate time is available for discussion of all agenda items, in particular strategic issues; promotes a culture of openness and debate at the Board and promotes high standards of corporate governance. Day-to-day operations of the Group are entrusted to the CEO, Mr Desmond Teo, Executive Director who assumes full executive responsibility over the mapping of business plans and operational decisions of the Group. Mr Ang Mong Seng and Mr Desmond Teo are not related to each other. There is a clear division of responsibilities of the Chairman of the Board and the CEO. All the Board Committees are chaired by Independent Directors and more than half of the Board consists of Independent Directors. Principle 4: Board Membership The NC consists of three (3) Independent Directors and one (1) Executive Director, the majority of whom, including the Chairman, are independent. Mr Ng Sey Ming - Chairman Mr Ang Mong Seng - Member Mr Wu Chiaw Ching - Member Mr Desmond Teo - Member The NC makes recommendations to the Board on relevant matters relating to board including succession planning; all board appointments/re-appointments of directors, taking into consideration composition of the Board and progressive renewal of the Board; how the director fi ts into the overall competency matrix of the Board as well as the director s contribution and performance at Board meetings, including attendance, preparedness and participation; training and professional development programmes for the Board. Currently, there is an informal succession plan put in place by the CEO. Going forward and at the relevant time, the NC will look into such plan in close consultation with the CEO and the Chairman. Management has an open policy for professional training for all the Board members, including Executive Directors and Independent Directors. The Company endorses the Singapore Institute of Directors ( SID ) training programmes and sets a budget for such training and professional development programmes. All Board members are encouraged to attend any relevant training organised by the SID or any other organisation which provides relevant training courses for directors. The cost of such training will be borne by the Company. Gaylin Holdings Limited 27

30 CORPORATE GOVERNANCE The NC has in place formal, written procedures for making recommendations to the Board on the selection and appointment of Directors. Such procedures would be activated when a vacancy on the Board arises or when the Board is considering making a new Board appointment either to enhance the core competency of the Board or for purpose of progressive renewal of the Board. Notwithstanding that the Chairman of the Board is an Independent Non- Executive Director, the Company maintains a very strong and independent element on the Board with Independent Directors making up more than half of the Board. In identifying suitable candidates, the NC may: 1. advertise or use services of external advisers to facilitate a search 2. approach alternative sources such as the SID 3. consider candidates from a wide range of backgrounds from internal or external sources 4. After short listing the candidates, the NC shall: (a) (b) consider and interview all candidates on merit against objective criteria, taking into consideration that appointees have enough time available to devote to the position; and evaluate and agree to a preferred candidate for recommendation to and appointment by the Board. As mentioned under Principle 2 above, the NC also reviews the independence of the Directors annually based on Guideline 2.3 of the 2012 Code s defi nition of what constitutes the independence of the Independent Directors. The NC has affi rmed that Mr Ang Mong Seng, Mr Wu Chiaw Ching, Mr Ng Sey Ming and Ms Lau Lee Hua are independent. None of the Independent Directors have served on the Board beyond nine years from their respective date of appointment. Guideline 2.4 of the 2012 Code is therefore not applicable to the Board. Pursuant to Article 114 of the Articles of Association of the Company, at least one-third of the Directors shall retire from offi ce at the annual general meetings of the Company (the AGM ). Accordingly, Mr Teo Bee Hoe and Mr Teo Bee Kheng will retire at the forthcoming AGM. The NC has recommended to the Board that the retiring Directors be nominated for re-election. In making the recommendation, the NC considers the Directors overall contribution and performance. All Directors are required to declare their board appointments. The NC has reviewed and is satisfied that notwithstanding their multiple board appointments, Mr Ang Mong Seng, Mr Wu Chiaw Ching and Mr Ng Sey Ming who sit on multiple boards, have been able to devote suffi cient time and attention to the affairs of the Company to adequately discharge their duties as Director of the Company. To address the competing time commitments that are faced when Directors serve on multiple boards, the NC has reviewed and made recommendation to the Board accordingly on the maximum number of listed company board appointments which any Director may hold. Based on the recommendation, the Board has determined and set the maximum number of listed company board appointments at not more than fi ve (5) listed companies of the same fi nancial year end. Currently, none of the Directors hold more than fi ve directorships in listed companies of the same fi nancial year end. Principle 5: Board Performance A review of the Board s performance is conducted by the NC annually. On the recommendation of the NC, the Board has adopted an internal process for evaluating the effectiveness of the Board as a whole. Each board member will be required to complete an appraisal form to be returned to the NC Chairman for evaluation. Based on the evaluation results, the NC Chairman will present his recommendations to the Board. The key objective of the evaluation exercise is to obtain constructive feedback from each Director to continually improve the Board s performance. The NC will at the relevant time look into adopting guidelines for annual assessment of the contribution of each individual Director to the effectiveness of the Board and also the assessment of Board committees. The NC is of the view that despite multiple board representations in certain instances, each Director has been adequately carrying out his or her duties as a Director of the Company. Annual Report

31 CORPORATE GOVERNANCE The Board has not engaged any external facilitator in conducting the assessment of Board performance. Where relevant, the NC will consider such engagement. Principle 6: Access to Information The Board is provided with adequate information by the Management prior to Board meetings on matters to be deliberated. This facilitates an informed decision-making process to enable the Directors to discharge their duties and responsibilities. Directors are also updated on initiatives and developments on the Group s business whenever possible on an on-going basis. All Directors are entitled to be provided with any additional information as needed to make informed decisions. In this connection, the Directors have separate and unrestricted access to the Management who shall provide such information in a timely manner. Where necessary, Directors, whether as a group or individually, can seek independent professional advice at the Company s expense for the discharge of their duties. The Directors also have separate and independent access to the Company Secretary. The Company Secretary is required to attend all Board and Board Committee meetings and ensures that Board procedures are followed and the applicable rules and regulations are complied with. Under the direction of the Chairman, the Company Secretary s responsibilities include ensuring good information fl ows with the Board and its board committees and between Management and Non-Executive Directors, advising the Board on all governance matters as well as facilitating orientation and assisting with professional development as required. Principle 7: Procedures for Developing Remuneration Policies Principle 8: Level and Mix of Remuneration Principle 9: Disclosure on Remuneration The RC consists of four (4) members, all of whom including the Chairman, are independent: Mr Ang Mong Seng - Chairman Mr Wu Chiaw Ching - Member Mr Ng Sey Ming - Member Ms Lau Lee Hua - Member According to its terms of reference, the responsibilities of the RC include the following:- review and recommend to the Board a framework of remuneration that will attract, retain and motivate directors and key management personnel; review the specifi c remuneration packages for each director; review the Company s obligations arising in the event of termination of the executive directors and key management personnel s contract to ensure reasonable termination clauses are not overly generous; consider whether directors, the CEO and key management personnel should be eligible for benefi ts under share schemes and such other long-term incentive schemes as may from time to time be implemented. As part of its review, the RC ensures that the Directors and key management personnel are adequately but not excessively remunerated as compared to industry benchmarks and other comparable companies. The RC also takes into consideration the Company s relative performance and the performance of individual Directors and key management personnel. Executive Directors are paid a basic salary and a performance-related bonus that are linked to the performance of the Company. Key management personnel are paid basic salary and performance bonus. The RC does consider long-term incentive schemes for the Executive Directors and key management personnel. In this connection, the RC shall at the relevant time look into granting of options under the Gaylin Employee Share Option Scheme which was approved by the shareholders of the Company on 24 September The performance-related element of the Executive Directors remuneration is designed to align their interests with the interests of shareholders and promote the long-term success of the Company. Gaylin Holdings Limited 29

32 CORPORATE GOVERNANCE The RC also ensures that the remuneration of the Independent Non-Executive Directors are appropriate to their level of contribution taking into account factors such as effort and time spent, and their responsibilities. Independent Non-Executive Directors receive a basic fee for their services. The RC ensures that the Independent Non-Executive Directors should not be over-compensated to the extent that their independence may be compromised. No Director is involved in deciding his or her own remuneration package. All revisions to the remuneration packages for the Directors and key management personnel are subjected to the review by and approval of the Board. Directors fees are further subjected to the approval of shareholders at annual general meetings. Where necessary, the RC will consult external professionals on remuneration matters of Directors and key management personnel. The remuneration band of the Directors for FY2013 and the various components of their remuneration in percentage terms are set out below in compliance with the recommendation of the Code. The RC may consider making full disclosure of the remuneration of each individual Director and the CEO on a named basis after the 2012 Code Effective Date. Remuneration Band and Name of Director Salary Bonus / Profit Sharing Fees Benefits in Kind % % % % % Up to S$250,000 Mr Ang Mong Seng (1) Mr Wu Chiaw Ching (1) Mr Ng Sey Ming (1) Ms Lau Lee Hua (1) Total S$250,001 to S$500,000 Mr Teo Bee Kheng Mr Teo Bee Hoe S$500,001 to S$750,000 Mr Desmond Teo (1) Appointed on 26 September The remuneration received by the top fi ve (5) key management personnel for FY2013 is below S$250,000 in each case, other than Mr Steven Teo whose remuneration is in the band S$250,001 to S$500,000. There is no employee who is an immediate family member of a Director or CEO whose remuneration exceeded S$150,000 during the year. Further information on Directors and the key management personnel is on page 10 to 12 of this Annual Report. The Company has not yet granted any options under the Gaylin Employee Share Option Scheme. Accountability and Audit Principle 10: Accountability Principle 11: Risk Management and Internal Controls The Board is accountable to shareholders and ensures that all material information is fully disclosed in a timely manner to shareholders in compliance with statutory and regulatory requirements. The Board strives to provide its shareholders a balanced and understandable assessment of the Group s performance, position and prospects. Annual Report

33 CORPORATE GOVERNANCE The Board takes steps to ensure compliance with legislative and regulatory requirements, including requirements under the Listing Manual, where appropriate, the Independent Directors in consultation with the Management, will request for Management s consideration for the establishment of written policies for any particular matter that is deemed to be essential to form part of management control. The Management provides appropriately detailed management accounts of the Group s performance on a quarterly basis to the Board to enable the Board to make a balanced and informed assessment of the Company s performance, position and prospects. As and when circumstances arise, the Board can request Management to provide any necessary explanation and information on the management accounts of the Company. The Board is responsible for the governance of risk. It should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders interests and the Company s assets and should determine the nature and extent of the signifi cant risks which the Board is willing to take in achieving its strategic objectives. Management is responsible to the Board for the design, implementation and monitoring of the Group s risk management and internal control systems and to provide the Board with a basis to determine the Company s level of risk tolerance and risk policies. The Board acknowledges that it is responsible for reviewing the adequacy and effectiveness of the Group s risk management and internal control systems including fi nancial, operational and compliance and information technology controls. The Board also recognises its responsibilities in ensuring a sound system of internal controls to safeguard shareholders investments and the Company s assets. The Company has engaged KPMG Services Pte. Ltd. ( KPMG ) as the internal auditors who have presented their Enterprise Risk Management ( ERM ) proposal to the AC and the Board to assist the Board and the AC in their review of the Group s risk management and internal control systems focusing on fi nancial, operational, compliance and information technology controls. Management regularly reviews the Group s business and operational activities in respect of the key risk control areas including fi nancial, operational and compliance and information technology controls and continue to apply appropriate measures to control and mitigate these risks. All signifi cant matters are highlighted to the Board and the AC for further discussion. The Board and the AC also work with the internal auditors, external auditors and the Management on their recommendations to institute and execute relevant controls with a view to managing such risks. With assistance from the internal auditors, key risk areas which have been identifi ed are analysed, monitored and reported. In this connection, the Group has conducted the enterprise risk assessment and has established the risk reporting dashboard with a view to develop a detailed risk register and to develop a structured ERM to ensure that the Group s risk management and internal control systems are adequate and effective. The Board notes that no cost effective system of internal controls could provide absolute assurance against the occurrence of material errors, losses, fraud or other irregularities. In view of the above and based on the internal controls established and maintained by the Group, work performed by the internal auditors, external auditors, and reviews performed by Management, various Board Committees and the Board so far, the AC and the Board are of the opinion that the Group s internal controls and risk management systems, addressing fi nancial, operational and compliance risks, put in place during the fi nancial year were adequate to provide a reasonable but not absolute assurance against the occurrence of errors, losses, fraud or other irregularities and the containment of business risk. In view of the above, the Board believes its responsibility of overseeing the Company s risk management framework and policies are well supported. The Board will look into the need for establishment of a separate board risk committee at the relevant time. The AC may consider receiving assurance from the CEO and CFO pursuant to the recommendation of Guideline 11.3 of the 2012 Code after the 2012 Code Effective Date. Gaylin Holdings Limited 31

34 CORPORATE GOVERNANCE Audit Committee Principle 12: Audit Committee The AC comprises four (4) members, all of whom including the Chairman, are independent: Mr Wu Chiaw Ching - Chairman Mr Ang Mong Seng - Member Mr Ng Sey Ming - Member Ms Lau Lee Hua - Member The duties of the AC include: a) review the audit plans of the Company s external auditors and the internal auditors, including the results of the auditors review and evaluation of the system of internal controls; b) review the external auditors reports; c) review with independent internal auditors the fi ndings of their review report, internal control process and procedures, and make recommendations on the internal control process and procedures to be adopted by the Company; d) review the recommendations of the external auditors and monitor the implementation of an automated inventory and information system; e) review the co-operation given by the Directors and Executive Offi cers to the external auditors; f) review the fi nancial statements of the Company and the Group, and discuss any signifi cant adjustments, major risk areas, changes in accounting policies, compliance with Singapore Financial Reporting Standards, concerns and issues arising from the audits including any matters which the external auditors may wish to discuss in the absence of management, where necessary, before their submission to the Board for approval; g) review and discuss with auditors any suspected fraud, irregularity or infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Group s operating results or fi nancial position and the Management s response; h) making recommendations to the Board on the appointment, re-appointment and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors; i) review the key fi nancial risk areas, with a view to providing independent oversight on the Group s fi nancial reporting, with the outcome of such review to be disclosed in the annual reports or, if the fi ndings are material, to be immediately announced via SGXNET; j) review interested person transactions, falling within the scope of Chapter 9 of the Listing Manual, if any, and connected person transactions; k) review transactions falling within the scope of Chapter 10 of the Listing Manual, if any; l) review any potential confl icts of interest and set framework to resolve or mitigate any potential confl ict of interest; m) review and approve foreign exchange hedging policies implemented by the Group and conduct periodic review of foreign exchange transaction and hedging policies and procedures; n) undertake such other reviews and projects as may be requested by the Board and report to the Board its fi ndings from time to time on matters arising and requiring the attention of the AC; Annual Report

35 CORPORATE GOVERNANCE o) review arrangements by which the Group s staff may, in confi dence, raise concerns about improprieties in matters of fi nancial reporting and to ensure those arrangements are in place for independent investigations of such matter and for appropriate follow-up; and p) undertake generally such other functions and duties as may be required by law or the Listing Manual, and by such amendments made thereto from time to time. The AC meets on a quarterly basis and plays a key role in assisting the Board to review signifi cant fi nancial reporting issues and judgements to ensure the quality and integrity of the accounting reports, the audit procedures, internal controls, fi nancial statements and any announcements relating to the Company s fi nancial performance. The AC reviews the adequacy and effectiveness of the internal control systems including fi nancial, operational, compliance and information technology controls annually and reports to the Board accordingly. The AC reviews the audit plan and scope of examination of the external auditors and the assistance given by the Group s offi cers to the auditors. The AC also discusses with the external auditors the results of their examinations and their evaluation of the Group s system of internal controls; and at least once a year holds separate sessions with them without the presence of the Company s management to discuss any matters deemed appropriate to be discussed privately. In addition, the AC reviews announcements relating to the Group s quarterly and full year fi nancial results, the fi nancial statements of the Company and the consolidated fi nancial statements of the Group prior to its recommendations to the Board for approval. The AC also reviews the independence and objectivity of the external auditors and having reviewed the scope and value of non-audit services provided to the Group by the external auditors, Deloitte & Touche LLP, is satisfi ed that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. The AC has recommended to the Board the nomination of Deloitte & Touche LLP for re-appointment as auditors of the Company at the forthcoming AGM. The AC has explicit authority to investigate any matter within its terms of reference. It has full access to the Management and full discretion to invite any Director or key management personnel or any executive offi cer to attend its meetings. The AC is reasonably resourced to enable it to discharge its functions properly. During FY2013, the AC has received full co-operation from the Management and the Group s offi cers in the course of it carrying out its duties. It is also satisfi ed with the adequacy of the scope and quality of the external audits being conducted by Deloitte & Touche LLP. The Board and AC have reviewed the appointment of different auditing fi rms for its foreign-incorporated subsidiaries and are satisfi ed that the appointment of different auditing fi rms would not compromise the standard and effectiveness of the audit of the Company. The Company is in compliance with Rules 712 and 715 (1) of the Listing Manual on the appointment of a same auditing fi rm in Singapore to audit its accounts and its Singapore-incorporated subsidiaries and Rule 716 (1) on the appointment of different auditing fi rms for its foreign-incorporated subsidiaries. Mr Wu Chiaw Ching, the AC Chairman is a practicing Certifi ed Public Accountant and is able to lead the AC and its members to be kept abreast of changes to accounting standards and issues which have a direct impact on fi nancial statements. In addition, the AC also relies on the external auditors, Deloitte & Touch LLP and internal auditors, KPMG, for updates on any changes to the accounting standards. Furthermore, as mentioned under Principle 4, the NC intends to send all the Directors including the Independent Directors for training with SID on courses which are relevant to them in order to discharge their duties and responsibilities. The Company has adopted a Whistle-Blowing Policy to provide a channel for employees of the Group to report in good faith and in confi dence their concerns about possible improprieties in the matter of fi nancial reporting or in other matters. The AC exercises the overseeing function over the administration of the Whistle-Blowing Policy. The Whistle- Blowing Policy provides for procedures to validate concerns and for investigation to be carried out independently. The Whistle-Blowing Policy has been circulated to all employees. The aggregate amount of audit and non-audit fees paid or payable to the Company s auditors for FY2013 are S$130,000 and S$123,000 respectively. Gaylin Holdings Limited 33

36 CORPORATE GOVERNANCE Principle 13: Internal Audit During FY2013, the AC has engaged KPMG as the internal auditors. The internal auditors primary line of reporting is the AC Chairman. Administratively, the internal auditors reports to the CEO. The shortlisting for the appointment of the internal auditors was conducted by the AC with assistance from the Management. The selection of KPMG as the internal auditors, its fee proposal and the internal audit proposal were reviewed and approved by the AC. The internal auditors carrying out of their function is in accordance to the standards set by the Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors. The AC ensures that Management provides good support to the internal auditors and provide them with access to documents, records, properties and personnel when requested in order for the internal auditors to carry out their function accordingly. The AC will review the adequacy and effectiveness of the internal audit function at least annually. Principle 14: Shareholders Rights Principle 15: Communication with Shareholders The Company treats all shareholders fairly and equitably and respects shareholders rights. The Company continually reviews and update governance arrangements with regard to shareholders rights. Relevant information pertaining to the Group, such as changes in the Company or its business which would affect the share price of the Company is disseminated in a timely manner to shareholders through public announcements via SGXNET or through circulars to shareholders and the annual reports. Shareholders are encouraged to participate effectively in and vote at general meetings. At general meetings, shareholders will be informed of the rules, voting procedures relating to the general meetings. The Company does not practice selective disclosure. The Company intends to actively engage its shareholders by putting in place an investor relations policy to promote regular, effective and fair communication with shareholders. The Company avoids boilerplate disclosures and provides detailed and forthcoming disclosure in its announcements to the SGX-ST. Such announcements are also available on the Company s website. In its IPO Prospectus dated 17 October 2012 (the IPO Prospectus ), the Company has stated that it does not have a formal dividend policy. The declarations and payment of dividends will be determined at the sole discretion of the Board subject to approval of the shareholders. The Board states in the IPO Prospectus the Company s intention to recommend and distribute dividends of not less that 30% out of the Group net profi ts attributable to the shareholders for FY2013 and FY2014. Please refer to page 43 of the IPO Prospectus for more details of the dividend policy. The Company s Articles of Association allow shareholders of the Company to appoint proxies to attend and vote on their behalf at all general meetings. Separate resolutions on each distinct issue are tabled at general meetings and explanatory notes are set out in the notices of general meetings where appropriate. All Directors including Chairman of the Board and the respective Chairman of the AC, NC and RC, the Management, and the external auditors are in attendance at general meetings to address any queries of the shareholders. The Company intends to record the minutes of general meetings that include relevant and substantial comments from shareholders relating to the agenda of the meeting and responses from Management. Such minutes will be available to shareholders upon their request. While acknowledging that voting by poll is integral in the enhancement of corporate governance and lead to greater transparency of the level of support for each resolution, the Company is concerned over the cost effectiveness and effi ciency of the polling procedures which may be logistically and administratively burdensome. Electronic polling may be effi cient in terms of speed but may not be cost effective. The Board will monitor shareholders attendance and participation at its forthcoming AGM and assess the possibility of implementing voting by poll in the future AGMs. Annual Report

37 CORPORATE GOVERNANCE Dealing in Securities The Group has adopted an internal compliance code to provide guidance to its Directors and all employees of the Group with regard to dealings in the Company s securities. The code prohibits dealing in the Company s securities by the Directors and employees of the Group while in possession of unpublished price-sensitive information. Directors and employees are not allowed to deal in the Company s securities on short-term considerations and during the two weeks before the announcement of the Company s fi nancial statement for the fi rst three quarters of its fi nancial year and the one month before the announcement of the Company s full year fi nancial results. The Directors and employees are also required to adhere to the provisions of the Securities and Futures Act, Companies Act, the Listing Manual and any other relevant regulations with regard to their securities transactions. They are also expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period. Material Contracts Save for the following material contracts previously disclosed in the IPO Prospectus, there are no other material contracts of the Company or its subsidiaries involving the interest of the CEO, any Director or controlling shareholder either still subsisting as at 31 March 2013 or if not then subsisting, entered into since the end of the previous fi nancial year. a) The Call Option Agreement dated 26 September 2012 entered into between the Company and the controlling shareholder, Keh Swee Investment Pte. Ltd. ( Keh Swee ) pursuant to which the Company was granted the Call Option. b) The Service Agreements of Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe and Mr Steven Teo, each dated 26 September c) The Covenantors Non-Competition Deed dated 26 September 2012 entered into between the Company and Mr Teo Bee Yen, Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe, Mr Steven Teo and Keh Swee. d) The Halo Non-Competition Deed dated 26 September 2012 entered into between the Company and Halo Wire Rope, L.L.C.. e) The letter of undertaking dated 26 September 2012 from Keh Swee to the Company. Interested Person Transactions The Company confi rms that there were no interested person transactions of more than S$100,000 during the fi nancial year under review. Non-Audit Fees The nature of the non-audit services that were rendered by the Company s auditors, Deloitte & Touche LLP, to the Group and their related fees for FY2013 were as follows: Fees for Reporting Accountants service rendered to the Group Fees for due diligence services rendered to the Group Fees for tax advisory services rendered to the Group S$80,000 S$30,000 S$13,000 Gaylin Holdings Limited 35

38 Financial Contents 37 Report of the Directors 46 Statements of Changes in Equity 42 Statement of Directors 48 Consolidated Statement of Cash Flows 43 Independent Auditors Report 50 Notes to Financial Statements 44 Statements of Financial Position 90 Statistics of Shareholdings 45 Consolidated Statement of Comprehensive Income 92 Notice of Annual General Meeting Proxy Form