CIRCULAR DATED 21 NOVEMBER 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt in relation to this Circular or as to the action you should take, you shouldconsult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professionaladviser immediately.

If you have sold or transferred all your issued and paid-up ordinary shares in the share capital of EzionHoldings Limited (formerly known as Nylect Technology Limited) (the “Company”), you shouldimmediately forward this Circular to the purchaser or transferee or to the bank, stockbroker or agentthrough whom you effected the sale or transfer for onward transmission to the purchaser or transferee.

The Singapore Exchange Securities Trading Limited (the “SGX-ST”) assumes no responsibility for thecorrectness of any of the statements made, reports contained or opinions expressed in this Circular.Approval in-principle by the SGX-ST is not to be taken as an indication of the merits of the Company orits securities.

EZION HOLDINGS LIMITED(formerly known as Nylect Technology Limited)

(Incorporated in the Republic of Singapore)(Company Registration Number: 199904364E)

CIRCULAR TO SHAREHOLDERS IN RELATION TO:-

(A) THE PROPOSED DISPOSAL OF THE COMPANY’S INTEREST IN THE M&E COMPANIES ANDTHE ACCOUNTS RECEIVABLE RELATING THERETO (THE “PROPOSED DISPOSAL”);

(B) THE PROPOSED CONFIRMATION OF THE GROUP’S OFFSHORE MARINE LOGISTICS ANDSUPPORT SERVICES BUSINESS AS THE CORE BUSINESS OF THE GROUP (THE“PROPOSED CONFIRMATION OF THE GROUP’S CORE BUSINESS”);

(C) THE PROPOSED SUBDIVISION OF EVERY ONE EXISTING SHARE IN THE COMPANY INTOTWO SHARES (THE “PROPOSED SHARE SUBDIVISION”); AND

(D) THE PROPOSED CHANGE OF THE AUDITORS OF THE GROUP (THE “PROPOSED CHANGEOF AUDITORS”),

(COLLECTIVELY, THE “PROPOSALS”)

IMPORTANT DATES AND TIMES

Last date and time for lodgement of Proxy Form : 8 December 2007 at 11 a.m.

Date and time of Extraordinary General Meeting : 10 December 2007 at 11 a.m.

Place of Extraordinary General Meeting : No 1 Woodlands Sector 1 Nylect Industrial Building Singapore 738309

CONTENTS

Page

DEFINITION ........................................................................................................................................ 3

LETTER TO SHAREHOLDERS.......................................................................................................... 7

1. INTRODUCTION ...................................................................................................................... 7

2. THE PROPOSED DISPOSAL .................................................................................................. 7

3. THE PROPOSED CONFIRMATION OF THE GROUP’S CORE BUSINESS .......................... 13

4. THE PROPOSED SHARE SUBDIVISION................................................................................ 31

5. THE PROPOSED CHANGE OF AUDITORS............................................................................ 33

6. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS ...................................... 34

7. DIRECTORS’ RECOMMENDATIONS ...................................................................................... 35

8. EXTRAORDINARY GENERAL MEETING................................................................................ 35

9. ACTION TO BE TAKEN BY SHAREHOLDERS........................................................................ 35

10. DIRECTORS’ RESPONSIBILITY STATEMENT ........................................................................ 35

11. DOCUMENTS FOR INSPECTION .......................................................................................... 36

NOTICE OF EXTRAORDINARY GENERAL MEETING .................................................................... 37

EXTRAORDINARY GENERAL MEETING – PROXY FORM

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DEFINITIONS

Except where the context otherwise requires, the following definitions apply throughout this Circular:

“Accounts Receivable” : The net amount of S$2.716 million due to the Company from theM&E Companies

“AGM” : The annual general meeting of the Company as may be convenedfrom time to time

“Audit Committee” : The audit committee of the Company

“Balance Sheet Date” : 30 June 2007, being the reference date for the purpose ofdetermining, inter alia, the value of the Disposal Considerationunder the Sale and Purchase Agreement

“Auditors” The auditors for the time being of the Company

“CDP” : The Central Depository (Pte) Limited

“Circular” : This circular dated 21 November 2007

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended ormodified from time to time

“Company” : Ezion Holdings Limited (formerly known as Nylect TechnologyLimited)

“Completion” : The completion of the disposal by the Company of its interest in theM&E Companies and the Accounts Receivable relating thereto tothe Purchaser

“Directors” : The board of directors of the Company as at the date of thisCircular

“Disposal Consideration” : The consideration of S$4.9 million, payable in cash, for which theCompany proposes to dispose of its interest in the M&E Companiesand the Accounts Receivable relating thereto to the Purchaser

“EGM” : The extraordinary general meeting of Shareholders, notice of whichis set out on pages 37 and 38 of this Circular

“EPS” : Earnings per Share

“FY” : Financial year ended or, as the case may be, ending 31 December

“Group” : The Company and its subsidiaries, collectively

“HY” : The six months ended or, as the case may be, ending 30 June

“Latest Practicable Date” : 9 November 2007, being the latest practicable date prior to theprinting of this Circular

“Listing Manual” : The listing manual of the SGX-ST

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“M&E Companies” : The subsidiaries of the Company, which undertake the Group’sMechanical, Electrical and Fabrication Services business operations

“Mechanical, Electrical : One of the Group’s core businesses, involving the provision of and Fabrication Services” mechanical and electrical engineering services to the industrial and

commercial sectors, providing design and build services as well assupply and installation services and the fabrication of fasteners andenclosures

“Memorandum” : The memorandum of association of the Company

“MPA” : The Maritime and Port Authority of Singapore

“NAV” : Net asset value

“NTA” : Net tangible assets

“Nylect Indonesia” : PT Nylect Indonesia

“Nylect Vietnam” : Nylect Technology Limited, Vietnam

“Nylect Xian” : NT Industries Co Ltd (in liquidation)

“Offshore Marine Logistics : One of the Group’s businesses, involving the provision of the and Support Services” Group’s customers, who are mainly in the offshore oil and gas or “OMLSS” industries, with the necessary assets, which comprise, inter alia,

vessels, rigs, etc

“OMLSS Assets” : The assets provided by the Group to its OMLSS customers, such asvessels, rigs, etc. Please refer to paragraphs 3.1 and 3.4 for moredetails

“OMLSS Companies” : Subsidiaries of the Group through which it conducts its OMLSSbusiness, namely, Northern Offshore Pte Ltd, Northern Offshore(Australia) Pty Ltd, Teras Offshore Pte Ltd, Teras Transporter PteLtd, Teras Transporter 2 Pte Ltd, Teras 331 Pte Ltd, Teras 335 PteLtd, Teras 336 Pte Ltd and Teras 338 Pte Ltd

“PRC” : People’s Republic of China

“Proposals” : The following proposals, collectively:-

(a) The Proposed Disposal;

(b) The Proposed Confirmation of the Group’s Core Business;

(c) The Proposed Share Subdivision; and

(d) The Proposed Change of Auditors

“Proposed Change : The proposed change of the Auditors of the Groupof Auditors”

“Proposed Confirmation : The proposed confirmation of the Group’s Offshore Marine Logistics of the Group’s Core and Support Services business as the core business of the GroupBusiness”

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“Proposed Disposal” : The proposed disposal of the Company’s interest in the M&ECompanies and the Accounts Receivable relating thereto to thePurchaser

“Proposed Share : The proposed subdivision of every one existing Share in the share Subdivision” capital of the Company into two Shares

“Purchaser” : Mr Sim Hee Chew, and, where the context so admits, “Purchaser”shall include such entity as Mr Sim Hee Chew shall nominate for thepurposes of holding the shares of the M&E Companies and theAccounts Receivable relating thereto to be acquired pursuant to theSale and Purchase Agreement

“Rule” : A rule set out in the Listing Manual

“Sale and Purchase : The agreement dated 19 September 2007 between the Company Agreement” and Mr Sim Hee Chew pursuant to which the Company is proposing

to dispose of the interest in the M&E Companies and the AccountsReceivable relating thereto to the Purchaser, more particularlydescribed in paragraph 2 of this Circular

“Securities Account” : A securities account maintained by a Depositor with CDP but doesnot include a securities sub-account

“SFA” : The Securities and Future Act, Chapter 289 of Singapore asamended or modified from time to time

“SGX-SESDAQ” : SGX-ST Dealing and Automated Quotation System

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Share Issues” : The allotment and issue of (i) 145,000,000 new Shares to UniqueCounsel Limited on 22 February 2007, (ii) 16,800,000 new Sharesto NHPL on 4 May 2007, (iii) 28,810,000 new Shares to the placeesprocured by a placement agent on 20 July 2007, (iv) 4,200,000 newShares to NHPL on 7 September 2007 and (v) 14,252,000 newshares to the placees procured by a placement agent on 7September 2007

“Shareholders” : Registered holders of Shares, except that where the registeredholder is CDP, the term “Shareholders” shall, where the contextadmits, mean the depositors whose Securities Accounts arecredited with Shares

“Shares” : Ordinary shares in the share capital of the Company

“US$” : United States dollars

“S$” : Singapore dollars

“%” or “per cent.” : Per centum or percentage

The terms “depositor”, “depository agent” and “depository register” shall have the same meaningsascribed to them respectively in section 130A of the Companies Act and the terms “subsidiary” and“substantial shareholder” shall have the meanings ascribed to them in sections 5 and 81 of theCompanies Act, respectively.

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The expressions “associates”, “associated companies” and “controlling shareholder” shall have themeanings ascribed to them respectively in the Listing Manual.

Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine and neuter gender and viceversa. References to persons shall, where applicable, include corporations.

Any reference in this Circular to any enactment is a reference to that statute or enactment for the timebeing amended or re-enacted. Any term defined under the Companies Act, the SFA or the Listing Manualor any statutory modification thereof and used in this Circular shall, where applicable, have the meaningascribed to it under the SFA or the Listing Manual or any statutory modification thereof, as the case maybe, unless otherwise provided.

Any discrepancies in tables included herein between the amounts therein and the totals thereof are dueto rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregationof the figures that precede them.

Any reference to a time of day in this Circular shall be a reference to Singapore time unless otherwisestated.

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LETTER TO SHAREHOLDERS

EZION HOLDINGS LIMITED(formerly known as Nylect Technology Limited)

(Incorporated in the Republic of Singapore)(Company Registration Number: 199904364E)

Board of Directors: Registered Office:

Mr Lee Kian Soo (Non-Executive Chairman) No 1 Woodlands Sector 1Mr Chew Thiam Keng (Chief Executive Officer and Executive Director) Nylect Industrial Building Dr Wang Kai Yuen (Independent Director) Singapore 738309Mr Lim Thean Ee (Independent Director)Mr Tan Woon Hum (Independent Director)Mr Teo Chuan Teck (Independent Director)

21 November 2007

To: The Shareholders of Ezion Holdings Limited

Dear Sir/Madam

(A) THE PROPOSED DISPOSAL OF THE COMPANY’S INTEREST IN THE M&E COMPANIES ANDTHE ACCOUNTS RECEIVABLE RELATING THERETO (THE “PROPOSED DISPOSAL”);

(B) THE PROPOSED CONFIRMATION OF THE GROUP’S OFFSHORE MARINE LOGISTICS ANDSUPPORT SERVICES BUSINESS AS THE CORE BUSINESS OF THE GROUP (THE“PROPOSED CONFIRMATION OF THE GROUP’S CORE BUSINESS”);

(C) THE PROPOSED SUBDIVISION OF EVERY ONE EXISTING SHARE IN THE COMPANY INTOTWO SHARES (THE “PROPOSED SHARE SUBDIVISION”); AND

(D) THE PROPOSED CHANGE OF THE AUDITORS OF THE GROUP (THE “PROPOSED CHANGEOF AUDITORS”),

(COLLECTIVELY, THE “PROPOSALS”)

1. INTRODUCTION

The purpose of this Circular is to provide Shareholders with relevant information relating to theProposals as well as to seek Shareholders’ approval for the same.

2. THE PROPOSED DISPOSAL

On 19 September 2007, the Company announced that it had entered into the Sale and PurchaseAgreement with the Purchaser, pursuant to which the Company has agreed to sell and thePurchaser has agreed to purchase from the Company its interest in the M&E Companies and theAccounts Receivable relating thereto.

Further, under the Sale and Purchase Agreement, all profits and receipts, and all losses andoutgoings, accrued or payable in relation to the M&E Companies between the Balance Sheet Dateand Completion shall belong to and be for the account of the Purchaser.

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The names of the M&E Companies and the Company’s effective interest therein is as follows:-

Name of M&E Company/ Effective interest Country of Incorporation held by the Company

Nylect Engineering Pte Ltd/Singapore 100%MST Precision Pte Ltd/Singapore 60%PT Nylect Indonesia/Indonesia 70%Nylect Technology Limited, Vietnam/Vietnam 100%NT Industries Co. Ltd (under liquidation)/the PRC 100%

Pending completion of the sale and purchase of Company’s interest in the M&E Companies, thePurchaser shall have sole and absolute control and management over the day-to-day operations(including all financial matters) of each of the M&E Companies with effect from the date of the Saleand Purchase Agreement.

2.1 Conditions Precedent

The Proposed Disposal is subject to:-

(i) the Company receiving approval by Shareholders in a general meeting in respect of thedisposal of the M&E Companies and the Accounts Receivable relating thereto on the termsand conditions of the Sale and Purchase Agreement;

(ii) the licenses, authorisations, orders, grants, confirmations, permissions, registrations andother approvals, including the approvals from the minority shareholders of the M&ECompanies, necessary or desirable for or in respect of the proposed transfer of the M&ECompanies by the Company or for the implementation of the Sale & Purchase Agreement orfor the proper carrying on of the M&E Business having been obtained from appropriategovernments, governmental, supranational or trade agencies, courts or other regulatorybodies on terms satisfactory to the Purchaser and such licenses, authorisations, orders,grants, confirmations, permissions, registrations and other approvals remaining in full forceand effect; and

(iii) the discharge of all corporate guarantees, deeds of subordination and any other form ofsecurity or financial support provided by the Company to the banks in favour of the M&ECompanies.

If the conditions referred to in paragraphs 2.1(ii) and 2.1(iii) are not complied with by 31 December2007, for any reason, the Company shall be entitled (in addition to and without prejudice to itsother rights and remedies conferred by law or otherwise, including the right to claim damages):

(a) to elect to terminate the Sale and Purchase Agreement; or

(b) to effect Completion as far as practicable, having regard to the defaults (without prejudice toits rights thereunder); or

(c) to fix a new date for Completion (not more than twenty (20) Business Days after the dateoriginally fixed for Completion),

save that:-

(I) in respect of the transfer of the shares of Nylect Indonesia and Nylect Vietnam, Completionthereof may take place on a date not later than 6 months after the date originally fixed forCompletion solely if the Purchaser requires such extended period to procure administrativeand regulatory approvals in respect of the said transfers, which for the avoidance of doubtshall not affect the payment of the Consideration on the date originally fixed for Completion;and

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(II) in respect of the shares of Nylect Xian, the shares shall not be transferred to the Purchaser,but the Purchaser shall complete the liquidation thereof.

2.2 Consideration

The consideration for the Proposed Disposal (the “Disposal Consideration”), arrived at after arm’slength negotiations on a willing seller willing buyer basis, after taking into account the reasons forProposed Disposal referred to in paragraph 2.3, is S$4.9 million (representing a 0.5% premium tothe NTA of the M&E Companies). The aforesaid consideration will be payable by the Purchaserfor:-

(i) the acquisition of the Company’s interest in the M&E Companies; and

(ii) the transfer of the net accounts receivable due to the Company from the M&E Companies,

and will be paid in cash in one lump sum following the completion of the Proposed Disposal.

2.3 Rationale

The Directors are of the view that it is in the best interest of the Company to undertake theProposed Disposal for the reasons set out below:-

(i) The Mechanical, Electrical and Fabrication Services division, taken as a whole, has beenloss-making. The Mechanical, Electrical and Fabrication Services division has accumulatedlosses of S$8,675,000 as at 31 December 2006 and reported net losses of S$1,510,000 forHY2007.

(ii) The Company is of the view that the Mechanical, Electrical and Fabrication Services divisionfaces keen competition. Whilst the management strives to continue improving theoperational capability and achieve greater efficiency, one of the challenges encountered wasthe increased prices of raw materials, which affected the gross profit margin of theMechanical, Electrical and Fabrication Services division. In order to reduce the exposure tothe volatile raw material prices, the Mechanical, Electrical and Fabrication Services divisionhas been cautious in taking new jobs, resulting in the decline in revenue.

(iii) The M&E Companies had an NAV of S$4.877 million as at the Balance Sheet Date(including the transfer of the Accounts Receivable of S$2.716 million) and the DisposalConsideration of S$4.9 million represents a premium of 0.5% to the NAV of the assets beingdisposed off pursuant to the Proposed Disposal.

(iv) The Company has also considered other potential purchasers. However, the indicative offerby the Purchaser was the most favourable, being the highest in terms of the monetary value,indemnities provided by the Purchaser and in view that the Purchaser has been running thecore Mechanical, Electrical and Fabrication Services business of the Group since 1982.

(v) The completion of the Proposed Disposal will remove the risk arising from corporateguarantees undertaken by the Company as security for the bank loans taken by Mechanical,Electrical and Fabrication Services division.

(vi) The Proposed Disposal would be beneficial to the Group for the following reasons:-

(a) it will allow the Company to focus on its more profitable Offshore Marine Logistics andSupport Services division, which has been profitable since its commencement in theearly half of FY2007 (please refer to paragraph 3 for more details on the Group’sOMLSS division);

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(b) it will result in net proceeds of approximately S$4.8 million (after deducting estimatedexpenses of the transaction), which will be available to fund the working capitalrequirements for the Offshore Marine Logistics and Support Services division; and

(c) the completion of the Proposed Disposal will lower the gearing of the Group, resultingin a healthier balance sheet which will, in turn, give the Group an edge in seeking itsbanks’ support to fund its future growth.

Accordingly, the disposal of the Mechanical, Electrical and Fabrication Services division will resultin the disposal of loss-making companies at a premium to their NAV, improve the balance sheet ofthe Company and hence enable it to conserve its limited resources. Thereafter, the Company willbe in a better position to focus on the better performing Offshore Marine Logistics and SupportServices division businesses and also identify and explore any new business which may enhanceShareholders’ value. Please refer to paragraph 3 for more details on the Group’s Offshore MarineLogistics and Support Services division.

2.4 Relative figures computed pursuant to Rule 1006 of the SGX-ST Listing Manual

Test Application

Rule 1006(a):Net asset value of assets to be disposed of,compared with the Company’s net asset value.

Rule 1006(b):Net profits (or loss) attributable to the assetsacquired or disposed of, compared with theGroup’s net profits.

Rule 1006(c):The aggregate value of the consideration givenor received, compared with the Company’smarket capitalisation.

Rule 1006(d):The number of equity securities issued by theissuer as consideration for an acquisition,compared with the number of equity securitiespreviously in issue.

Notes:-

(1) The Company’s net asset value of S$76.44 million was derived based on the net asset value of the Group as at 30June 2007, after adjusting for the net increase pursuant to the placement of shares on 20 July 2007 and 7September 2007. As the assets proposed to be disposed of had a net assets value of S$5.11 million, the relativefigure was approximately 6.7%.

(2) The relative figure computed pursuant to Rule 1006(b) is a negative figure, which is computed as follows:-

Group’s net profit before tax: $1,102,000Less : other income: $1,926,000Less: Profit from the OMLSS Division: $ 675,000Net loss attributable to the M&E Business: ($1,499,000)

Based on the foregoing, the relative figure computed pursuant to Rule 1006(b) is a negative figure, as follows:-Relative figure = ($1,499,000) / $1,102,000

= (136.0)%

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6.7%(1)

(136.0%)(2)

0.9%, being an aggregate value of theconsideration given of S$4.9 million over theGroup’s market capitalisation of S$542.3million.

Not applicable

As the applicable relative figure computed under Rule 1006(a) exceeds 5% but does not exceed20%, the Proposed Disposal is a “discloseable transaction” as defined under Chapter 10 of theSGX-ST Listing Manual, for which information as set out in this announcement must be disclosedimmediately but shareholders’ approval for the transaction will not be mandatory. Nonetheless, theCompany is seeking shareholders’ approval for the aforesaid transaction.

2.5 Financial effects of the Proposed Disposal

FOR ILLUSTRATIVE PURPOSES ONLY, based on the announced unaudited consolidatedfinancial statements of the Group for HY2007, the EPS and NTA per Share of the Group and thegearing of the Group, after the Proposed Disposal are as follows:-

(a) EPS

For the purpose of computing the EPS of the Group after the Proposed Disposal, it isassumed that the Proposed Disposal had been effected on 1 January 2007.

S$’000

Profit attributable to Shareholders 1,031Adjusted profit after adjusting for the Proposed Disposal 2,448Weighted Average no. of Shares for HY2007 192,774,000

EPS 1.27 cents

Based on the foregoing, the Proposed Disposal would have resulted in an EPS of the Groupof 1.27 cents instead of an EPS of 0.53 cents.

(b) NTA per Share

The NTA per Share of the Group was 8.05 cents as at 30 June 2007.

S$’000

NTA as at 30 June 2007 19,802NTA after adjusting for the Proposed Disposal 19,825Number of Shares as at 30 June 2007 245,848,000

NTA per share 8.06 Cents

Based on the foregoing, assuming the Proposed Disposal was effected on 30 June 2007,the NTA per Share would have been 8.06 cents instead of 8.05 cents.

(c) Gearing

The gearing of the Group, defined as the total indebtedness to financial institutions as aratio of capital employed (shareholders’ funds and minority interests) was 0.53 times as at30 June 2007.

S$’000

Total borrowings as at 30 June 2007 10,454Total borrowings after adjusting for the Proposed Disposal 5,454Shareholders’ funds as at 30 June 2007 19,802Shareholders’ funds after adjusting for the Proposed Disposal 19,825

Gearing before the Proposed Disposal 0.53 timesGearing after the Proposed Disposal 0.28 times

Based on the foregoing, assuming the Proposed Disposal was effected on 30 June 2007,the gearing of the Group would have been 0.28 times instead of 0.53 times.

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FOR ILLUSTRATIVE PURPOSES ONLY, the financial effect of the Proposed Disposal on thebalance sheet and the profit and loss account of the Group, based on the announced unauditedconsolidated financial statements of the Group for HY2007, is set out below.

(d) Effect of Proposed Disposal on the balance sheet of the Group:

AssumingProposedDisposal

Actual as at took place onGroup S$’000 30 June 2007 30 June 2007

CURRENT ASSETSBank and cash equivalents 9,429 8,000Trade and other receivables 8,759 4,427Inventories 337 0Current investments 19 0

18,544 12,427

NON-CURRENT ASSETSInvestment properties 600 0Property, plant and equipment 20,855 16,368Other assets 44 0

21,499 16,368

TOTAL ASSETS 40,043 28,795

CURRENT LIABILITIESShort-term borrowings 4,512 0Trade and other payables 9,198 3,363Provision for taxation 307 153Provision for employee benefits 49 0Current portion of long term borrowings 672 545Current portion of finance lease 28 0

14,766 4,061

NON-CURRENT LIABILITIESLong-term borrowings 5,175 4,909Finance lease liabilities 67 0

5,242 4,909

NET ASSETS/( LIABILITIES) 20,035 19,825

SHARE CAPITAL AND RESERVESShareholders’ Fund 19,802 19,825Minority Shareholders 233 0

NET ASSETS/( LIABILITIES) 20,035 19,825

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(e) Effect of Proposed Disposal on the profit and loss account of the Group:

Adjusted HY2007(Exclude

Contribution from Contribution fromMechanical, Mechanical,

Electrical and Electrical andFabrication Fabrication

Services ServicesGroup S$’000 HY2007 Division Division)

Profit before tax 1,102 (1,499) 2,601Income tax (164) (11) (153)Profit after tax 938 (1,510) 2,448Minority interests 93 93 0Profit attributable to Shareholders 1,031 (1,417) 2,448

The financial effects as set out above are theoretical in nature and are therefore notnecessarily indicative of the future actual financial position, earnings and gearing of theGroup after the completion of the Proposed Disposal.

2.6 Information on the Purchaser

The Purchaser, Mr Sim Hee Chew, was formerly an executive Director of the Company. Heremains a key executive of the Group, as of the Latest Practicable Date, being responsible foroverseeing its Mechanical, Electrical and Fabrication Services division. He remains a SubstantialShareholder (due to his deemed interest in the shares held by Nylect Holdings Pte Ltd in the sharecapital of the Company) as of the Latest Practicable Date.

Following the completion of the Proposed Disposal, Mr Sim Hee Chew will not have any executivefunction in the Group.

2.7 Operations and assets of the Company after the completion of the Proposed Disposal

Following the completion of the Proposed Disposal, the Company’s remaining business divisionwill be its Offshore Marine Logistics and Support Services division. Please refer to paragraph 3 formore details on this business division.

3. THE PROPOSED CONFIRMATION OF THE GROUP’S CORE BUSINESS

3.1 The Group’s Offshore Marine Logistics and Support Services business

Following the completion of the Proposed Disposal, the Group will have one business division,namely, its existing Offshore Marine Logistics and Support Services (OMLSS) division. Thisbusiness division is undertaken by the OMLSS Companies, who are all wholly-owned subsidiariesof the Company in Singapore.

Under the OMLSS division, the Group provides customers with the necessary marine logistics-related assets, which comprise mainly vessels, rigs, etc, as well as other marine offshore logisticsand support services. The Group typically meets its customers’ requirements in the following ways:

(i) the purchasing of assets, and the leasing of the same to its customers;

(ii) the building of the assets via sub-contracting, and leasing of the same to its customers;

(iii) entering into back-to-back leases of the assets; and

(iv) modifying the existing assets of its customers to conform to their specifications.

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The Group would supply the above assets to customers who are oil and gas companies engagedin the offshore exploration, production and development of oil and natural gas from marinesources. The revenue from this business segment is derived mainly from the charter contractsentered into with these customers, as well as the provision of offshore marine support services.

In preparation for engaging in such activities, the Group will establish the appropriate managementand investment framework that includes a risk assessment, financial and accounting analysis. Arisk management policy and governance framework will be formulated and applied to alltransactions, including appropriate due diligence processes, assessment and management of riskfactors involved, risk management policies and approval processes, communication andconsultation processes.

3.2 Organisational structure and key management of the Group’s OMLSS business division

The Group currently has in place a team comprising members, each of whom on average hasmore than 10 years of experience in the offshore marine logistics and support services industry. Allmembers of the team bring with them invaluable experience in various areas of sales, operationsand technical expertise. Please refer to the organisation chart of the Group’s OMLSS businessdivision and a description of the experience and qualifications of the Group’s executive Directorand key executives (who comprise the respective heads of department), below. In addition to theforegoing persons, the Group employs four administrative staff in the Finance and AdministrationDepartment, and 14 operations staff (including crew who operate its vessels) under the Operations& Commercial Department. The Group does not employ a significant number of temporaryemployees as the OMLSS Assets chartered to its customers are crewed by the customers’ staffand/or contractors.

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A summary of the executive Director and the key executives (who comprise the respective headsof department) of the Group’s OMLSS business division is set out below.

Chief Executive Officer and Executive Director

Mr Chew Thiam Keng is the Executive Director of the Group appointed since 1st March 2007. MrChew has also been appointed as the Chief Executive Officer of the Group since 1st June 2007.

With several years of experience in managing public listed companies, Mr Chew brings addedvalue to the management of the Company as he takes overall charge of the Group’s operations instrategic planning, corporate management and business development.

Prior to joining Ezion, he was the Managing Director of KS Energy Services Limited and anExecutive Director of Kian Ann Engineering Ltd. between 1996 and 2001. Mr Chew was also withthe Development Bank of Singapore Limited for nine years serving in the areas of corporatefinance and retail banking.

Mr Chew graduated with a Bachelor Degree (Honours) in Mechanical Engineering from theNational University of Singapore and holds a MBA from the University of Hull.

Financial Controller

Mr Cheah Bon Pin joined the Group in June 2007 and is responsible for all accounting, financialand taxation matters of the Group. He has more than 10 years of experience in auditing andcommercial accounting. Prior to joining the Group, he was a Finance Manager of KS EnergyServices Ltd. from 2004 to 2007, an Assistant Finance Manager of Acma Ltd from 2000 to 2004,and an Accounts Executive with East Elevators Pte Ltd from 1998 to 2000. He holds the ACCAaccounting qualification and is a provisional Certified Public Accountant of Singapore.

Technical Head (Teras Offshore Pte Ltd)

Mr Guru Sharma joined the Group in August 2007. A Chartered Engineer by training, he is aFellow Member of the Institute of Marine Engineers (India) and holds a Class 1 Competency as aMarine Engineer Officer. With more than 30 years of technical and operational experience, GuruSharma provides a solid backbone to the Group’s vessel management activities.

Operation and Commercial Head (Teras Offshore Pte Ltd)

Mr Poh Leong Ching (David) assumed the post of Operation and Commercial Head of the Group’sOMLSS business division in August 2007 and is responsible for the day-to-day operations anddeployment of the fleet of vessels. Mr Poh has more than 15 years of experience in the sales andmarketing of cranes and heavy equipment. Before joining the Group, Mr Poh held the position ofMarketing Manager at Tiong Woon Marine Pte Ltd, where he was in charge of the operations oftheir entire fleet of tugs and barges. Prior to that, he had been the Sales and Marketing Managerat Tat Hong Holdings Group. Mr Poh holds a Professional Diploma in Business from Edith CowanUniversity of Western Australia.

International Sales Manager (Teras Offshore Pte Ltd)

Mr Lawrence Mui Rap Wai joined the company in March 2007 and is responsible for the businessdevelopment functions. Prior to joining the Group, he was the Head of Sales at Uni-Bulk ServicesPte Ltd, a company managing a fleet of tugs and barges. Mr Mui graduated from the University ofNew South Wales, Australia with a Bachelor of Commerce. He also holds a Specialist Diploma inShipping Operation and Management.

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3.3 Risk factors

To the best of the Directors’ knowledge and belief, all the risk factors that are material to theShareholders in making an informed judgment on a change of core business are set out below.

The Group could be affected by a number of risks that relate to the industry and countries in whichthe Group intends to operate as well as those that may generally arise from, inter alia, economic,business, market and political factors, including the risks set out herein. The risks described beloware not intended to be exhaustive.

(a) The OMLSS business is dependent on the shipping industry which is subject to businessfluctuations, cyclical changes and the Company’s ability to source for the vessels, customersand/or contracts required for the OMLSS business

The customers to whom the Group provides marine logistics services are in the shippingindustry, which has traditionally been affected by changes in freight and charter rates,capacity utilisation, demand and supply of vessels and shipping routes. These factors wouldcontribute to volatility in the financial performance of this business, as these factors wouldaffect the customers’ continued demand for the Group’s marine logistics services.

The freight and charter rates, capacity utilisation, demand and supply of vessels andshipping routes would, in turn, be affected by conditions such as trade, changes in seaborneand other transportation patterns, environmental conditions, port locations, port congestion,availability of transhipment links, and political situations in the various countries. In theevent that there are any developments which negatively impact any of these conditions suchthat the markets in which the Group operates experience a reduced number of voyages fromthe vessels belonging to its customers, the demand for the Group’s marine logistics serviceswould decline and this would adversely affect the Group’s financial performance. In addition,a general economic slowdown may affect business conditions and international trade ingeneral. This may result in a reduction in shipping activities and hence a decrease indemand for the Group’s marine logistics services.

In addition, should the Group be unable to undertake charter contracts due to its inability tosecure the requisite assets when required, or if it should be unable to acquire such assets atcompetitive prices, it would not be able to compete effectively in this business.

(b) The OMLSS business is dependent on the state of the offshore oil and gas industry

The OMLSS business is largely dependent on the state of the offshore oil and gas industry,in terms of the level of activities in the exploration, development and production of oil andnatural gas. Such activities are affected by factors such as fluctuations in oil and natural gasprices and changes in capital spending by customers in the offshore oil and gas industry.

The prices of oil and natural gas are volatile and are affected by supply and demand. Theyin turn will affect the level of capital spending by companies in the offshore oil and gasindustry. Low oil and natural gas prices tend to reduce the amount of oil and natural gas thatproducers can produce economically. When this occurs, major oil and gas companiesgenerally reduce their spending budgets for offshore drilling, exploration and development.Any decline in the level of activities in the offshore oil and gas industry will result in adecrease in demand for the Group’s offshore support vessels and services.

(c) The business will be affected by any oversupply of offshore support vessels in the industry

The supply of offshore support vessels in the industry is affected by the independentassessment of demand for and supply of vessels by offshore support operators. Any over-estimation of demand for offshore support vessels by offshore support operators may resultin an excess supply of new vessels. This will result in lower charter rates and depress themarket value of the Group’s offshore support vessels. In such an event, the Group’s financialperformance and position will be adversely affected.

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Further, competitors may also engage in aggressive pricing which will necessitate acorresponding lowering of the charter fees of the OMLSS Companies significantly in order tosecure contracts, thereby lowering the Group’s gross profit margins and cash flow.

However, due to the capital intensive nature of the business, there are not many competitorsin the industry in the geography into which the Group intends to venture. To the best of theDirectors’ knowledge of the offshore support services industry, the following companies areinvolved in the business of offshore support services and are considered to be incompetition with the Group:

(i) Britoil Offshore Services Pte Ltd;

(ii) Jaya Holdings Ltd;

(iii) Labroy Shipping Pte Ltd; and

(iv) Swiber Holdings Limited.

The Group is not aware of any independent published industry statistics pertaining to themarket share (whether by geographic location or otherwise) of the foregoing competitors orother companies in the offshore support services, trading of marine supplies andengineering businesses. As such, the Group is unable to determine the competitors’ marketshare in these industries.

The principal competitive factors for the offshore support services industry include charterrates as well as the quality and availability of vessels.

Importantly, the Group believes that the barriers to entry for new entrants to the offshoresupport services are relatively high, primarily due to the high capital investment in a fleet ofoffshore support vessels necessary for new competitors to be able to compete effectivelywith the more established players in the industry. Please refer to “Strategy and Future Plans”at paragraph 3.6 for more details.

(d) The business will be affected by political risks in countries where the Group operates

Wars, unsettled political conditions, social unrests, riots, terrorist attacks and governmentactions such as possible vessel seizure and import/export restrictions in countries where theGroup may operate could potentially affect the ability of the Group’s offshore supportvessels to call on the ports of such countries. Such development may also affect the abilityof the Group’s customers to meet their payment obligations to the Group and increaseinsurance premium for its operations. If such risks develop into actual events, the Group’soperations and profitability will be adversely affected.

(e) The vessels deployed in the OMLSS business are exposed to security threats and piracy

The vessels deployed in the OMLSS business operate in regions in which ships mayencounter incidences of security threats such as piracy, terrorist attacks, wars/insurgencyand internal strife. If such events affect any of the vessels such that the vessels arecaptured, destroyed or damaged, the business operations will be affected and this mayadversely impact the Group’s financial results.

(f) The OMLSS business is affected by the regulations governing the Group’s operations

The OMLSS Companies which comprise the Group’s OMLSS division, will be subject to thelaws and regulations governing the shipping industry, such as the Merchant Shipping Act(Chapter 179 of Singapore), the Prevention of Pollution at Sea Act (Chapter 243 ofSingapore), and the various regulations introduced by the International MaritimeOrganisation, including the International Safety Management Code.

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In the event that any of the OMLSS Companies is unable at any time to comply with theexisting regulations or any changes in such regulations, or any new regulations introducedby local or international bodies, their operations may be adversely affected if its vessels arenot allowed to operate as a result. In addition, any change in or introduction of newregulations may increase the costs of operations. All these will have an adverse effect onthe Group’s profitability. Please refer to “Government Regulations and ClassificationRequirements” at paragraph 3.5 for more details.

(g) The OMLSS business is subject to general risks associated with doing businesses outsideSingapore

There are risks inherent in doing business overseas, which include unexpected changes inregulatory requirements, difficulties in staffing and managing foreign operations, social andpolitical instability, fluctuations in currency exchange rates, potentially adverse taxconsequences, legal uncertainties regarding liability and enforcement, changes in local lawsand controls on the repatriation of capital or profits. Any of these risks could materially affectthe Group’s overseas operations and consequently, its financial position and profit.

(h) The OMLSS business is affected by the inherent risks associated with marine operations

The operations of the Group’s offshore support vessels are exposed to inherent risks ofmarine disasters such as oil spills, damage to and/or loss of vessels and cargo sustained incollisions, property loss, interruptions to operations caused by adverse weather conditionsand mechanical failures.

In the event of an oil spill or damaged or lost cargo, the Group may incur liability forcontainment, clean-up and salvage costs and other damages that may arise as a result. TheGroup may also be liable for damages sustained in collisions and wreck removal chargesarising from the operations of its offshore support vessels.

The Group’s vessels may be involved in accidents, resulting in damage to or loss of vessels,equipment or cargo for which the Group may be exposed to claims from third parties. Any ofsuch events will result in a reduction in turnover or increased costs. Further, there can be noassurance that all risks can be adequately insured against or that any insured sum will bepaid. In the event of damages or losses in excess of the insurance coverage taken up, theGroup may be required to make material compensation payments. As such, the Group’sfinancial position will be materially and adversely affected.

At any rate, events such as wars or terrorist attacks may result in substantial increases inthe Group’s insurance premiums, thereby affecting the Group’s financial performance.

The Group’s vessels will also exposed to possible attacks by pirates. If such attacks occurand its vessels are captured, destroyed or damaged, its financial position will be adverselyaffected.

(i) The OMLSS business is exposed to potential liability arising from any damage, injury ordeath resulting from accidents or other causes

Due to the nature of the offshore support service operations, the Group will be subject to therisk of accidents occurring either to its employees or to third parties who may be involved inaccidents while on its premises or vessels. These accidents may occur as a result of fire,explosions or other incidents which may result in injury to persons, death or damage toproperty or vessels. The Group may be liable, whether contractually or under the law, for anyor all of such loss or damage or injury to or loss of life. The Group customarily obtainsinsurance for hull and machinery, war risk, protection and indemnity and mortgagee interestfor its OMLSS Assets, which typically cover, inter alia, the hull value and/or acquisition costof these assets. In the event of an accident is not covered by its insurance policies or theclaims of which are in excess of its insurance coverage or are contested by the insurancecompanies, the Group’s financial performance and position will be adversely affected.

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(j) The OMLSS business is capital intensive and may require additional financing in the futurefor growth

The expansion and development of this business requires significant additional capital. Inparticular, substantial additional funds are required if the Group wishes to expand its fleet ofoffshore support vessels through building or by acquiring new or used vessels. Failure toraise the required capital in the future on acceptable terms, or at all, will limit its expansionand growth which, in turn, may affect the Group’s ability to compete in the offshore supportservices industry.

In addition, Shareholders cannot be assured that the Group’s profitability will increasesignificantly or that the Group will not incur losses after its capital investment due to apotential increase in its operating and financing costs incurred to finance the business’sgrowth and expansion or lower than expected increase in turnover. This increase inoperating and financing costs without a corresponding increase in turnover will have anegative impact on the Group’s results of operations. In the event that any of the aboveevents materialises, the Group’s financial performance will be adversely affected.

(k) The OMLSS business is exposed to risks arising from foreign exchange fluctuations

It is anticipated that a significant portion of the revenue from the OMLSS business will bederived from charter fees which are denominated in US dollars, whereas a significantportion of the operating costs will denominated in Singapore dollars. To the extent of anymismatch between the Group’s revenue and costs, the OMLSS business will be exposed toany material fluctuations in the US dollar to Singapore dollar exchange rate, which mayaffect its operating results.

As the Company’s books of accounts and records are recorded in Singapore dollars, anyfluctuations in currency exchange rates will also result in exchange gains or losses arisingfrom transactions carried out in foreign currencies as well as translations of foreign currencymonetary assets and liabilities as at the balance sheet dates. All resultant exchangedifferences will be either reflected in the profit and loss account or foreign currencytranslation reserve.

The Group intends to monitor foreign exchange rates and take appropriate measures tohedge its foreign currency exposure, subject to approval of the Board, if required, which mayinclude entering into forward currency contracts. The Group will also put in placeprocedures to hedge its exposure to foreign currency fluctuations. Such procedures wouldbe reviewed and approved by the Group’s Audit Committee. It is expected that the AuditCommittee will review any hedging transactions entered into on a half-yearly basis for, interalia, compliance with the procedures to be established, including internal procedures on thethreshold of approvals required for the entry into hedging transactions. However, theGroup’s policy is not to engage in any speculative foreign exchange transactions. To theextent that the Group is unable to successfully hedge its foreign currency exposure, itsfinancial performance will be adversely affected.

(l) The OMLSS business may be affected by infectious communicable diseases

Typically, the crew who operate the OMLSS Assets are engaged on a contractual basis andmay have travelled or worked in other areas prior to deployment upon the OMLSS Assets. Ifany one of these crew members is suspected to have contracted or contracts infectiouscommunicable diseases such as the Severe Acute Respiratory Syndrome, the entire crewon the OMLSS Assets may have to be quarantined for an indeterminate period. This willdisrupt the operations of the OMLSS Assets, which will have an adverse effect on theOMLSS business. In addition, the onshore staff may also be affected by such infectiouscommunicable diseases which may result in a disruption of the OMLSS business.

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(m) The OMLSS business depends on adequate insurance coverage and is susceptible toincrease in insurance premium

The Directors have observed that recent years have witnessed a substantial increase ininsurance premiums charged by insurers in the industry, due, inter alia, to heightenedsecurity threats in the countries and regions where the customers of the OMLSS businessoperate. Any deterioration of the security conditions in the countries or regions where thecustomers of the OMLSS business operate may lead to further increases in the insurancepremiums charged by insurers, or withdrawal by insurers from providing the insurancecoverage. An inability to secure adequate insurance coverage for the OMLSS Assetsdeployed in the OMLSS business will result in the Group being unable to operate its OMLSSAssets. In consequence, the OMLSS business will be disrupted and the revenue and profitstherefrom may be adversely affected.

(n) The OMLSS business is sensitive to rise and fall in fuel costs

The Directors have observed that fuel costs for the vessels deployed in the OMLSSbusiness have sharply increased in recent years. Further, there is no assurance that theGroup will be able to fully pass on any increase in the fuel costs to its customers, except forvessels on bareboat charter. Thus, the Group may have to absorb any such increase in fuelcosts to maintain its competitiveness. In such event, the operational expenses of the OMLSSbusiness will increase and its profitability will be adversely affected.

(o) The OMLSS business will be dependent on key personnel for its operations and profitability

The success of the business will be dependent on the commitment of its key managementpersonnel comprising the Group’s executive directors, Mr Chew Thiam Keng, and keyexecutives (comprising the heads of department), namely, the financial controller, Mr CheahBoon Pin, Mr Guru Sharma, Mr Poh Leong Ching (David) and Mr Lawrence Mui Rap Wai,and the Group’s ability to identify, recruit, train and retain qualified employees for technical,marketing and managerial positions. There is no assurance that the Group will be able toretain its key management personnel in relation to the OMLSS business venture and nordoes it have any key man insurance coverage. The loss of the Group’s key managementpersonnel in relation to the OMLSS business without suitable replacements will have anadverse impact on its operations and its future performance.

(p) The OMLSS business may be exposed to variation in interest rates

It is anticipated that the working capital requirements of the OMLSS business may be met,inter alia, by the Group incurring additional bank borrowings. As at the Balance Sheet Date,the total amount of bank borrowings incurred for the OMLSS business was S$5.4 million,which attract interest rates typically at 6.8% to 7.3%. As such, any significant increase ininterest rates will have a significant and adverse impact on the profitability of the OMLSSbusiness.

(q) The OMLSS business may be exposed to risks arising from credit terms extended tocustomers.

The OMLSS business will be exposed to payment delays and/or defaults by customers whoare granted credit terms. Generally, the charter fees under the Group’s current chartercontracts are payable with credit terms of between 7 and 60 days. The factors which theGroup takes into account in determining the credit terms granted include the assessment ofthe customer’s creditworthiness and the size of the charter contract. The OMLSS businessis exposed to credit risks due to the inherent uncertainties in the customers’ businessenvironment. Such risks include political, social, legal, economic and foreign exchangerisks, as well as those arising from unforeseen events or circumstances. There is hence noguarantee on the timeliness of the customers’ payments or whether they will be able to fulfill

their payment obligations. As at 30 June 2007, the Group had outstanding accountsreceivable of S$1.625 million, which was attributable to revenues from the Group’s business,and as at 30 August 2007 and the Latest Practicable Date, the Group had collected S$1.256million and S$1.625 million, respectively. Based on the foregoing, the Group’s accountsreceivable turnover days were as follows:

Accounts receivable x 30 days x 4 monthsAccounts receivable =turnover days Revenue

S$369,000 x= 30 days x 4 months

S$1,625,000

= 27 days

Any inability on the part of the Group’s customers to promptly settle the amounts due to theGroup for work done and/or services rendered may have a material adverse impact on thefinancial performance and operating cash flow in respect of the OMLSS business and theGroup.

(r) The charter contracts may be terminated upon the occurrence of certain events

In general, offshore support vessels are typically chartered for periods of between a fewmonths and five years. However, these charter contracts may be prematurely terminated orthe charter rates be reduced or suspended upon occurrence of certain events, includingpoor or non-performance by the service provider, events of force majeure, loss or seizure ofthe vessel(s), unavailability of the vessel(s) due to any reason whatsoever for specifiedperiods of time, cessation or abandonment of drilling operations by the charterer or uponnotice of termination being given by the charterer for any reason whatsoever. If any of suchevents occur, the Group’s turnover will be reduced and its profitability will be adverselyaffected.

In addition, if for any reason, any of the OMLSS Companies is not able to redeploy theoffshore support vessels for a period of time upon expiry or early termination of the existingcharter contracts, or is not able to secure any charter contract for its vessels, or ifnegotiations over the terms of the charter contracts are protracted, or if the charter contractsare renewed on less favourable terms, the Group’s turnover and profits would be materiallyand adversely affected.

(s) The business will be affected by any change in the current taxation regulations applicable tothe income from the chartering of vessels

The chartering income of shipping companies in Singapore relating to their Singapore-registered vessels plying outside Singapore is currently exempted from income tax, as longas the income is derived from overseas operations. However, any change in the current taxand/or the rules and regulations applicable to the taxation of chartering income wouldadversely affect the tax payable by the Group and correspondingly its financial results.

(t) The Group is subject to various international conventions governing the shipping industry

The Group is subject to various conventions under the International Maritime Organisation(“IMO”), as described under paragraph 3.4 of this Circular. Compliance with suchconventions adds to the Group’s cost of operations.

From time to time, the IMO may adopt new conventions which our vessels need to complywith. If such conventions become more stringent in the future and/or additional complianceprocedures are introduced, the Group’s cost of operations may increase.

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(u) The Group is subject to appraisal and certification standards issued by independentcertification authorities

Pursuant to the ISM Code (as described in paragraph 3.5 of this Circular), companies whichhave complied with the requirements of the ISM Code are issued with a document ofcompliance (by the relevant government authorities of the jurisdictions in which their vesselsare registered). The Group’s vessels are also subject to assessment by independentcertification organisations for compliance with the requirements of MARPOL (as described inparagraph 3.5 of this Circular).

The relevant authorities and certification organisations have the right to conduct inspectionsof the Group’s vessels to ensure that the Group continues to comply with the relevantstandards. Any material failure to comply with the standards or any changes in thestandards which are implemented from time to time, may cause the certifications to bewithdrawn. The Group’s customers in the offshore oil and gas industry typically require thevessels which the Group provides to bear certain certifications. If the certifications arewithdrawn, the Group would not be able to supply the vessels to its customers. This willadversely affect the Group’s business, financial performance and financial condition.

(v) The Group is subject to the laws and regulations of the jurisdictions in which its vessels areregistered and the countries in which its vessels operate

The Group’s vessels are registered in Singapore, and may, in the future, be registered inother jurisdictions. The jurisdictions in which the vessels are registered and the countries inwhich the vessels operate have laws and regulations which the Group is required to complywith.

If the Group is unable to comply with the relevant laws and regulations, its vessels may notbe allowed to operate and our business would be adversely affected. The need to complywith new laws and regulations may increase the Group’s cost of operations. This will have anadverse effect on the Group’s business, financial performance and financial condition.

(w) The Group is affected by changes in the tax law in Singapore which is applicable to incomefrom its vessels registered under the Singapore flag

Pursuant to Section 13A of the Income Tax Act, Chapter 134 of Singapore, income derivedfrom the operation of its Singapore-flag vessels in international waters is exempted fromincome tax in Singapore. Any changes in the current tax law in Singapore applicable to thetaxation of shipping income may adversely affect the amount of income tax payable by theGroup and may have an adverse impact on the Group’s financial results.

(x) The Group is subject to various international and local environmental protection laws andregulations

The Group’s vessels and their operations are subject to various international and localenvironmental protection laws and regulations (as described in paragraph 3.5 of thisCircular). Such laws and regulations are becoming increasingly complex and stringent andcompliance may become increasingly difficult and costly.

Some of these laws and regulations may expose the Group to liability for the conduct ofothers, or for their acts, even if such acts complied with all applicable laws at the time ofperformance, and the Group may be required to pay significant fines and penalties for non-compliance. Some environmental laws impose joint and several “strict liability” for cleaningup spills and releases of oil and hazardous substances, regardless of whether the Group isnegligent or at fault.

Environmental protection laws and regulations may also have the effect of curtailing offshoreexploration, development and production activities by the Group’s customers. This wouldreduce the demand for the Group’s services, which would have an adverse impact on itsbusiness, financial performance and financial condition.

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3.4 Performance of OMLSS division

Since March 2007, the Group has diversified into the Offshore Marine Logistics and SupportServices business. As at the Latest Practicable Date, the Group has procured 14 vessels and isin the process of constructing 4 vessels to meet the demand from various customers in theindustry.

Date

acquired or

estimated Classification

Name of Description Gross Port of Year delivery / month of

S/No vessel of vessel tonnage registry built date expiry

1. Teras 330 x 120 ft Self 5,940 Singapore 2005 May 2007 Lloyd’s RegisterTransporter Ballastable Barge / August 2010

2. Teras 338 330 x 100 ft 4,843 Singapore 2006 July 2007 American Bureau Ballastable Barge of Shipping /

April 2011

3. Teras 331 300 x 90 ft 4,215 Singapore 2003 November Bureau Veritas /Flat Top Barge 2007 October 2008

4. Teras 335 330 x 100 ft 4,814 Singapore 2005 November Lloyd’s Register / Ballastable Barge 2007 June 2010

5. Teras 336 330 x 100 ft 4,814 Singapore 2005 November Lloyd’s Register / Ballastable Barge 2007 June 2010

6. Teras 339 330 x 120 ft 5,809 Singapore 2005 November Lloyd’s Register / Ballastable Barge 2007 March 2011

7. Teras 360 x 120 ft Self 6,452 Singapore 2006 November American Bureau Transporter 2 Ballastable Barge 2007 of Shipping /

May 2011

8. Eminent 237(1) 330 x 100 ft 4,847 Singapore 2005 October American Bureau Ballastable Barge 2007 of Shipping /

March 2011

9. Eminent 1(1) 300 x 90 ft 3,527 Singapore 2007 December American BureauFlat Top Barge 2007 of Shipping /

October 2011

10. Eminent 2(1) 300 x 90 ft 3,527 Singapore 2007 December American BureauFlat Top Barge 2007 of Shipping /

October 2011

11. Eminent 3(1) 300 x 90 ft 3,527 Singapore 2007 December American BureauFlat Top Barge 2007 of Shipping /

December 2011

12. Eminent 4(1) 300 x 90 ft 3,527 Singapore 2007 December American BureauFlat Top Barge 2007 of Shipping /

December 2011

13. Eminent 5(1) 300 x 90 ft 3,527 Singapore 2007 December American BureauFlat Top Barge 2007 of Shipping /

Interim certificate(3)

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Date

acquired or

estimated Classification

Name of Description Gross Port of Year delivery / month of

S/No vessel of vessel tonnage registry built date expiry

14. Eminent 6(1) 300 x 90 ft 3,527 Singapore 2007 December Lloyd’s RegisterFlat Top Barge 2007 / April 2012

15. Ocean H1(2) 300 Men To be NA Under January NAAccommodation confirmed Construction 2009

Barge

16. Ocean H2(2) 300 Men To be NA Under April NAAccommodation confirmed Construction 2009

Barge

17. Ezion I 165 x 145 x 22.5 To be NA Under April NAfeet Multi-Purpose confirmed Construction 2009

Self-PropelledJack-up Rig

18. Ezion 2 166 x 145 x 22.5 To be NA Under June 2009 NAfeet Multi-Purpose confirmed Construction

Self-PropelledJack-up Rig

Notes:-

(1) Held under Eminent Offshore Logistics Pte Ltd (the Group’s 50/50 joint venture with Ezra Holdings Limited).

(2) Held under Singapore Ocean Hotels Pte Ltd (the Group’s 50/50 joint venture with Nordic Maritime Pte Ltd).

(3) Full certificate is expected to be issued in December 2007.

In its first financial reporting period, the OMLSS division has been profitable. For HY2007, therevenue and profits of the Group from the OMLSS division were S$1.625 million and S$0.522million, respectively.

3.5 Government Regulations and Classification Requirements

The Group’s OMLSS business operations are subject to various international conventions and thelaws and regulations of the jurisdictions in which their vessels are registered and where theirvessels operate. Under such laws and regulations, the Group’s business operations are alsosubject to permits, licences and other requirements. Some of the international conventions andlaws and regulations of the various jurisdictions which are material to the business of their Groupare set out below.

Conventions under the International Maritime Organisation (the “IMO”)

(a) International Convention for the Safety of Life at Sea (“SOLAS”)

The SOLAS sets out the minimum safety standards for the construction, equipment andoperation of vessels. These safety standards include fire safety measures and life-savingappliances and arrangements.

Vessels above 500 gross tonnage which are propelled by mechanical means and registeredin countries that are signatories to the SOLAS are required to comply with the minimumsafety standards of the SOLAS. There is no formal certificate evidencing compliance withthe SOLAS, although compliance thereof will be reviewed in the classification surveys of therelevant vessel, which occurs at stipulated intervals. Please refer to “ClassificationRequirements”, below, for more details on the surveys conducted on the Group’s vessels.

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Presently, all of the Group’s vessels, being unmanned barges, are not required to complywith the SOLAS code. However, the four vessels under construction will be required tocomply with the SOLAS, and the Group intends to ensure that any vessels it procures infuture (which require compliance with the SOLAS) will comply with the SOLAS. In addition,the Group has chartered AKN Challenger on a bareboat charter for towing vessels, andalthough AKN is not strictly required to comply with the SOLAS code (having a grosstonnage of less than 500 tons), it is the Group’s policy to ensure that all of its mannedvessels will comply with the SOLAS code.

(b) International Management Code for the Safe Operation of Ships and for Pollution Prevention(“ISM Code”)

The ISM Code sets out an international standard for the safe management and operation ofvessels and for pollution prevention. It has the objectives of ensuring safety at sea,prevention of human injury or loss of life and avoidance of damage to the marineenvironment and to property.

The ISM Code has been made mandatory under the SOLAS for manned vessels above 500gross tonnage which are propelled by mechanical means. Companies (defined in the ISMCode as owners of the vessel or any other organisation or person who has assumed theresponsibility for operation of the vessel from the vessel owner) which own and/or operatevessels registered in countries that are signatories to the SOLAS are bound to comply withthe requirements of the ISM Code. The Group is therefore bound to comply with therequirements of the ISM Code in respect of the manned vessels above 500 gross tonnagewhich they operate.

The ISM Code requires, amongst others, that the companies which own and/or operatevessels develop, implement and maintain a safety management system which includes thefollowing functional requirements:

� a safety and environmental-protection policy;

� instructions and procedures to ensure the safe operation of ships and protection ofthe environment;

� defined levels of authority and lines of communication between, and amongst, shoreand shipboard personnel, procedures for reporting accidents and non-conformitieswith the provisions of the ISM Code;

� procedures to prepare for and respond to emergency situations; and

� procedures for internal audits and management reviews

Companies which have complied with the requirements of the ISM Code are issued with adocument of compliance (by the relevant government authorities of the jurisdictions in whichtheir vessels are registered). Documents of compliance are valid for a maximum period offive years and are subject to annual verification by the relevant government authorities.Upon evidence of major non-conformities with the ISM Code, the document of compliancewill be withdrawn.

The Group’s subsidiary, Terras Offshore Pte. Ltd. has been issued with an interim documentof compliance dated 8 October 2007 which is valid for six months, and it expects to obtainthe full-term document of compliance (which will be valid for five years) by the end of 2007,following the completion of the audit process by the issuing auditor, Lloyds Register (Asia).

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Presently, all the Group’s vessels, being unmanned barges, are not required to comply withthe ISM Code. However, the four vessels under construction will be required to comply withthe ISM Code, and the Group intends to ensure that any vessels it procures in future (whichrequire compliance with the ISM Code) will be issued with the relevant document ofcompliance. In addition, the Group has chartered AKN Challenger on a bareboat charter fortowing vessels, and although AKN is not strictly required to comply with the ISM Code(having a gross tonnage of less than 500 tons), it is the Group’s policy to ensure that all oftheir manned vessels will comply with the ISM Code, and it intends to apply for a certificateof compliance for AKN Challenger following the certification by Terras Offshore Pte. Ltd. atthe end of 2007, as stated above.

(c) International Convention for the Prevention of Pollution from Ships, 1973 (the “MARPOL”)

The MARPOL, as added to by the Protocol of 1978 relating to the 1973 InternationalConvention for the Prevention of Pollution from Ships (the “1978 MARPOL Protocol”) is themain international convention covering prevention of marine environmental pollution by shipsfrom operational or accidental causes. As the Group’s vessels are registered in countriesthat are signatories to the MARPOL, the Group is bound to comply with the provisions of theMARPOL.

The MARPOL sets out various technical requirements in respect of discharges of oil,noxious liquid substances, harmful substances which are in packaged form, sewage andgarbage at sea. Assessment for compliance with the requirements of MARPOL is carried outby classification societies such as American Bureau of Shipping.

(d) International Ship and Port Facility Security Code (the “ISPS Code”)

The ISPS Code, which came into force on 1 July 2004, was adopted to enhance maritimesecurity and the management of risk of terrorist attacks at sea. The requirements of theISPS Code provide a framework through which vessels and ports can co-operate to detectand deter acts of terrorism which pose a threat to world maritime trade. The ISPS Code hasbeen incorporated into the amended SOLAS and provides a number of mandatoryrequirements that cargo vessels above 500 gross tonnage which sail the international sealanes, mobile drilling rigs and passenger ships which sail the international sea lanes have tocomply with.

The ISPS Code provides for the following measures:

� owners of vessels are required to develop and implement a Ship Security Plan andensure that their crew are conversant with such Ship Security Plan and their securityduties;

� vessels are to be installed with automatic information systems which enable vessel-to-vessel and vessel-to-shore communications;

� vessels are to be installed with ship security alert systems; and

� owners of vessels are required to designate Company Security Officers for one ormore vessels and a Ship Security Officer on board each vessel.

The MPA has issued a circular which states that vessels which are found to be non-compliant with the ISPS Code from 1 July 2004 may be subject to the risk of disruption totheir operations, such as delays or detention, restriction of operations or movement in portor expulsion from the port. Vessels which are in compliance with the ISPS Code are issuedwith an International Ship Security Certificate.

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The Group intends to apply for an International Ship Security Certificate through its wholly-owned subsidiary, Terras Offshore, in the course of 2007 and it expects to receive the saidcertificate in the first half of 2008. Although the Group has not obtained the said certificate,it does not presently anticipate any difficulty in obtaining the same, and the vessels which itoperates are presently in compliance with ISPS Code.

Government Regulations in Singapore

(a) Merchant Shipping Act, Chapter 179 of Singapore (the “MSA”)

The provisions of the MSA apply to vessels which are registered in Singapore. Accordingly,the Group’s vessels which are registered in Singapore are subject to the MSA provisions.The registration, transfer and alteration of vessels in Singapore are regulated by the MSA.The following provisions of the MSA also apply to the Group’s vessels:

� survey and safety of vessels;

� duty of vessels to assist others in case of collision; and

� obligation of vessel owner to crew to use reasonable efforts to secure seaworthinessand liability of vessel owner for unsafe operation of vessel

The Group does not own any tugs at present, although it has chartered a tug for itsoperations. It may acquire tugs in the future if suitable business opportunities arise, and theMSA contains provisions which apply to tugs in respect of:-

� manning of vessels and certification and qualification of officers and seamen; and

� crew matters such as crew agreements, payment of seamen’s wages, discharge ofseamen, provisions and water for seamen employed on vessels, medical provisionsand treatment on board the vessel and disciplinary matters.

As at the Latest Practicable Date, all of the Group’s operating vessels registered inSingapore have been issued with certificates of registration by the MPA. Such certificatesare issued only to vessels which have satisfied the requirements specified in the MSA.

(b) Prevention of Pollution at Sea Act, Chapter 243 of Singapore (the “PPSA”)

The Group’s vessels are subject to the PPSA, which gives effect to the MARPOL, as addedto by the 1978 MARPOL Protocol and to other international agreements relating to theprevention, reduction and control of pollution of the sea and pollution from ships.

The PPSA prohibits the discharge of refuse, garbage, wastes, effluents, plastics anddangerous pollutants, such as noxious liquid substances from vessels. The PPSA alsoprescribes preventive measures against pollution at sea, such as requiring vessels to keepoil and cargo record books and to report discharges of harmful substances from vessels.The PPSA further provides that any costs incurred in the removal of refuse, garbage,wastes, plastics, effluents and dangerous pollutants discharged from vessels from the seashall be borne by the owners of such vessels.

(c) Merchant Shipping (Civil Liability and Compensation for Oil Pollution) Act (Chapter 180) ofSingapore (the “CLCA”)

The Group’s vessels are subject to the CLCA, which gives effect to the InternationalConvention on Civil Liability for Oil Pollution Damage 1992 (the “CLC”) and to theInternational Convention on the Establishment of an International Fund for Compensation forOil Pollution Damage 1992.

The CLCA provides that owners of vessels which cause damage in the territory ofSingapore by contamination resulting from the discharge or escape of oil shall be liable forsuch damage, the cost of any measures taken after such discharge or escape for thepurpose of preventing or reducing such damage and for damage caused in the territory ofSingapore by the measures so taken. The CLCA also provides for the limitation of liability fordamage caused by the discharge or escape of oil and for the availability of an internationalfund for compensation to the person suffering the damage caused. Such international fundis contributed to by importers as well as receivers of oil.

Classification Requirements

Inspection of the Group’s vessels by classification societies

Every seagoing merchant vessel must be “classed” by a classification society. The classificationsociety certifies that the vessel is “in class”, which indicates that the vessel has been built and isbeing maintained in accordance with the rules of the classification society and complies withapplicable rules and regulations of the vessel’s country of registry and the internationalconventions of which that country is a signatory. Classification societies also carry out surveyswhich are required under international conventions and the relevant laws and regulations of thejurisdictions under which the vessels are registered.

In general, the Group determines the classification society which will “class” its newly- built vesselsbased on factors such as the design of the vessels, the requirements of its customers, theintended area of operations of the vessels and the cost of the respective classification societies.Regular surveys of hull and machinery, including electrical plant, safety equipment, communicationequipment and any special equipment classed, are required to be performed for the maintenanceof classification. The types of surveys normally carried out include:

(i) Annual Surveys

Annual surveys of vessels are conducted for the hull and the machinery, including electricalplant, safety equipment, communication equipment and, where applicable, for specialequipment classed, at intervals of 12 months plus or minus three months from the date ofcommencement of the class period indicated in the certificate.

(ii) Intermediate Surveys

Intermediate surveys are more extensive than annual surveys. They relate to the structureand equipment of the vessel and are conducted in conjunction with the second or thirdannual survey.

(iii) Class Renewal Surveys

Class renewal surveys, also known as special surveys, are carried out for the hull andmachinery, including electrical plant, safety equipment, communications equipment and forany special equipment classed, every five years from the vessel’s certification. At the specialsurvey, the vessel is thoroughly examined, including ultrasonic gauging to determine thethickness of the steel structures. Should the thickness be found to be less than classrequirements, the classification society will prescribe steel renewals. Substantial amounts ofmoney may have to be spent for steel renewals to pass a special survey if the vessel hassuffered excessive wear and tear.

(iv) Continuous Surveys

Upon the application of an owner, the surveys required for class renewal may be splitaccording to an agreed schedule to be carried out over the entire period of the classcertificate. It is common for this process to be applied to the vessel’s machinery, known asa continuous machinery survey. All areas subject to survey as defined by the classificationsociety are required to be surveyed at least once every five years, unless shorter intervalsbetween surveys are prescribed.

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(v) Docking Surveys

Vessels are required to be drydocked twice within the five year survey cycle, with amaximum of 36 months between inspections, for survey of the underwater parts and forrepairs related to inspections. An in-water survey may be permitted in lieu of a drydockingfor the intermediate survey, although the vessel must carry out a drydocking in conjunctionwith a class renewal survey. If any defects are found by the classification surveyor duringany survey of the vessel, an immediate repair may be required. If, however, the surveyorconsiders it safe for the vessel to continue in service without an immediate repair, thesurveyor will issue a condition of class which will require the defect to be rectified by thevessel owner within prescribed time limits. Any conditions of class must be repaired at thetime of the class renewal survey.

In general, the new vessels and/or second-hand vessels that the Group purchases must becertified as being “in class” prior to their delivery under our purchase contracts and theclassification certificates must be delivered at the time of delivery of the vessels.

As at the Latest Practicable Date, all of the Group’s vessels have undergone the surveysappropriate to their respective survey schedules.

3.6 Strategy and Future Plans

The offshore marine logistics and support services industry is directly affected by the level ofactivities in the offshore oil and gas industry which in turn is largely dependent on oil and naturalgas prices. The prices of oil and natural gas are affected by factors such as the level of demandand supply for such natural resources, crude oil production levels, global political and economicuncertainties, advances in exploration and development technology, worldwide demand for naturalresources, and governmental restrictions placed on exploration and production of naturalresources. Higher oil and natural gas prices have the potential of increasing the level of oil andnatural gas exploration, development and production as higher prices are able to support thecapital spending for such activities.

The Directors of the Company have observed that there is an increased trend in oil and naturalgas exploration, development and production in certain identified areas, which will likely result inan increase in the demand for offshore support vessels and services. In addition, the Directorsbelieve that demand for newer and more technologically advanced offshore support vessels andservices will rise as oil and gas companies move into deeper waters in search for oil and naturalgas.

The present intention of the Company is to expand its fleet of offshore support vessels and tomaintain a young fleet equipped with up-to-date technology and capabilities. This will enable theGroup to meet the demands for newer and more powerful vessels. With an expanded fleet, theGroup’s offshore logistics division will be less reliant on third party vessels and this is expected toimprove the Group’s profit margin. In addition, the Group intends to secure long-term chartercontracts, where possible, so as to ameliorate the risk of fluctuations in the supply of OMLSSAssets.

3.7 Confirmation of the Group’s Offshore Marine Logistics and Support Services Business asthe Group’s Core Business

Following the completion of the Proposed Disposal, the Group’s OMLSS business will be theremaining Group’s core business. As such, the Company seeks approval of its Shareholders toconfirm the OMLSS business as the Group’s core business.

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4. THE PROPOSED SHARE SUBDIVISION

4.1 The Proposed Share Subdivision

As announced on 8 October 2007, the Company proposes to sub-divide each existing Share in thecapital of the Company into two new Shares in the capital of the Company. Based on the issuedshare capital of the Company as at the Latest Practicable Date, the Company has in issue293,110,000 Shares. If the proposed Share Subdivision is approved, the Company will have inissue 586,220,000 issued Shares. All Shares arising from the proposed Share Subdivision rankpari passu with each other.

4.2 Rationale for the Proposed Share Subdivision

The Company believes that the proposed Share Subdivision is beneficial to the Shareholders forthe following reasons:

(i) the proposed Share Subdivision will further improve the market liquidity of the Company’sShares over time as the reduced price of each board lot will make the ordinary Shares ofthe Company more accessible and attractive to both existing and potential investors;

(ii) with the increased number of board lots available for trading purposes, it may also increasethe number of Shareholders in the Company.

The Company will retain trading of the Shares in a board lot of 1,000 Shares following theproposed Share Subdivision.

4.3 Conditions for the Proposed Share Subdivision

The proposed Share Subdivision is subject to the approval of Shareholders by way of an ordinaryresolution for the proposed Share Subdivision, and the approval in-principle of SGX-ST for thelisting and quotation of all the Shares arising from the Share Subdivision. On 20 November 2007,the Company announced that it had obtained approval in-principle from the SGX-ST for the listingand quotation of all the additional Shares arising from the proposed Share Subdivision subject to,inter alia, Shareholders’ approval for the proposed Share Subdivision at an Extraordinary GeneralMeeting to be convened. Any approval by the SGX-ST shall not be taken as an indication of themerits of the proposed Share Subdivision, the Shares arising from the proposed ShareSubdivision, the Company or its subsidiaries.

4.4 Financial effects Of the Proposed Share Subdivision

(a) The Proposed Share Subdivision would have no material effect on the ordinary share capitalof the Company.

(b) FOR ILLUSTRATIVE PURPOSES ONLY, the financial effects of the Proposed ShareSubdivision on the Company’s net tangible assets per Share, earnings per Share andgearing, based on the unaudited consolidated financial statements of the Group set out inthe Half Year Financial Statement and Dividend Announcement for the half-year ended 30June 2007 which was announced by the Company on 7 August 2007 are shown below:

Net Tangible Assets (“NTA”) Group

NTA per Share (before the Proposed Share Subdivision) (cents) 8.050

NTA per Share (after the Proposed Share Subdivision) (cents) 4.025

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(c) The EPS is expected to be diluted in view of the enlarged capital after the Proposed ShareSubdivision, as follows:-

Earnings Per Share (“EPS”) Group

Profit after tax and minority interest for HY2007 (S$’000) 1,031

EPS (before the Proposed Share Subdivision) (cents) 0.530

EPS (after the Proposed Share Subdivision) (cents) 0.265

(d) The Proposed Share Split will not have any effect on the gearing of the Group.

4.5 Dividends

Barring any unforeseen circumstances, the Directors are of the opinion that the proposed ShareSplit would not have any effect on the ability of the Company to make dividend payments.

4.6 Theoretical price following the Proposed Share Subdivision

Based on the price per Share as at the Latest Practicable Date of $1.30, the theoretical price perShare following the Proposed Share Subdivision will be $0.65.

4.7 Procedures for the Proposed Share Subdivision

Persons registered in the Register of Members of the Company and Depositors whose SecuritiesAccounts are credited with Shares as at the books closure date to be announced in due course(the “Books Closure Date”) will be included for the purpose of the proposed Share Subdivision onthe basis of the number of such Shares registered in their names or standing to the credit of theirSecurities Accounts as at the Books Closure Date. The Notice of Books Closure Date is set outbelow.

4.8 Deposit of share certificates with CDP

Shareholders who hold physical share certificate(s) for the Shares in their own names (“ExistingShare Certificate(s)”) and who wish to deposit the same with CDP for the purposes of theProposed Share Subdivision, must deposit their Existing Shares Certificate(s), together with theduly executed instruments of transfer in favour of CDP, not later than five Market Days prior to theBooks Closure Date. After the Books Closure Date, CDP will only accept for deposit, physicalshare certificate(s) for the share certificates to be issued for the purposes of the Proposed ShareSubdivision in their own names (“New Share Certificate(s)”).

4.9 Members’ Entitlement and New Share Certificates

Depositors whose Securities Accounts are credited with Shares as at the Books Closure Date willbe attributed the number of Shares pursuant to the Proposed Share Subdivision based on thenumber of Shares standing to the credit of their Securities Accounts as at the Books Closure Date.

Shareholders who have not deposited their Existing Share Certificates as aforesaid or who do notwish to deposit their Existing Share Certificates with CDP are advised to forward all their ExistingShare Certificate(s) to the Company’s Share Registrar, as soon as possible after the ExtraordinaryGeneral Meeting for cancellation and exchange for the New Share Certificates.

Share certificates to be issued pursuant to the proposed Share Subdivision will be sent, not laterthan one day after the Books Closure Date to:

(a) members who are Depositors, by sending the same to CDP; and

(b) members who are not Depositors, by ordinary post at their respective address shown in theRegister of Members of the Company or in the case of joint holders, to the first name holderat this registered address, at the sole risk of the holders.

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No receipt will be issued by the Company’s Share Registrar for the physical share certificatestendered.

Shareholders who hold physical share certificate(s) are reminded that their Existing ShareCertificates are no longer good for settlement of trading in the Shares on the SGX-ST (as theCompany is under a book-entry (scripless) settlement system) but will continue to be accepted forcancellation and issue of New Share Certificates in replacement thereof for an indefinite period bythe Company’s Share Registrar. The Existing Share Certificates and the New Share Certificateswill not be valid for delivery pursuant to trades done on the SGX-ST although they will continue tobe prima facie evidence of legal title.

Shareholders who have lost any of their Existing Share Certificate(s) or whose addresses havechanged from those reflected in the Company’s Register of Members should notify the Company’sShare Registrar immediately.

4.10 Trading of Shares arising from the Proposed Share Subdivision

The cessation date for the trading of the existing Shares and the commencement date for thetrading the Shares arising from the proposed Share Subdivision on the SGX-ST will be announcedseparately.

5. THE PROPOSED CHANGE OF AUDITORS

The Group is committed to high standards of corporate governance. The Directors of the Grouprecognise that employing the best practices in corporate governance is an essential factor inimproving shareholders’ value. The Directors are aware that in certain key industries, the periodicrotation of auditors is an essential step in adhering to the best practices in corporate governancefor the Group.

The current Auditors of the Group, Messrs RSM Chio Lim, have been the Group’s Auditors since2002. In implementing the audit rotation process, the Directors are proposing the appointment ofMessrs KPMG as auditors of the Group in respect of the financial year ending 31 December 2007,in place of Messrs RSM Chio Lim. For the avoidance of doubt, this proposed change is not areflection of any concerns over the integrity of the Group’s operations or its management, theeffectiveness of the Group’s internal controls or the capability of the Auditors.

In this regard, Messrs RSM Chio Lim have on 2 October 2007 given notice to the Directors of theirintended resignation as Auditors of the Group, and Messrs KPMG on 2 October 2007 haveindicated that they will provide their formal consent to act as Auditors of the Group, subject to theapproval of the Shareholders at the EGM. Accordingly, the resignation of Messrs RSM Chio Limas Auditors of the Group will take effect upon the approval of the same by Shareholders at theEGM and the appointment of Messrs KPMG as Auditors of the Group will take effect upon theirconsent to act as Auditors.

Messrs RSM Chio Lim have confirmed that there are no circumstances connected to theirproposed resignation which ought to be brought to the attention of the shareholders or creditors ofthe Company.

The proposed change of Auditors has been reviewed and recommended by the Audit Committee.

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6. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS

6.1 Directors’ and substantial shareholders’ interest in Shares

The interest of the Directors and the substantial shareholders in Shares, as extracted from theRegister of Directors’ and substantial shareholders’ Interest, as at the Latest Practicable Date isset out below:

As at the Latest Practicable Date Assuming the Proposed Share

Subdivision has occurred

Direct Interest Deemed Interest Direct Interest Deemed Interest

Number of Number of Number of Number of

Shares % Shares % Shares % Shares %

Directors

Mr Lee Kian Soo(1) – – 50,000,000 17.058 – – 100,000,000 17.058

Mr Chew Thiam Keng(2) – – 95,000,000 32.411 – – 190,000,000 32.411

Dr Wang Kai Yuen – – – – – – – –

Mr Lim Thean Ee 407,000 0.139 – – 814,000 0.139 – –

Mr Tan Woon Hum – – – – – – – –

Mr Teo Chuan Teck – – – – – – – –

Other Existing Substantial Shareholders

Unique Counsel Limited(3) 95,000,000 32.411 – – 190,000,000 32.411 – –

Ezra Holdings Limited(4) 50,000,000 17.058 – – 100,000,000 17.058 – –

Lee Chye Tek Lionel(5) – – 50,000,000 17.058 – – 100,000,000 17.058

Stichting Pensioenfonds 21,000,000 7.165 – – 42,000,000 7.165 – –ABP

Legg Mason, Inc. – – 25,790,000 8.799 – – 51,580,000 8.799

Nylect Holdings Pte Ltd(6) 18,036,000 6.153 – – 36,072,000 6.153 – –

Mr Sim Hee Chew(7) 500,000 0.171 19,231,000 6.561 1,000,000 0.171 38,462,000 6.561

Mdm Chua Ah Suai(8) 1,195,000 0.408 18,536,000 6.324 2,390,000 0.408 37,072,000 6.324

Oversea-Chinese Banking

Corporation Limited – – 15,596,000 5.321 – – 31,192,000 5.321

Notes:-

(1) Mr Lee Kian Soo is deemed interested in the Shares held by Ezra Holdings Limited, in which he has an interest of22.5% in its issued and paid up share capital.

(2) Mr Chew Thiam Keng is deemed interested in the Shares held by Unique Counsel Limited, which is a companywholly owned by him.

(3) Unique Counsel Limited is a company wholly owned by Mr Chew Thiam Keng.

(4) Ezra Holdings Limited is a company in which Mr Lee Kian Soo has an interest of 22.5% in its issued and paid upshare capital. Mr Lee Kian Soo is deemed interested in the Shares held by Ezra Holdings Limited.

(5) Mr Lee Chye Tek Lionel is deemed interested in the Shares held by Ezra Holdings Limited.

(6) Nylect Holdings Pte Ltd is a company in which Mr Sim Hee Chew has an interest of 44.2% in its issued and paid upshare capital.

(7) In addition to his direct interest, Mr Sim Hee Chew is also deemed interested in the Shares held by his spouse, MdmChua Ah Suai and by Nylect Holdings Pte Ltd, in which he has an interest of 44.2% in its issued and paid up sharecapital.

(8) Deemed interest arising from interest of spouse of Mr Sim Hee Chew.

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6.2 Directors and Substantial Shareholders’ interests in the Proposals

Save as otherwise disclosed in this Circular, none of the Directors and the substantialshareholders of the Company has any direct or indirect interest (apart from their shareholdinginterest in the Company, if any) in any of the Proposals.

7. DIRECTORS’ RECOMMENDATIONS

7.1 The Proposed Disposal

The Directors are of the opinion that the Proposed Disposal is in the best interest of the Company.Accordingly, they recommend that Shareholders vote in favour of resolution 1, being the ordinaryresolution relating to the aforesaid Proposal.

7.2 The Proposed Confirmation of the Group’s Core Business

The Directors are of the opinion that the Proposed Confirmation of the Group’s Core Business is inthe best interest of the Company. Accordingly, they recommend that Shareholders vote in favourof resolution 2, being the ordinary resolution relating to the aforesaid Proposal.

7.3 The Proposed Share Subdivision

The Directors are of the opinion that the Proposed Share Subdivision is in the best interest of theCompany. Accordingly, they recommend that Shareholders vote in favour of resolution 3, being theordinary resolution relating to the aforesaid Proposal.

7.4 The Proposed Change of Auditors

The Directors are of the opinion that the Proposed Change of Auditors is in the best interest of theCompany. Accordingly, they recommend that Shareholders vote in favour of resolution 4, being theordinary resolution relating to the aforesaid Proposal.

8. EXTRAORDINARY GENERAL MEETING

The Extraordinary General Meeting, notice of which is set out on pages 37 to 38 of this Circular,will be held on 10 December 2007 at No 1 Woodlands Sector 1, Nylect Industrial Building,Singapore 738309 for the purpose of considering and, if thought fit, passing, with or withoutmodifications the resolutions set out in the Notice of Extraordinary General Meeting.

9. ACTION TO BE TAKEN BY SHAREHOLDERS

9.1 Shareholders who are unable to attend the Extraordinary General Meeting are requested tocomplete and sign the Proxy Form which is attached to this Circular in accordance with theinstructions printed thereon and return it to the Company’s registered office at No 1 WoodlandsSector 1 Nylect Industrial Building Singapore 738309 as soon as possible and in any event so asto arrive at the Company’s registered office not less than 48 hours before the time fixed for theholding of the Extraordinary General Meeting. The completion and return of the Proxy Form by aMember will not preclude him from attending the Extraordinary General Meeting and voting inperson in place of his proxy should he subsequently wish to do so.

9.2 A Depositor shall not be regarded as a Shareholder of the Company entitled to attend theExtraordinary General Meeting and to speak and vote thereat unless his name appears on theDepository Register at least 48 hours before the Extraordinary General Meeting.

10. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept responsibility for the accuracy of the informationgiven in this Circular and confirm, having made all reasonable enquiries, that to the best of theirknowledge and belief, the facts stated and the opinions expressed in this Circular are fair andaccurate and that there are no material facts, the omission of which would make any statement inthis Circular misleading.

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Where information has been extracted from published or otherwise publicly available sources, theDirectors have ensured that such information has been accurately and correctly extracted fromthese sources.

11. DOCUMENTS FOR INSPECTION

Copies of the following documents may be inspected at the registered office of the Company at No1 Woodlands Sector 1, Nylect Industrial Building, Singapore 738309 during normal office hoursfrom the date of this Circular up and including the date of the EGM:-

(a) the audited financial statements of the Company and the Group for FY2006;

(b) the existing set of the Memorandum and Articles of the Company;

(c) the Sale and Purchase Agreement;

(d) the letter from the present Auditors of the Company, Messrs RSM Chio Lim referred to inparagraph 5;

(e) the letter from the proposed new Auditors of the Company, Messrs KPMG referred to inparagraph 5; and

(f) the letter of confirmation dated 6 November 2007 from Messrs RSM Chio Lim that there areno circumstances connected with the change of auditors that need to be brought to theattention of the shareholders and creditors of the Company.

Yours faithfully,For and on behalf of the Directors

Chew Thiam KengChief Executive Officer and Executive DirectorEzion Holdings Limited

EZION HOLDINGS LIMITED(formerly known as Nylect Technology Limited)

(Incorporated in the Republic of Singapore)(Company Registration Number: 199904364E)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of EZION HOLDINGS LIMITED (the“Company” and, together with its subsidiaries, the “Group”) will be held at No 1 Woodlands Sector 1,Nylect Industrial Building, Singapore 738309 on 10 December 2007 at 11 a.m. for the purpose ofconsidering and, if thought fit, passing with or without any amendment the following resolutions:-

Resolution 1: Ordinary ResolutionThe Proposed Disposal

That:-

(a) approval be and is hereby given for the Company to sell its shareholding interests in thesubsidiaries of the Company which undertake the Group’s Mechanical, Electrical and FabricationServices business operations (the “M&E Companies”) together with the net amount of S$2.716million due to the Company from the M&E Companies (the “Proposed Disposal”) to thepurchaser, Mr Sim Hee Chew or such nominee as he shall direct, on the terms and subject to theconditions of the sale and purchase agreement dated 19 September 2007 made between theCompany as the vendor and Mr Sim Hee Chew as the purchaser, subject to such amendments ormodifications thereto as the directors of the Company (the “Directors”) may in their discretiondeem fit, for a consideration of S$4.9 million; and

(b) the Directors (or any one of them) be and are hereby authorised to take such steps, make sucharrangements, do all such acts and things and exercise such discretion in connection with, relatingto or arising from the matters referred to in paragraph (a) of this resolution, as they (or he) mayfrom time to time consider necessary, desirable or expedient to give effect to such matters and thisresolution as they (or he) may deem fit.

Resolution 2: Ordinary ResolutionThe Proposed Confirmation of the Group’s Core Business

That:-

(a) approval be and is hereby given for the confirmation of the Group’s business of providing OffshoreMarine Logistics Support Services to customers who are mainly in the offshore oil and gasindustries with the necessary assets, which comprise, inter alia, vessels, rigs, etc, and otherrelated activities, as the Group’s core business; and

(b) the Directors and each of them be and are hereby authorised to do all acts and things as they orhe deem desirable, necessary or expedient to give effect to the matters referred to in paragraph (a)of this resolution as they or he may in their or his absolute discretion deem fit in the interests of theCompany.

Resolution 3: Ordinary ResolutionThe Proposed Share Subdivision

That:-

(a) every one (1) ordinary share in the issued and paid-up share capital of the Company be dividedinto two (2) ordinary shares (the “Share Subdivision”); and

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(b) the Directors of the Company be and are hereby authorised to do all such acts and things as theymay consider necessary, desirable or expedient to give effect to the Share Subdivision, includingwithout limit to the foregoing, to approve any amendments, alteration or modification to anydocument and affix the Common Seal of the Company to any such documents (if required).

Resolution 4: Ordinary ResolutionThe Proposed Change in Auditors

That the resignation of Messrs RSM Chio Lim as Auditors of the Company be and is hereby acceptedand that Messrs KPMG be and are hereby appointed Auditors of the Company in place of Messrs RSMChio Lim, to hold office until the conclusion of the next Annual General Meeting, at a fee to be agreedbetween the Directors and Messrs KPMG.

By Order of the Board

Chew Thiam KengChief Executive Officer and Executive Director21 November 2007Singapore

Notes:-

1. A member of the Company entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint not morethan two proxies to attend and vote in his stead. A member of the Company, which is a corporation, is entitled to appoint itsauthorised representative to vote on its behalf. A proxy need not be a member of the Company.

2. The Proxy Form is attached and must be deposited at the registered office of the Company at No 1 Woodlands Sector 1,Nylect Industrial Building, Singapore 738309 not less than 48 hours before the time fixed for holding the ExtraordinaryGeneral Meeting in order for the proxy to be entitled to attend and vote at the Extraordinary General Meeting.

3. A Depositor’s name must appear on the Depository Register maintained by The Central Depository (Pte) Limited 48 hoursbefore the time fixed for holding the Extraordinary General Meeting in order for the Depositor to be entitled to attend and voteat the Extraordinary General Meeting.

EZION HOLDINGS LIMITED(formerly known as Nylect Technology Limited)(Incorporated in the Republic of Singapore)(Company Registration Number: 199904364E)

EXTRAORDINARY GENERAL MEETING – PROXY FORM

*I/We (Name)

of (Address)

being a *member/members of EZION HOLDINGS LIMITED (the “Company”) hereby appoint: -

Name Address NRIC/Passport Proportion ofNo. Shareholding (%)

and/or (delete as appropriate)

Name Address NRIC/Passport Proportion ofNo. Shareholding (%)

or failing whom the Chairman of the Extraordinary General Meeting as *my/our proxy/proxies to vote for*me/us on *my/our behalf and, if necessary, to demand a poll at the Extraordinary General Meeting of theCompany to be convened on 10 December 2007 at 11 a.m. at No 1 Woodlands Sector 1, Nylect IndustrialBuilding, Singapore 738309 and at any adjournment thereof. *I/We direct *my/our proxy/ proxies to vote for oragainst the Ordinary Resolutions to be proposed at the Extraordinary General Meeting as indicated hereunder.If no specific direction as to voting is given, the *proxy/proxies will vote or abstain from voting at *his/her/theirdiscretion, as *he/she/they will on any other matter arising at the Extraordinary General Meeting.

To be used on a show To be used in the event

of hands of a poll

For** Against** No. of Votes No. of Votes

For*** Against***

1. Ordinary Resolution:-

The Proposed Disposal

2. Ordinary Resolution:-

The Proposed Confirmation of the Group’s Core Business

3. Ordinary Resolution:-

The Proposed Share Subdivision

4. Ordinary Resolution:-

The Proposed Change of Auditors

Notes:

* Please delete accordingly.** Please indicate your vote “For” or “Against” with an “x” within the box provided.*** If you wish to exercise all your votes “For” or “Against”, please indicate with an “X” within the box provided. Alternatively, please

indicate the number of votes as appropriate.

Dated this day of 2007.

Signature(s) of Member(s)/Common Seal

*Delete accordingly

IMPORTANT: PLEASE READ NOTES OVERLEAF BEFORE COMPLETING THIS PROXY FORM

IMPORTANT:

1. For investors who have used their CPF monies to buy EZION HOLDINGSLIMITED’S shares, this Circular is forwarded to them at the request oftheir CPF Approved Nominees and is sent solely FOR INFORMATIONONLY.

2. This Proxy Form is not valid for use by CPF investors and shall byineffective for all intents and purposes if used or purported to be used bythem.

3. CPF investors who wish to vote should contact their CPF Nominees.

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Total Number of Shares held

CDP Register

Register of Members

Notes:-

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend andvote in his stead.

2. Where a member appoints more than one proxy, he/she should specify the proportion of his/her shareholding (expressed asa percentage of the whole) to be represented by each proxy and if no percentage is specified, the first named proxy shall betreated as representing one hundred per cent. (100%) of the shareholding and the second named proxy shall be deemed tobe an alternate to the first named.

3. A proxy need not be a member of the Company.

4. Please insert the total number of Shares held by you. If you have Shares entered against your name in the DepositoryRegister (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), you should insert that number of Shares.If you have Shares registered in your name in the Register of Members of the Company, you should insert that number ofShares. If you have Shares entered against your name in the Depository Register and registered in your name in theRegister of Members, you should insert the aggregate number of Shares. If no number is inserted, this form of proxy will bedeemed to relate to all the Shares held by you.

5. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at No 1 WoodlandsSector 1, Nylect Industrial Building, Singapore 738309 not less than 48 hours before the time set for the ExtraordinaryGeneral Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or by his/her attorney duly authorisedin writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either underits common seal or under the hand of its attorney or a duly authorised officer.

7. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power ofattorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrumentof proxy, failing which the instrument may be treated as invalid.

8. A corporation which is a shareholder of the Company may, in accordance with Section 179 of the Companies Act, Cap. 50 ofSingapore, authorise by resolution of its directors or other governing body such person as it thinks fit to act as itsrepresentative at the Extraordinary General Meeting.

9. The Company shall be entitled to reject the instrument appointing a proxy or proxies, if it is incomplete, improperlycompleted, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointorspecified on the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the DepositoryRegister, the Company may reject any instrument appointing a proxy or proxies if a shareholder of the Company, being theappointor, is not shown to have shares entered against his/her name in the Depository Register as at 48 hours before thetime appointed for holding the Extraordinary General Meeting, as certified by The Central Depository (Pte) Limited to theCompany.