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KS ENERGY SERVICES LIMITEDAnnUAL rePort 2006

1 About KS Energy Services Limited

2 A Letter to Shareholders

4 Operations & Financial Review

11 Corporate Data

12 Board of Directors

15 Company Key Executives

16 Group Structure

17 Financial Contents

C O N T E N T

ABOUT KS EnErgy SErVICES LIMITED (“KS EnErgy”)

Listed on SGX-SESDAQ on 6 August 1999 and upgraded to the Mainboard on 11 March 2002, KS Energy is an energy services group catering to the oil & gas and petrochemical industries around the world.

In addition to distributing more than 60,000 oil & gas, marine and tubular related products items that encompass more than three hundred global brands, the Group through a series of acquisitions in the last few years enhanced its expertise in the related services of procurement, distribution, engineering and offshore chartering to support its customers.

Over the last two decades, the Group has established very close working relationships with major oil & gas companies in the region. In leveraging its enhanced expertise as a leading one-stop supply and services provider with these long term relationships, KS Energy was able to provide higher value-added services by procuring and supplying upgraded capital assets to CNOOC Group, Maersk, Gulf Drilling International Limited and others under the service contracts it has secured since November 2003.

Headquartered in Singapore, the Group has subsidiaries and representative offices in China, Vietnam, Thailand, Qatar, UAE, USA, Indonesia and Malaysia to support its wide base of global oil & gas customers.

A leading one-stop energy services provider to the global oil & gas and petrochemical industries

KS Energy Services Limited • Annual Report 2006 | �

Our net profit after tax rose 51% to $50.7 million. Earnings per share

rose from 14.11 cents in the previous financial year to 21.30 cents at the

close of FY2006. ’’

‘‘

A LETTER TO SHArEHOLDErS

By combining KS Energy’s existing customer network in markets like Latin America, the Middle East and Indonesia with the resources from my Citramas Group, we will be able to increase KS Energy’s range of products and services offerings and expand its customer base.

Dear Shareholders,

I am pleased to present a good set of performance for the 2006 financial year.

Our revenues rose 10% to $295.1 million and net profit after tax rose 51% to $50.7 million. Earnings per share rose from 14.11 cents in the previous financial year to 21.30 cents at the close of FY2006.

In view of the strong performance this year, the Board of Directors have recommended a total dividend of 6.5 cents per share, including a final dividend of 1.8 cents per share which is subject to the approval of the shareholders at the forthcoming Annual General Meeting. This represents a 78% increase in dividend payout compared to the dividend paid in the previous financial year.

In April 2006, Pacific One Energy Limited (formerly known as Pacific Oilfield Equipment Investment Corp) together with other partners acquired a 29.98% equity stake in KS Energy. This is a strategic partnership. By combining KS Energy’s extensive customer network in markets like Latin America, the Middle East and Indonesia with the resources from my Citramas Group, we will be able to increase KS Energy’s range of products and services offerings and expand its customer base.

The strong economic growth in Asia and other emerging economies have increased the world demand for energy. Exploration and production activities for oil and gas are on the rise. Conversely, equipment support for both onshore and offshore activities

� Annual Report 2006 • KS Energy Group2 | Annual Report 2006 • KS Energy Services Limited

are in short supply. This situation is further exacerbated by underinvestment in the energy industry over the last two decades when crude prices were lower.

The current demand in the global energy landscape is benefiting companies who are providing services and equipment to the energy industry. Production activities need to be stepped up. Demand for floating production systems is expected to rise. Rig builders are sitting on strong order books. It has been a long time since the world last witnessed such buoyant activities in the energy, petrochemical and marine industries.

Within KS Energy group, together with our subsidiary Aqua-Terra Supply Co. Limited and associate, SSH Corporation Ltd, we supply an extensive range of equipment and spare parts. Distributing more than one thousand types of oilfield equipment products, we cater to the needs of the energy, petrochemical, marine and infrastructure industries.

Our capital equipment and rig refurbishment business has continued to grow and contributed to the higher profit in FY2006, as we benefited from the world shortage in capital equipment including oil rigs.

Over the years, KS Energy has developed an extensive proprietary know-how, customer network and competencies within the organisation. Going forward, we plan to integrate all the activities in KS Energy Group. This integration process, which has commenced, is expected to be completed by the end of 2007.

Last year we also witnessed many achievements by the Group. Among them were the recognition by Forbes Asia as one of the 200 “Best Under a Billion” companies; the receipt of Asiamoney Magazine’s Best Corporate Awards for Excellence; and we ranked 12th in Business Week’s Top 100 Hot Growth Companies in Asia for 2006.

I would like to thank the management team at KS Energy for their dedication and commitment. Their passion, hard work and loyalty for the company have helped turned KS Energy into a Global Energy Equipment player and I look forward to more achievements as we progress into the new financial year.

In closing, on behalf of all my colleagues in KS Energy, I would like to thank my predecessor Mr Tan Kim Seng; and our previous CEO Mr Chew Thiam Keng for their contributions to the Group and wish them all my very best in their future endeavors.

To our customers, shareholders, bankers and business associates, I convey my deepest appreciation for your confidence and trust in me and our organization.

Your guidance and support have been instrumental to our success today.

Yours Sincerely,

Kris Taenar Wiluan Chairman & Chief Executive Officer


OpERATiOnS & FinAnciAL rEVIEw

OPERATION REVIEW

FY2006 was both an exciting and challenging year for the Group. Amidst the strong global demand for energy, both our capital equipment and distribution units reported significantly improved performances. Our revenue saw a 9.7% growth rising from $269.1 million to $295.1 million and net profit after tax attributable to Shareholders of the Company grew by more than 50% rising from $33.6 million in FY2005 to $50.7 million this year.

On 28 April 2006, we saw the entry of new shareholders into the Group. Led by Pacific One Energy Limited (formerly known as Pacific Oilfield Equipment Investment Corp), the new shareholders

acquired 29.98% equity interest in the Group. This development sets the stage for a new growth strategy for KS Energy. Under the leadership of our new Chairman, Mr Kris Wiluan, we now have access to his extensive network of contacts in the global energy industry. Furthermore, we were able to forge strategic business alliances with PT. Citra Tubindo Tbk, a part of the enlarged Citramas Group owned by Mr Wiluan. Thereafter, in August 2006, KS Energy signed a Memorandum of Understanding with PT Citra Tubindo Tbk to set up a joint venture to acquire and lease rig equipment in Indonesia.This joint venture would be supported by the rig refurbishment facility established by PT Citra Tubindo Tbk in the Kabil Industrial Estate in the neighbouring island of Batam, Indonesia.

� | Annual Report 2006 • KS Energy Services Limited

Capital Equipment Business

On the Capital Equipment Business, our existing contracts are progressing according to plan. In addition, the year also marked a major breakthrough comprising the contracts for the supply of 2 self-propelled offshore jackup rigs to a Central American based National Oil Company. Valued at US$204 million, the tenures of these projects are scheduled to be continued over a period of 3+2 option years. Together with the other projects awarded during the year, we closed the year with charter contracts in excess of US$300 million.

Distribution Business

Benefitting from the region’s escalating exploration and production activities, our distribution business also reported strong growth. Currently, the Company distributes a total of 20,000 products items and together with the products distributed by Aqua-Terra and SSH, we distribute a total of 60,000 products items ranging from consumables to industrial products in the KS Energy Group. On 3rd November 2006, our subsidiary, Aqua-Terra Supply Co. Limited completed the acquisition of 28.4% equity stake in SSH Corporation. An established name in the distribution and supply of specialised tubular products, steel plates and welding equipment, SSH boasts a history


spanning more than six decades in the energy and petrochemical industries. Complementing the growth of our capital equipment and rig refurbishment business, we expect the demand for our parts, consumables and industrial products businesses to remain strong.

Geographically, recent developments on the corporate and business fronts have further enhanced the Group’s presence in the region. The entry of our new shareholders has paved the way for us to raise our visibility and our presence in Indonesia

� Annual Report 2006 • KS Energy Group

CONTRACTs sECuRED IN 2006

Date Contract secured

Oct 2006 JV with Tat Hong Holdings Ltd to charter a skid mounted land drilling rig to a China National Oil Company for US$8.1 million.

Sep 2006 JV with Sinwa Limited to charter a new self-propelled offshore jack-up rig to a Central American based National Oil Company. Total contract value of US$109.5 million over 5 years.

Aug 2006 JV with Pacific Exploration Pte Ltd to refurbish and charter seismic exploration vessel for US$21 million over 4 years.

Apr 2006 JV with Ezra Holdings Limited to own and charter a new self-propelled offshore jack-up rig to a Central American based National Oil Company. Total contract value of US$95 million over 5 years.

JV with Tat Hong Holdings Ltd to charter and manage two land rigs for a China National Oil Company. Total contract value of US$10.8 million over 4 years.

Feb 2006 JV with Tat Hong Holdings Ltd to procure and manage oilfield equipment for Sky China Petroleum Services Ltd. Total contract value of RMB87.5 million over 5 years.

Jan 2006 JV with BR Energy Sdn Bhd to charter offshore workover pulling unit to oil company in Malaysia. Total contract value of US$30.7 million over 5 years.

through closer working relationships with the Citramas Group. Furthermore, we now have the opportunity to tap into our Chairman’s network and relationships in the global energy arena. Going forward, with the ready access to globally accredited tubular manufacturing facilities combined with the wide range of leading global products distributed by our group of companies, we are rapidly evolving into an integrated one-stop supply hub ready to better support the demands of the energy, petrochemical and marine industries.

6 | Annual Report 2006 • KS Energy Services Limited

AWARDs & ACCOLADEs

The high operating standards of the Group and the dedication and commitment of our team received many recognitions in FY2006. The year began with the receipt of Asiamoney Magazine’s Best Corporate Awards for Excellence in January 2006. This was followed by the recognition from Forbes Asia as one of the 200 “Best Under a Billion” companies in October 2006. At the close of the year in December 2006, KS Energy ranked 12th in Business Week’s Top 100 Hot Growth Companies in Asia for 2006.

FINANCIAL REVIEW

Reflecting the activities and developments in FY2006, the Group’s improved performance is reflected in its profit and loss statement. The paragraphs below highlights some key areas in the Group’s business during the financial year under review.

Revenue

In FY2006, the Group reported a 9.7% increase in its revenue which rose from $269.1 million (FY2005) to $295.1 million (FY2006). This comprises a $91.4 million (31.0%) contribution from the capital equipment sector with the balance of $203.7 (69.0%) being contribution from our distribution business. The stronger performance this year is attributable to the high demand for capital equipment and parts as major energy companies continue to step up their exploration and production activities globally.

sIgNIFICANT EVENTs

Date Event

Dec 06 Ranked No. 12 in Business Week’s Top 100 Hot Growth Companies in Asia for 2006.

Nov 06 Aqua-Terra acquired a 28.4% stake in SSH Corporation Ltd, a specialist supplying high-grade industrial materials such as tubular products, steel plates and welding equipment.

Oct 06 Achievement as one of the 200 “Best Under a Billion” companies by Forbes Asia.

Aug 06 Entered into MOU with PT Citra Tubindo Tbk to incorporate a 75:25 JV to refurbish and charter oil rigs in Indonesia.

May 06 Mr Kris Wiluan appointed as Chairman and Executive Director and Dr Adam Paul Brunet appointed as Executive Director.

Apr 06 Pacific Oilfield Equipment Investment Corp, controlled by Mr Kris Wiluan, and its associates acquired 29.98% of KS Energy.

Feb 06 Acquired remaining 25% stake to wholly own oil & gas engineering company, GlobalTech Group Pte Ltd.

Jan 06 Received Asiamoney Magazine’s Best Corporate Awards for Excellence.


� Annual Report 2006 • KS Energy Group� Annual Report 2006 • KS Energy Group

Relative to the previous financial year, capital equipment saw a dip in its revenue contribution. This is primarily due to the structure of a project which resulted in the recognition of revenue and cost of the capital equipment in FY2005, instead of the amount of commission earned. Hence, it boosted the revenue for capital equipment by $76.2 million in FY2005. If this amount was excluded from FY2005, capital equipment would have seen a significant revenue growth of 184% in FY2006.

Profitability

The Group reported a net profit after tax attributable to Shareholders of the Company of $50.7 million. This represents a

significant increase of 50.9% when compared to the net profit of $33.6 million reported in the previous financial year.

The Group’s profitability this year is attributable to the higher operating profit contributions generated by both capital equipment and distribution business segments. Compared to the previous financial year, segmental results from the capital equipment business rose from $12.2 million (FY2005) to $22.8 million (FY2006) representing an increase of 86.9%. Segmental results from the distribution business also rose from $11.6 million (FY2005) to $18.4 million (FY2006), representing an increase of 58.7%.

The interests of shareholders increased to $159.3 million in FY2006 from $109.5 million in FY2005.

Net Profit Trend (S$ Million)

6.5

16.3

33.6

50.7

2003 2004 2005 2006

CAGR +6�.�%

Revenue Trend (S$ Million)

67.695.3

269.1

295.1

2003 2004 2005 2006

CAGR +��.�%

� | Annual Report 2006 • KS Energy Services Limited

PROsPECTs

Globally the outlook for the energy, petrochemical and marine industries in FY2007 remained bullish. Investment by oil majors in the exploration and production areas, particularly in the Asian region, will continue to increase. To support the growth in these areas, the Group expects the demand for capital equipment as well as parts and consumables to remain strong in the new financial year.

Amid the buoyant market conditions, the Group expects to refurbish and supply more capital equipment to its customers in FY2007. Furthermore, in addition to its traditional markets, the Group will be leveraging upon Mr Kris Wiluan’s extensive contacts in the energy sector in the US, Middle East and Indonesia to seek new opportunities for its capital equipment and distribution businesses.

Organically, the distribution business will continue to grow. Fuelling this growth, will be the contributions from its newly acquired subsidiaries. Additionally, the scheduled completion of new capital equipment projects in FY2007 will also add to the demand for parts, equipment, consumables and industrial products.

Going forward, the Group will continue to seek opportunities to expand its product portfolio and improve its operational efficiencies by integrating its capabilities so as to strengthen its business offerings to customers around the world.

Shareholders’ Fund (S$ Million)

37.448.4

109.5

159.3

2003 2004 2005 2006

CAGR +��.�%

FINANCIAL HIgHLIgHTs

2006 2005 2004 2003 2002

$’000 $’000 $’000 $’000 $’000

Turnover 295,132 269,081 95,253 67,564 71,121

Profit before Tax 64,906 41,538 18,938 7,308 4,977

Net Profit 50,702 33,604 16,271 6,503 3,862

Key Balance sheet Indicators

Shareholders’ Fund 159,256 109,482 48,411 37,427 25,168

Total Assets 322,327 242,554 131,474 76,888 66,595

Total Liabilities 143,206 117,098 79,461 39,461 41,427

Performance Indicators

Earnings Per Share (cents/share)* 21.30 14.11 6.83 2.73 1.62

Net Asset Value (cents/share)* 67.10 46.00 20.33 15.71 10.57

Financial Ratios

ROE(%) 31.8 30.7 37.9 20.8 17.3

ROA(%) 15.7 13.9 15.6 9.1 7.0

Current Ratio (times) 1.59 1.77 1.62 2.05 1.88

Net Gearing (times) 0.03 Net Cash Net Cash 0.29 0.40

*The comparative figures have been adjusted for new share placements and bonus share issues for the period up to 31 December 2006.


10 Annual Report 2006 • KS Energy Group10 Annual Report 2006 • KS Energy Group

A Leading One-Stop

Energy Services Provider

to the Global Oil & Gas &

Petrochemical Industry

Congratulations

KS ENERGY SERVICES LIMITEDCompany Registration No. 198300104G

for being recognized as one of the 200

BestUnder a Billion

companies by Forbes Asia”

“

�0 | Annual Report 2006 • KS Energy Services Limited

KS Energy Group • Annual Report 2006 11

cORpORATE DATA

BOARD OF DIRECTORsKRIS TAENAR WILUAN Executive Chairman & Chief Executive OfficerTAN FUH GIH Executive DirectorWOO PENG KONG Executive Director & Chief Operating OfficerGOH BOON CHYE Executive Director (Finance & Admin)DR ADAM PAUL BRUNET Executive DirectorCHEW THIAM KENG Non-Executive DirectorLIM HO SENG Independent DirectorWONG MENG YENG Independent DirectorLEE BENG CHENG, BILLY Independent DirectorSHEIKH FAISAL F.J. AL-THANI Independent Director

AuDIT COMMITTEELIM HO SENG ChairmanWONG MENG YENGLEE BENG CHENG, BILLY

NOMINATINg COMMITTEEWONG MENG YENG ChairmanLEE BENG CHENG, BILLYKRIS TAENAR WILUAN

REMuNERATION COMMITTEELEE BENG CHENG, BILLY ChairmanWONG MENG YENGLIM HO SENG

COMPANY sECRETARYLIM KA BEE

REgIsTERED OFFICENo 4 Tuas Avenue 5 Jurong Singapore 639331Tel: (65) 6415 0808 Fax: (65) 6898 4418Website: www.ksenergy.com.sgCompany Registration No: 198300104G

REgIsTRAR & sHARE TRANsFER OFFICETricor Barbinder Share Registration Services(a division of Tricor Singapore Pte Ltd)8 Cross Street #11-00 PWC Building Singapore 048424

AuDITORsKPMGCertified Public Accountants16 Raffles Quay #22-00 Hong Leong Building Singapore 048581Partner-in-charge: TAN HUAY LIMYear of appointment: 2005

PRINCIPAL BANKERsBank of ChinaCitibank, NA.KBC Bank N.V.Maybank GroupOversea-Chinese Banking Corporation LimitedStandard Chartered BankThe Development Bank of Singapore LimitedUnited Overseas Bank Limited

KS Energy Services Limited • Annual Report 2006 | ��

BOARd OF DIrECTOrS

1� Annual Report 2006 • KS Energy Group

MR LIM HO sENg MR LEE BENg CHENg, BILLYMR WONg MENg YENg sHEIKH FAIsAL F.J. AL–THANI

MR TAN FuH gIH

MR KRIs TAENAR WILuAN

MR gOH BOON CHYE

MR WOO PENg KONg

DR ADAM PAuL BRuNET

MR TAN FuH gIH

MR CHEW THIAM KENg


KRIs TAENAR WILuANExecutive Chairman & Chief Executive Officer

Mr Wiluan is the founder of the Citramas Group, whose business activities include oilfield equipment manufacturing, shipping and logistics, drilling services, infrastructure development comprising port, ferry terminals and telephone companies, and the hotel and leisure industry. Under the umbrella of the Citramas Group is the Indonesian public listed PT Citra Tubindo Tbk, a manufacturer of tubular products for the oil and gas industry whose shares are quoted on the Jakarta and Surabaya Stock Exchanges, and 35 other subsidiary companies who activities span different parts of ASEAN. The Citramas Group provides employment to more than 2000 employees across the region.

The President of the Citramas Group, Mr Wiluan is also the President and CEO of PT Citra Tubindo Tbk, and the Chairman of PT Citra Bonang, a Jakarta based industrial chemicals and food distribution group of companies with more than 50 branches throughout Indonesia.

TAN FuH gIHExecutive Director

Mr Tan joined the Group in 1978 and was instrumental in the Group’s expansion into the oil & gas industry in the 1980s. Mr Tan is the founder of the Projects Division which handles all the projects based procurement & supply to the oil & gas major players. Currently, Mr Tan is the President of Oil & Gas Division. He is responsible for the marketing and business development of the Oil & Gas Division and is also involved in the liaison with strategic partners & key customers. Mr Tan graduated with a Bachelor of Commerce (Honours) degree from Nanyang University and he also holds a MBA from the National University of Singapore.

WOO PENg KONgExecutive Director & Chief Operating Officer

Mr Woo joined the Group in 2004 when the GlobalTech group of companies, which he co-founded in 2002, became its subsidiaries. Appointed subsequently as Chief Operating Officer of the Group, he takes charge of the business operations and leads the high-valued capital equipment projects for the Group. An engineer by profession, Mr Woo has more than 25 years of experience in the oil & gas and marine industry, assuming diversified senior managerial roles in engineering, sales & marketing, new business start-up and joint-ventures with particular expertise in business operations and financial management. Mr Woo holds a First Class Honours Bachelor Degree in Mechanical Engineering from the University of Singapore and a Certified Diploma in Accounting & Finance from the Chartered Association of Certified Accountants.

gOH BOON CHYEExecutive Director (Finance & Admin)

Mr Goh joined the Group in 1999, is currently the Executive Director responsible for finance and administration. He is also responsible to grow the Group’s core businesses in new markets around the world. Mr Goh was the Chief Financial Officer in 1999. On 29 November 2002, Mr Goh held the post of Chief Operating Officer. During our restructure in 2006, Mr Goh was appointed the Chief Business Development Officer on 16 February 2006. Prior to 1998, Mr Goh held the post of Financial Controller in Parker Hannifin Pte Ltd and Motorola Electronics Pte Ltd. Mr Goh graduated from the University of Singapore in 1976 with a Bachelor of Accountancy Degree and is a Certified Accountant by profession. He also holds a MBA from Oklahoma City University. Mr Goh is a fellow of the Singapore Institute of Certified Public Accountants and the Association of Chartered Certified Accountants of United Kingdom.

DR ADAM PAuL BRuNETExecutive Director

Dr Brunet is presently the Technical Director and Vice President of Manufacturing & Engineering of PT Citra Tubindo Tbk (“Tubindo”). He plays a crucial role of overseeing the manufacturing processes, engineering and business development as well as procurement and marketing functions of Tubindo and its group of companies. Dr Brunet, a postgraduate from Oxford University, is also an established academic who specializes in Operations Management. Through strategic alliances and joint ventures, Dr Brunet has over the last two decades capitalized on Tubindo’s engineering capabilities to develop new technologies, products and services transforming the company into an export driven entity with 75% of product being shipped overseas. His major contributions in the early 1980s included the development of Tubindo’s key technology in threading and heat-treating casing and tubing. In 2003, he ventured into the global oil and gas industry to develop the market for technologies associated with Tubindo’s established manufacturing operations. Since 2006, Dr Brunet has acted as an Executive Director in KS Energy focusing on the Capital Equipment Division and the group’s businesses and projects in Indonesia.

CHEW THIAM KENgNon-Executive Director

Mr Chew was the Managing Director and CEO of KS Energy. On 3 November 2006, he relinquished his CEO role and remained in office as Managing Director up to 31 January 2007. Thereafter, Mr Chew remains in office as a Non-Executive Director of KS Energy. Mr Chew was the Executive Director of another listed company (SGX Main Board) between 1996 and November 2001. Before that, Mr Chew was with The Development Bank of Singapore Limited for nine years working in the areas of banking such as corporate finance and retail banking. He is also a director and an audit committee member of several other listed companies. He holds a Master Degree in Business Administration from the University of Hull and a Bachelor Degree (Honours) in Mechanical Engineering from the National University of Singapore.


BOARd OF DIrECTOrS

LIM HO sENgIndependent Director

Mr Lim is an Independent Director and Chairman of the Audit Committee and a member of the Remuneration Committee of the Group. He was appointed our Independent Non Executive Director on 1 September 2005. He is the Chairman of Baker Technology Ltd and Sim Siang Choon Ltd and sits on the Board of several other public companies listed on the Stock Exchange of Singapore. He was the former Chief Executive Officer of NTUC Fairprice Cooperative Ltd. Mr Lim is a Fellow of the Institute of Certified Public Accountants Singapore, the Institute of Certified Pubic Accountants Australia and the Association of Chartered Certified Accountants of United Kingdom. He is also a Fellow of the Institute of Chartered Secretaries & Administrators and the Singapore Institute of Directors.

WONg MENg YENgIndependent Director

Mr Wong has been an advocate and solicitor in Singapore since 1984 of which the last 17 years were spent as a corporate lawyer. He is currently a director of Alliance LLC, a law corporation he co-founded and an Independent Director of several companies listed on the Singapore Exchange. Mr Wong graduated from the National University of Singapore in 1983 with a Bachelor of Laws (Honours) degree.

LEE BENg CHENg, BILLYIndependent Director

Mr Lee has extensive experience in the oil & gas and marine industries, having worked in the oil refining and petrochemical sectors, offshore drilling rig and platform construction including drilling several oil & gas wells both onshore and offshore in Asia.

He held senior positions in several public-listed and private entities in the hydrocarbon industry in Singapore, Malaysia and China including Vice Chairman of the listed Shenzhen-Chiwan Petroleun Supply Base, Chairman of Singapore Offshore Petroleum Supply Base, President of Sembawang Marine & Logistics Ltd (formerly known as Sembawang Maritime Ltd), Managing Director of Hong Kong listed Promet Petroleum Ltd. Mr Lee holds a First Class Honours degree in Mechanical Engineering and a Master of Science (with distinction) from Leeds University, UK. He is also member of the Singapore Institute of Management, the Institute of Engineers Singapore and the Singapore Institute of Directors.

sHEIKH FAIsAL F.J. AL–THANIIndependent Director

Sheikh Al-Thani was appointed an Independent Director of the Group on 20 January 2006. He has 20 years of working experience in the oil & gas industry in Qatar. He started his career in 1987 with state-owned Qatar Petroleum and spent more than a decade working there before being seconded to Arco Qatar and British Petroleum in Qatar. In 2002, Sheikh Al-Thani assumed his present position as Deputy General Manager and Qatar Petroleum’s representative at Anadarko Qatar Energy Co. LLC, a subsidiary of US-based public-listed Anadarko Petroleum Corporation, a “Fortune 500” oil & gas exploration and production company with assets in excess of US$30 billion. Sheikh Al-Thani is the Chairman of both Namma Real Estate Company and Qatar National Export Import Company. He is a prolific author and has published numerous books on risk management and trends in the oil & gas industry in the Middle East. He is also the current Chairman of the Society of Petroleum Engineers in Qatar and a Member of Qatar Supreme education council. Sheikh Al-Thani, a Fulbright scholar, completed his first degree in Petroleum Engineering at the University of Tulsa, Oklahoma followed by a Masters in Project Management at the University of Bath as well as a PhD in Project Finance at Leeds University, UK.

�� | Annual Report 2006 • KS Energy Services Limited

cOMpAnY KEy EXECUTIVES

LEONg KOK HOChief Financial Officer

Mr Leong joined the Group in 2002, has almost 20 years of experience as an accounting professional. He started his career as an auditor with Coopers and Lybrand and involved in audits of the banks, shipping and distributions companies. Thereafter, he held accounting positions in various industries such as oil and gas equipment & personnel service provider, ship building company, engineering company and manufacturing. Mr Leong also has regional exposure in the China and Myanmar environment. In China, he worked for Kerry Group’s of companies. During his work in Myanmar, he had experience dealing and supporting oil exploration companies at that time. Mr Leong is the Chief Financial Officer of the Company and is responsible for the running of the accounting and finance matters. Mr Leong graduated from National University of Singapore in 1988 with an Accountancy Degree and obtained his MBA with University of Southern Queensland in 1999. He is a FCPA with the Institute of Certified Public Accountants of Singapore.

TAN WEI MINPresident of Valves & Projects Division

Mr Tan joined the Group in 1994 and started the Valves division. In year 2000, Mr Tan secured the master stocking distribution agency from Velan Valves for South East Asia region. Velan Valves is a world’s leading manufacturer of industrial valves for the petrochemical, oil & gas industry. Since, KS Energy has become one of the leading valves specialists in the region. Subsequently, Mr Tan has taken over the Projects Division, which handles all project based procurement and supply to major oil & gas players. Mr Tan graduated from the Kingston University in the United Kingdom with a Bachelor of Science (Honours) Degree in Information Technology.

BOEY KENg CHEWDirector of Strategic Planning & Projects

Mr Boey joined the Group in 2005. He has rich experience in the public and private sectors. Prior to joining the Group, he was the Chief Representative of Singapore Technologies in Beijing and had served in the Singapore Chamber of Commerce & Industry in China

and the Singapore-Shandong Business Council. He graduated with a Bachelor of Commerce degree from the Nanyang University and holds a Chartered Company Secretary qualification as well as a Diploma in Investment Analysis.

RAYMOND NEO KOK KIANGM of Instrumentation & Hydraulic Division

Mr Neo joined the Group in 1983. He has more than 24 years of experience in the hydraulic equipment, instrumentation, spares and parts trading business. He was instrumental in building up the Group’s business, agencies & marketing network.

gWEN TOH CHIN TuANGM of Projects Division

Ms Toh joined the Group in 1988. She has more than 19 years experience in handling projects in oil & gas industry, particular in project-based and tender procurement. Ms Toh holds a Diploma in Business Administration & Marketing.

VINCENT LIM CHEE HONgHead of Valves Division

Mr Lim joined the Group in 2000. He has more than 17 years experience in the valves industry and helped to set up the valves division of the Group. He has a wide experience working with MNC and agency business. Mr Lim holds a Diploma in Marketing (CIMUK).

JIANg YANAssistant GM of Projects Division

Mr Jiang joined the Group in 2002. He is in charge of technical sales and sales support for the oil & gas and marine industries. He has more than 22 years of experience in the marketing and research work in the marine industry. Later, he extended his coverage to the oil and gas industry. He graduated from Naval Engineering Institute, PRC with a Bachelor Degree of Engineering and holds a MBA degree from University of Leicester, UK.



GROUp STrUCTUrE

KS ENERGY SERVICES LIMITED

Country of incorporation :-

singapore Mauritius PRC, including Hong Kong Vietnam Malaysia Thailand BVI usA Qatar

Note: This group structure is correct as at 28 February 2007.

GlobaltechGroup Pte Ltd

(100%)Globaltech System Engineering Pte Ltd

(70%)

Globaltech Offshore & Marine Pte Ltd

(80%)

MarinehubPte Ltd(100%)

Orient MarinePte Ltd(100%)

Aqua-TerraMiddle East

(49%)

SSHCorporation Ltd

(28.4%)

Atlantic EsbjergLimited(100%)

S&E Cumford(M) Sdn Bhd

(100%)

Harta Offshore & Marine Services Pte Ltd

(50%)

Yakki International Pte Ltd

(50%)

Blue OceanExplorer Ltd

(50%)

Girdnal OilfieldServices Inc

(50%)

Casadilla Group Pte Ltd

(50%)

Global OilfieldServices Pte Ltd

(50%)

BR OffshoreServices Limited

(50%)

New StrongGroup Limited

(50%)

United OilfieldServices Pte Ltd

(50%)

KSES (USA) Inc.

(25%)

Aqua-Terra Offshore (Shanghai) Co. Ltd

(100%)

Aqua-Terra Supply (Shanghai) Co. Ltd

(100%)

StarbeamTechnology Pte Ltd

(100%)

AmosInternational (S) Pte Ltd

(51%)

Genesis Express Pte Ltd

(30%)

AmosSolutions Pte Ltd

(51%)

KS OilfieldSupport Ltd

(100%)

KS OilfieldServices Ltd

(100%)

Aqua-TerraSupply Co. Limited

(54.8%)

KS Equipment(Shanghai) Ltd

(100%)

Kim SengHardware & Oilfield

Supply Pte Ltd(100%)

Atlantic EsbjergHolding Pte Ltd

(100%)

KS OilfieldSupport (AP) Ltd

(100%)

S&E Tech Pte Ltd(100%)

S&E Cumford(Thailand) Ltd

(100%)

KS TechWorkshop Ltd

(100%)

HartaHolding Pte Ltd

(100%)

KT Lion OilfieldServices Limited

(70%)

MH GlobalPte Ltd(100%)

KS Energy Services Limited • Annual Report 2006 | 17

18 Corporate Governance Statement

25 Directors’ Repor t

28 Statement by Directors

29 Independent Auditors’ Repor t to the Members

of KS Energy Services Limited

30 Consolidated Income Statement

31 Balance Sheets

32 Consolidated Statement of Changes in Equity

34 Consolidated Cash Flow Statement

36 Notes to the Financial Statements

74 Statistics of Shareholders

76 Notice of Annual General Meeting

F i n a n c i a l c o n t e n t s

18 Annual Report 2006 • KS Energy Group18 | Annual Report 2006 • KS Energy Services Limited

CORPORATE GOVERNANCE STATEMENT

KS Energy Services Limited (“KS Energy”) is committed to good standards of corporate conduct in line with the principles and guidelines set out in the new Code of Corporate Governance 2005 (“Code 2005”).

BOARD OF DIRECTORS

Principle 1: Board’s Conduct of its Affairs

The Board’s primary role is to protect and enhance long-term shareholders’ value. It sets the overall strategic direction of the Company and supervises the management of the Company (the “Management”). It is also responsible for the overall corporate governance of the Company including setting its strategic direction, establishing goals for the Management and monitoring the achievement of these goals.

The principal functions of the Board apart from its statutory responsibilities are to:

a) set values and standards of the Company and ensure that obligations to shareholders and others are understood and met;b) provide entrepreneurial leadership, approve the strategic and financial objectives, corporate policies and authorisation matrix

of the Company;c) oversee the processes for risk management, financial reporting and compliance and evaluate the adequacy of internal controls;

approve annual budget, key operational matters, major acquisition and divestment proposals , major funding proposals of the Company;

d) review management performance; e) approve the nominations to the Board of Directors and appointment of key management, as may be recommended by the

Nominating Committee; f ) assume responsibility for corporate governance framework of the Company.

Principle 2: Board Composition and Balance

The Board of Directors comprises the following:

Executive Directors Mr Kris Taenar Wiluan Mr Tan Fuh Gih Mr Woo Peng KongMr Goh Boon ChyeDr Adam Paul Brunet

Non-Executive DirectorMr Chew Thiam Keng

Non-Executive and Independent DirectorsMr Lim Ho SengMr Wong Meng YengMr Lee Beng Cheng, BillySheikh Faisal F.J. Althani

To facilitate effective management, certain functions of the Board have been delegated to various Board committees, namely Audit, Nominating and Remuneration Committees. Further information regarding the Board’s function and details of the terms of reference of the respective Board Committees are set out in the later part of the Report.



The current size of the Board is appropriate for the facilitation of effective decision making. The Board will continue to review the size of the Board on an ongoing basis. As a team, the Board collectively provides core competencies in the areas of oil and gas industry knowledge, accounting, finance, business and management experience. The Directors’ academic and professional qualifications are set out on pages 13 and 14 of the Annual Report.

The Board conducts regular scheduled meetings on quarterly basis. Ad-hoc meetings are convened when circumstances require. The Company’s Articles of Association (the “Articles”) provides for Board meetings to be conducted by way of telephone and video conferencing.

Principle 3: Chairman and CEO

The Board is of the opinion that there is a sufficiently strong independent element on the Board to enable independent exercise of objective judgement on corporate affairs of the Group and that there is a good balance of power and authority. As such, there is no need for the role of the Chairman and the CEO to be separated.

The Group’s Executive Chairman and Chief Executive Officer (“CEO”), Mr Kris Taenar Wiluan plays an instrumental role in developing the business of the Group and provides the Group with strong leadership and vision. He is responsible for the operational and strategic policies of the Group.

He also bears responsibility for the workings of the Board and ensures that board meetings are held when necessary. He sets the board meeting agenda and reviews most board papers before they are presented to the Board and ensures that board members are provided with complete, adequate and timely information. As a general rule, board papers are sent to directors in advance in order for directors to be adequately prepared for the meeting. Management staff who can provide additional insight into the matters to be discussed, are invited as and when necessary, to attend at the relevant time during the board meetings.

The four Executive Directors are responsible for the day-to-day operations of the Company. There is clear division of responsibilities between the Chairman and the Executive Directors.

The Executive Chairman and CEO’s performance and appointment to the Board is reviewed periodically by the Nominating Committee (“NC”) and his remuneration package is reviewed by the Remuneration Committee (“RC”).

Principle 6: Access to InformationPrinciple 10: Accountability

Board members are provided with management information pertaining to such areas e.g. budget, forecast, the funding positions and quarterly financial statements of the Group, to help them carry out their responsibilities effectively. In addition, all relevant information on material events and transactions are circulated to directors as and when they arise.

All Board members have separate and independent access to the advice and services of the Company Secretary, who is responsible to the Board for ensuring that board procedures are followed and that applicable rules and regulations are complied with. All Board members also have separate and independent access to the senior management of the Company and the Group.

Board members are aware that they, whether as a group or individually, in the furtherance of their duties, can take independent professional advice, if necessary, at the Company’s expense.

The Company Secretary attends all board meetings and is responsible for ensuring that board procedures are followed. Together with the management staff of the Company, the Company Secretary is responsible for compliance with the Companies Act and all other rules and regulations which are applicable to the Company.



The attendance of the Directors at meetings of the Board and Board committees as well as number of such meetings during the financial year is set out in the table below:

Board Nominating Committee Audit Committee Remuneration Committee

Name of Director

No. of

Meetings

Held Attendance

No. of

Meetings

Held Attendance

No. of

Meetings

Held Attendance

No. of

Meetings

Held Attendance

Mr Kris Taenar Wiluan (Note 1) 4 2 3 - NA NA NA NA

Mr Tan Kim Seng (Note 2) 4 2 3 2 NA NA NA NA

Mr Chew Thiam Keng 4 4 NA NA NA NA NA NA

Mr Tan Fuh Gih 4 3 NA NA NA NA NA NA

Mr Woo Peng Kong (Note 3) 4 - NA NA NA NA NA NA

Mr Goh Boon Chye (Note 4) 4 2 NA NA NA NA NA NA

Dr Adam Paul Brunet (Note 1) 4 2 NA NA NA NA NA NA

Mr Lim Jit Poh (Note 2) 4 2 3 2 3 1 3 1

Mr Lim Ho Seng (Note 5) 4 4 3 2 3 3 3 3

Mr Wong Meng Yeng 4 4 3 3 3 3 3 3

Mr Lee Beng Cheng, Billy 4 4 3 3 3 3 3 3

Sheikh Faisal F.J. Althani 4 2 NA NA NA NA NA NA

Note 1 Mr Kris Taenar Wiluan and Dr Adam Paul Brunet were appointed on 2 May 2006.Note 2 Mr Tan Kim Seng and Mr Lim Jit Poh resigned on 2 May 2006.Note 3 Mr Woo Peng Kong was appointed on 11 August 2006.Note 4 Mr Goh Boon Chye resigned on 2 May 2006 and was re-appointed on 16 January 2007.Note 5 Mr Lim Ho Seng step-down as a member of the Nominating Committee on 2 May 2006.

BOARD COMMITTEES

Nominating Committee

Principle 4: Board Membership

The Nominating Committee (“NC”) comprises the following:

Mr Wong Meng Yeng (Chairman and Independent Director)Mr Lee Beng Cheng, Billy (Independent Director)Mr Kris Taenar Wiluan (Executive Director)

The principal functions of the NC are to:

a) identify, review and recommend candidates for appointment as Directors of the Company and appointment to the Board committee as well as to senior management positions in the Company;

b) evaluate the effectiveness of the Board as a whole and assess the contribution by each Director, to the effectiveness of the Board;

c) determine annually whether or not a Director is independent; andd) make recommendations to the Board on reappointment of Board and Board committee members.

During the year, the NC met and determined the independence of the Directors is in line with the undertakings described in the Code 2005.

In accordance with the provisions of the Articles, one-third of the Directors retire by rotation and subjects themselves to re-election at every AGM. New Directors who were appointed by the Board will submit themselves for re-election at the following AGM.



Principle 5: Board Performance

The NC uses objective and appropriate quantitative and qualitative criteria to assess the performance of individual directors, and the Board as a whole. Assessment parameters include the attendance records of the directors at Board or Committee meetings, the level of participation at such meetings, the quality of Board processes and the business performance of the Group.

The NC is of the opinion that the Board is able to exercise objective judgement on corporate affairs independently and no individual or small group of individuals dominates the Board’s decision making process.

The NC assesses and recommends to the Board whether retiring directors are suitable for re-election. The NC considers that the multiple board representations held presently by some Directors do not impede their respective performance in carrying out their duties to the Company.

Audit Committee

Principle 11: Audit CommitteePrinciple 12: Internal ControlsPrinciple 13: Internal Audit

The Audit Committee (“AC”) comprises the following:

Mr Lim Ho Seng (Chairman and Independent Director)Mr Wong Meng Yeng (Independent Director)Mr Lee Beng Cheng, Billy (Independent Director)

The AC performs the following functions:

a) reviews with the external auditors, their audit plan, evaluation of the accounting controls, audit reports and any matters which the external auditors wish to discuss ;

b) reviews with the internal auditors, their audit plan, the adequacy of the internal audit procedures and their evaluation of the effectiveness of the overall internal control systems, including financial, operational and compliance controls and risk management;

c) reviews the half yearly and annual financial statements, including announcements to shareholders and the SGX-ST prior to submission to the Board so as to ensure the integrity of the Company’s financial statements;

d) reviews any significant findings and recommendations of the external and internal auditors and related management response and assistance given by the management to auditors; and

e) reviews interested person transactions to ensure that internal control procedures approved by the shareholders are adhered to;

f ) conducts annual review of the independence and objectivity of the external auditors, including the volume of non-audit services provided by the external auditors, to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors before confirming their re-nomination.

The Group maintains a system of internal controls for all companies within the Group, but recognises that no internal control system will preclude all errors and irregularities. The system is designed to manage rather than to eliminate the risk of failure to achieve business objectives. The controls are to provide reasonable, but not absolute, assurance to safeguard shareholders’ investments and the Group’s assets.

The AC and the Board of Directors, with the assistance of internal audit, reviews the effectiveness of the key internal controls, including financial, operational and compliance controls, and risk management on an on-going basis. There are procedures in place for both the internal and external auditors to report independently their findings and recommendations to the AC.

The Company had subsequent to the financial year end developed a whistle blowing policy. This policy provides well-defined and accessible channels in the Group through which employees may raise concerns about improper conduct within the Group.



The AC has full access to, and cooperation from the Management including internal and external auditors, and has full discretion to invite any director and executive officer to attend its meetings. The AC has also express power to investigate any matter brought to its attention, within its terms of reference, with the power to retain professional advice at the Company’s expense.

The Group recognises the importance of the internal audit function which, being independent of Management is one of the principal means by which the AC is able to carry out its responsibilities effectively. Messrs BDO Raffles Consultants Pte Ltd is the internal auditors of the Group.

Based on its review, the AC believes that the internal auditor is independent and has the appropriate standing to perform its function effectively. The internal auditor plans its internal audit schedules in consultation with Management and submits its plan to the AC for approval. The Internal Auditors report directly to the AC.

The AC conducts regular meetings scheduled on half yearly basis. Apart from the half yearly meetings, the AC meets with the external and internal auditors, without the presence of the management at least once a year. Ad-hoc meetings may be carried out from time to time, as circumstances require.

The AC, having reviewed the non-audit services provided by the external auditors to the Group, is satisfied with the independence and objectivity of the external auditors and recommends to the Board of Directors, the nomination of the external auditors for re-appointment.

Remuneration Committee

Principle 7: Procedures for Developing Remuneration PoliciesPrinciple 8: Level and Mix of RemunerationPrinciple 9: Disclosure on Remuneration

The Remuneration Committee (“RC”) comprises the following:

Mr Lee Beng Cheng, Billy (Chairman and Independent Director)Mr Wong Meng Yeng (Independent Director)Mr Lim Ho Seng (Independent Director)

The principal functions of the RC are to:

a) recommend to the Board base salary level, benefits and incentive programs, and identify components of salary which can best be used to focus management staff on achieving corporate objectives;

b) approve the structure of compensation programme (including but not limited to Directors’ fees, salaries, allowances, bonuses, options and benefits in kind) for the Directors and senior management to ensure that the programme is competitive and sufficient to attract, retain and motivate senior management of the required quality to run the Company successfully;

c) review, on annual basis, the compensation package of the Company’s Directors and senior management personnel and determined appropriate adjustments.

The Company currently adopts a remuneration policy for staff consisting of a fixed component and a variable component. The fixed component is in the form of a base/ fixed salary. The variable component is in the form of a variable bonus that is linked to the Company and Group and individual performance.

Disclosure on Directors’ Remuneration

In setting the remuneration packages of the Executive Directors, the RC takes into account the respective performances of the Group and the individual. In its deliberation, the RC takes into consideration, remuneration packages and employment conditions within the industry and benchmarked against comparable companies.



Non-Executive Directors are paid a basic fee and an additional fee for serving on any of the committees. The Chairman of each of these committees is compensated for his additional responsibilities. Such fees are approved by the shareholders of the Company as a lump sum payment at the annual general meeting of the Company.

Directors of the Company receiving remuneration during the financial year:

Breakdown of the directors’ remuneration

Salary & CPF

%

Fee

%

Bonus & CPF

%

Other Benefits

%

Total

%

$500,000 to below $750,000

Mr Chew Thiam Keng (Note 1) 44 - 54 2 100

Mr Tan Fuh Gih 39 - 59 2 100

Mr Woo Peng Kong (Note 2) 44 - 56 - 100

$250,000 to below $500,000

Mr Kris Taenar Wiluan (Note 3) 45 - 55 - 100

Mr Goh Boon Chye (Note 4) 50 - 50 - 100

Below $250,000

Dr Adam Paul Brunet (Note 3) 49 - 51 - 100

Mr Tan Kim Seng (Note 5) 94 - - 6 100

Mr Lim Jit Poh (Note 5) - 100 - - 100

Mr Lim Ho Seng - 100 - - 100

Mr Wong Meng Yeng - 100 - - 100

Mr Lee Beng Cheng, Billy - 100 - - 100

Sheikh Faisal F. J. Althani (Note 6) - 100 - - 100

Note 1: Mr Chew Thiam Keng stepped down as Managing Director on 1 February 2007 and remains in office as a Non-Executive Director.Note 2: Mr Woo Peng Kong was appointed as Director on 11 August 2006.Note 3: Mr Kris Taenar Wiluan and Dr Adam Paul Brunet were appointed as Executive Directors on 2 May 2006.Note 4: Mr Goh Boon Chye resigned as Director on 2 May 2006 and was re-appointed on 16 January 2007.Note 5: Mr Tan Kim Seng and Mr Lim Jit Poh resigned as Directors on 2 May 2006.Note 6: Sheikh Faisal F.J. Althani was appointed as Director on 20 January 2006.

The remuneration band of the top five executive of the Group who are not directors of the Company are as follows:

Number of executives of the Group in remuneration band

- $250,001 to $500,000 2

- $250,000 and below 3

Total 5

Amongst the top five executives, one of them is an immediate family member of an Executive Director, who fall in the remuneration band of $250,000 to $500,000.

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Communication with ShareholdersPrinciple 15: Greater Shareholder Participation

The Company strives for timeliness and transparency in its disclosures to the shareholders and the public. All information on the Company’s new initiatives will be first disseminated via SGXNET followed by a news release, where appropriate. The Company currently holds media and analyst briefing upon the release of its full year financial results.



The Company does not practise selective disclosure. Price-sensitive information is first publicly released via SGXNET, either before the Company meets with any group of investors or analysts or simultaneously with such meetings. Results and annual reports are announced or issued within the period prescribed by the SGX-ST.

At general meetings of the Company, shareholders are given the opportunity to express their views and ask questions regarding the Company and the Group.

DEALINGS IN SECURITIES

The Company has adopted the SGX-ST’s Best Practices Guide on dealings in securities

Directors and employees of the Company are prohibited from securities dealings while in possession of price-sensitive information. The Company issues regular circulars to its Directors, principal officers and relevant officers who have access to unpublished material price-sensitive information to remind them of the aforementioned prohibition and to remind them of the requirement to report their dealings in shares of the Company. The Directors and employees are also prohibited from dealing in the securities of the Company during the period commencing one month before the announcement of the Company’s financial statements for the half year or financial year, as the case may be, and ending on the date of the announcement of the relevant results.

MATERIAL CONTRACTS

There are no material contracts made by the Company and its subsidiaries involving the interest of the chief executive officer, each director or controlling shareholder, either still subsisting at the end of the financial year or if not then subsisting, entered into since the end of the previous financial year.

INTERESTED PERSON TRANSACTIONS

The Group has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the AC and that the transactions are on an arms’ length basis.

The aggregate value of the interested person transactions entered during the financial year under review is as follows:

Name of interested person

Aggregate value of all interested person transactions during the financial period under review

(excluding transactions less than $100,000 and transactions conducted under shareholders’ mandate

pursuant to Rule 920)

Aggregate value of all interested person transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than $100,000)

2006

$

2005

$

2006

$

2005

$

Kim Seng Holdings Pte Ltd 676,924 734,566 - -

- Tan Fuh Gih


We are pleased to submit this annual report to the members of the Company, together with the audited financial statements for the financial year ended 31 December 2006.

DIRECTORS

The directors in office at the date of this report are as follows:

Kris Taenar Wiluan (Appointed on 2 May 2006)Tan Fuh Gih Woo Peng Kong (Appointed on 11 August 2006)Goh Boon Chye (Appointed on 16 January 2007)Adam Paul Brunet (Appointed on 2 May 2006)Chew Thiam Keng Lim Ho Seng Wong Meng Yeng Lee Beng Cheng, Billy Sheikh Faisal F.J Althani

DIRECTORS’ INTERESTS

According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the “Act”), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company and in related corporations (other than wholly-owned

subsidiaries) are as follows:

Direct Deemed

Name of director and corporation in which interests are held

Holdings at beginning of

the year / date of

appointmentHoldings at end of

the year

Holdings at beginning of

the year/ date of

appointmentHoldings at end

of the year

The Company

Ordinary shares fully paid*

Kris Taenar Wiluan – – 51,516,000 51,516,000

Adam Paul Brunet 4,764,000 4,764,000 – –

Tan Fuh Gih – – 78,408,000 22,689,600

* The ordinary shares of the Company no longer have par value. The concept of par value has been abolished under the Companies

(Amendment)Act2005witheffectfrom30January2006.

By virtue of Section 7 of the Act, Tan Fuh Gih is deemed to have interests in the shares held by the Company in all its subsidiaries at the beginning of the financial year.By virtue of Section 7 of the Act, Kris Taenar Wiluan is deemed to have interests in the shares held by the Company in all its subsidiaries at the date of appointment and at the end of the financial year. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year.

DiRECTORs’ rEporT


There were no changes in any of the above-mentioned interests in the Company between the end of the financial year and 21 January 2007.

Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Except as disclosed in note 25 to the accompanying financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

SHARE OPTIONS

During the financial year, there were:(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its

subsidiaries; and

(ii) no shares issued by virtue of any exercise of options to take up unissued shares of the Company or its subsidiaries.

As at the end of the financial year, there were no unissued shares of the Company or its subsidiaries under option.

AUDIT COMMITTEE

The members of the Audit Committee during the year and at the date of this report are:

Lim Ho Seng (Chairman and Independent Director)Lee Beng Cheng, Billy (Independent Director)Wong Meng Yeng (Independent Director)

The Audit Committee performs the functions specified in Section 201B of the Act, the SGX Listing Manual and the Code of Corporate Governance.

The Audit Committee held three meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external auditors to discuss the scope of their work, the results of their examination and evaluation of the Company’s internal accounting control system. The Audit Committee also reviewed the following:

assistance provided by the Company’s officers to the external auditors; interim financial information and annual financial statements of the Group and the Company prior to their submission to the

directors of the Company for adoption; and interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).

The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.

DiRECTORs’ rEporT


The Audit Committee reviewed the independence of the external auditors as required under Section 206(1A) of the Act and determined that the external auditors were independent in carrying out their audit of the financial statements of the Group and the Company.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.

The auditors, KPMG, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors

_________________________________Kris Taenar WiluanDirector

_________________________________Goh Boon ChyeDirector

Singapore12 March 2007

DiRECTORs’ rEporT


In our opinion:

(a) the financial statements set out on pages 30 to 73 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2006 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorized these financial statements for issue.

On behalf of the Board of Directors

_________________________________Kris Taenar WiluanDirector

_________________________________Goh Boon ChyeDirector


sTATEmENT by DirEcTorS


We have audited the accompanying financial statements of KS Energy Services Limited (the “Company”) and its subsidiaries (the “Group”), which comprise the balance sheets of the Group and the Company as at 31 December 2006, the income statement, statement of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 30 to 73.

Directors’responsibilityforthefinancialstatements

The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion:

(a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2006 and the results, changes in equity and cash flows of the Group for the year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KPMGCertified Public Accountants


iNDEPENDENT AuDiTORs’ REPORT To THE MEMbErS of KS ENErgy SErvicES LiMiTED


Group

Note 2006 2005

$’000 $’000

Revenue 3 295,132 269,081

Cost of sales (218,912) (210,102)

Gross profit 76,220 58,979

Other operating income 23,077 17,185

Distribution costs (21,056) (17,643)

Administrative expenses (10,964) (8,942)

Other operating expenses (4,491) (9,416)

Profit from operations 4 62,786 40,163

Finance costs 5 (2,095) (1,783)

Share of results of associates (net of tax) 1,078 661

Share of results of jointly controlled entities (net of tax) 13 3,137 2,497

Profit before income tax 64,906 41,538

Income tax expense 6 (9,983) (4,444)

Profit for the year 54,923 37,094

Attributable to:

Equity holders of the Company 50,702 33,604

Minority interests 4,221 3,490


Earnings per share:

Basic and diluted (cents) 7 21.30 14.11

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CONsOliDATED iNcoME STATEMENTFinancial Year ended 31 December 2006


Group Company

Note 2006 2005 2006 2005

$’000 $’000 $’000 $’000

Current assets

Cash and cash equivalents 8 46,015 83,111 16,291 62,988

Amounts due from subsidiaries 9 – – 25,851 7,184

Trade receivables 10 68,593 47,122 23,974 8,660

Inventories 11 47,546 42,859 19,610 18,856

Other current assets 12 36,353 21,758 3,790 9,547

198,507 194,850 89,516 107,235

Non-current assets

Available-for-sale equity securities 43,462 27,900 43,462 27,900

Associates and jointly controlled entities 13 60,658 2,698 19,170 191

Subsidiaries 14 – – 11,447 10,429

Property, plant and equipment 15 7,891 10,878 890 1,217

Goodwill 16 6,515 5,734 – –

Other non-current assets 17 5,294 494 301 494

123,820 47,704 75,270 40,231

Total assets 322,327 242,554 164,786 147,466

Current liabilities

Trade and other payables 18 72,474 87,042 12,557 15,070

Amounts due to subsidiaries 19 – – 1,807 –

Provision for current tax 11,491 5,621 7,482 3,289

Borrowings 20 41,272 17,536 1,618 6,225

125,237 110,199 23,464 24,584

Non-current liabilities

Trade and other payables 18 7,800 3,590 – –

Amounts due to subsidiaries 19 – – 37,558 38,561

Borrowings 20 9,989 3,187 273 1,260

Deferred tax liabilities 21 180 122 – –

17,969 6,899 37,831 39,821

Total liabilities 143,206 117,098 61,295 64,405

Net assets 179,121 125,456 103,491 83,061

Equity attributable to equity holders of the Company

Share capital 22 27,771 19,848 27,771 19,848

Share premium – 10,099 – 10,099

Foreign currency translation reserve 23 (2,170) (83) – –

Fair value reserve 23 41,438 23,638 41,438 23,638

Accumulated profits 92,217 55,980 34,282 29,476

159,256 109,482 103,491 83,061

Minority interests 19,865 15,974 – –

Total equity 179,121 125,456 103,491 83,061


BAlANCE SHEETSAs at 31 December 2006


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com

e st

atem

ent

on

disp

osal

of a

vaila

ble-

for-

sale

inve

stm

ent

–

–

–

(6,1

14)

–

(6,1

14)

–

(6,1

14)

Net

inco

me

reco

gniz

ed d

irec

tly

in e

quit

y–

–

12

4

3,78

7–

3,

911

–

3,91

1

Profi

t fo

r th

e ye

ar–

–

–

–

33

,604

33,6

043,

490

37,0

94

Tota

l rec

ogni

zed

inco

me

and

expe

nse

for

the

year

–

–

124

3,78

733

,604

37,5

153,

490

41,0

05

Issu

e of

sha

res

1,00

07,

900

–

–

–

8,90

0–

8,

900

Issu

e of

bon

us s

hare

s6,

065

(6,0

65)

–

–

–

–

–

–

Sha

re is

sue

expe

nses

–

(35)

–

–

–

(35)

–

(35)

Fina

l div

iden

d pa

id o

f 0.8

cen

ts p

er s

hare

le

ss t

ax a

t 20

% in

res

pect

of 2

004

–

–

–

–

(1,0

58)

(1,0

58)

–

(1,0

58)

Spe

cial

inte

rim

div

iden

d pa

id o

f 1.5

cen

ts

per

shar

e le

ss t

ax a

t 20

%–

–

–

–

(

1,98

5) (

1,98

5)–

(

1,98

5)

Inte

rim

div

iden

d pa

id o

f 1.6

cen

ts p

er s

hare

le

ss t

ax a

t 20

%–

–

–

–

(2

,117

)(2

,117

)–

(2

,117

)

Acq

uisi

tion

of m

inor

ity

inte

rest

–

–

–

–

–

–

(791

)

(791

)

Capi

tal c

ontr

ibut

ions

by

min

orit

y sh

areh

olde

rs o

f a s

ubsi

diar

y–

–

–

–

–

–

9,

673

9,67

3

At

31 D

ecem

ber

2005

19,8

4810

,099

(83)

23,6

3855

,980

109,

482

15,9

7412

5,45

6

The

acco

mpa

nyin

gno

tes

form

an

inte

gral

par

toft

hese

fina

ncia

lsta

tem

ents

.

CONsOliDATED STATEMENT of cHANgES iN EquiTyFinancial Year ended 31 December 2006


Gro

up

Sha

re

capi

tal

$’0

00

Sha

re

prem

ium

$’0

00

Fore

ign

curr

ency

tran

slat

ion

rese

rve

$’0

00

Fair

val

ue

rese

rve

$’0

00

Acc

umul

ated

pr

ofits

$’0

00

Tota

l at

trib

utab

le t

o eq

uity

ho

lder

s of

the

Co

mpa

ny$

’000

Min

orit

y in

tere

sts

$’0

00

Tota

l eq

uity

$’0

00

At

1 Ja

nuar

y 20

0619

,848

10,0

99(8

3)23

,638

55,9

8010

9,48

215

,974

125,

456

Exch

ange

dif

fere

nces

on

tran

slat

ion

of fi

nanc

ial s

tate

men

ts o

f for

eign

op

erat

ions

, and

mon

etar

y it

ems

whi

ch

form

par

t of

net

inve

stm

ent

in fo

reig

n op

erat

ions

–

–

(2,0

87)

–

–

(2,0

87)

–

(2,0

87)

Chan

ge in

fair

val

ue o

f ava

ilabl

e-fo

r-sa

le

inve

stm

ents

–

–

–

30,1

76–

30

,176

–

30

,176

Tran

sfer

red

to in

com

e st

atem

ent

on

disp

osal

of a

vaila

ble-

for-

sale

inve

stm

ent

–

–

–

(12,

376)

–

(12,

376)

–

(12,

376)

Net

inco

me

reco

gniz

ed d

irec

tly

in e

quit

y–

–

(2

,087

) 17

,800

–

15,7

13–

15

,713

Profi

t fo

r th

e ye

ar–

–

–

–

50

,702

50,7

024,

221

54,9

23

Tota

l rec

ogni

zed

inco

me

and

expe

nse

for

the

year

–

–

(2,0

87)

17,8

0050

,702

66,4

154,

221

70,6

36

Rep

urch

ase

and

canc

ella

tion

of s

hare

s(2

,168

)–

–

–

–

(2

,168

)–

(2

,168

)

Sha

re is

sue

expe

nses

(8)

–

–

–

–

(8

)–

(8

)

Fina

l div

iden

d pa

id o

f 2.0

cen

ts p

er s

hare

le

ss t

ax a

t 20

% in

res

pect

of 2

005

–

–

––

(3,1

75)

(3,1

75)

–(3

,175

)

Spe

cial

fina

l div

iden

d pa

id o

f 0.6

cen

ts p

er

shar

e le

ss t

ax a

t 20

% in

res

pect

of 2

005

–

–

–

–

(953

)(9

53)

–

(953

)

Inte

rim

div

iden

d pa

id o

f 1.8

cen

ts p

er s

hare

le

ss t

ax a

t 20

%–

–

–

–

(

3,43

0) (

3,43

0)–

(

3,43

0)

Spe

cial

inte

rim

one

-tie

r ta

x ex

empt

div

iden

d pa

id o

f 2.9

cen

ts p

er s

hare

–

–

–

–

(6,9

07)

(6,9

07)

–

(6,9

07)

Acq

uisi

tion

of m

inor

ity

inte

rest

–

–

–

–

–

–

(652

)

(652

)

Acq

uisi

tion

of a

sub

sidi

ary

–

–

–

–

–

–

322

322

Tran

sfer

red

from

sha

re p

rem

ium

acc

ount

to

shar

e ca

pita

l upo

n im

plem

enta

tion

of t

he

Com

pani

es (

Am

endm

ent)

Act

200

510

,099

(10,

099)

–

––

––

–

At

31 D

ecem

ber

2006

27,7

71–

(2

,170

)41

,438

92,2

1715

9,25

619

,865

179,

121

The

acco

mpa

nyin

gno

tes

form

an

inte

gral

par

toft

hese

fina

ncia

lsta

tem

ents

.

CONsOliDATED STATEMENT of cHANgES iN EquiTyFinancial Year ended 31 December 2006


Group

Note 2006 2005

$’000 $’000

Operating activities


Adjustments for:

Depreciation of property, plant and equipment 1,882 2,358

Dividend income (1,153) (606)

Gain on disposal of plant and equipment (652) (25)

Gain on dilution of interest in a subsidiary – (6,120)

Gain on dilution of interest in a jointly controlled entity (790) –

Gain on disposal of interest in a jointly controlled entity (783) –

Gain on disposal of other investments (17,364) (7,797)

Loss on disposal of interest in an associate 667 –

Interest income (2,799) (1,597)

Interest expense 2,095 1,783

Net loss on remeasurement of derivatives at fair value – 102

Share of results of associates (1,078) (661)

Share of results of jointly controlled entities (3,137) (2,497)

Operating profit before changes in working capital 41,794 26,478

Changes in working capital:

Inventories (4,523) (4,248)

Trade receivables (18,260) (5,732)

Other current assets (1,193) (8,416)

Trade and other payables (12,189) 34,325

Cash generated from operations 5,629 42,407

Income taxes paid (4,076) (1,773)

Cash flows from operating activities 1,553 40,634

Investing activities

Dividends received 1,153 606

Interest received 2,723 1,827

Payments for purchase of plant and equipment (2,085) (1,806)

Proceeds from disposal of plant and equipment 4,984 182

Net cash outflow on acquisitions of subsidiaries and minority interest 24 (1,665) (5,084)

Payments for investments in associates (41,768) (1,615)

Payments for investments in jointly controlled entities (3,986) (242)

Proceeds from disposal of interest in a jointly controlled entity 1,580 –

Proceeds from disposal of interest in an associate 1,742 –

Proceeds from disposal of other investments 20,083 9,880

(Advances to)/Repayment of advances by a third party corporation and jointly controlled entities (32,573) 4,145

Cash flows from investing activities (49,812) 7,893


CONsOliDATED cASH fLow STATEMENTFinancial Year ended 31 December 2006


Group

Note 2006 2005

$’000 $’000

Financing activities

Bills payable to banks (336) (1,208)

Dividends paid (14,465) (5,160)

Interest paid (1,786) (1,761)

Proceeds from/(Repayment of ) finance lease liabilities 12 (409)

Proceeds from bank loans 60,753 6,527

Repayment of bank loans (30,380) (5,875)

Repayment to a director of a subsidiary – (9,230)

Proceeds from issue of new shares – 8,865

Payments for repurchase of shares (2,168) –

Payments for share issue expenses (8) –

Proceeds from issue of new shares by a subsidiary to minority shareholders – 15,793

Cash flows from financing activities 11,622 7,542

Net (decrease)/increase in cash and cash equivalents (36,637) 56,069

Cash and cash equivalents at beginning of the year 83,111 27,042

Effect of exchange rate fluctuations on cash held in foreign currencies (459) –

Cash and cash equivalents at end of the year 8 46,015 83,111


CONsOliDATED cASH fLow STATEMENTFinancial Year ended 31 December 2006


These notes form an integral part of the financial statements.

The financial statements were authorized for issue by the Board of Directors on 12 March 2007.

1 Domicile and activities

KS Energy Services Limited (the “Company”) is incorporated in the Republic of Singapore and has its registered office at No. 4, Tuas Avenue 5, Singapore 639331.

The principal activities of the Company are those of trading in hydraulic products, instrumentation and equipment for the shipbuilding, marine and oil and gas industries, commission agents, trading in hardware products and oilfield equipment, and investment holding. The principal activities of the subsidiaries are set out in note 14 to the financial statements.

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interests in associates and jointly controlled entities.

2 Summary of significant accounting policies

2.1 Basis of preparation

The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities which are stated at fair value.

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in the following notes:

Note 13 – valuation of the Group’s share of assets and liabilities of an associate acquired during the year Note 16 – assumptions of recoverable amounts relating to goodwill impairment

In 2006, the Group adopted the following new/revised FRS and Interpretations (“INT FRS”) which are relevant to its

operations:

Amendment to FRS 21 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Financial Guarantee Contracts and

Credit Insurance INT FRS 104 Determining whether an Arrangement contains a Lease

The change in accounting policies due to the adoption of the above new/revised FRS and INT FRS did not give rise to any adjustments to the opening balances of accumulated profits of the prior and current periods or to changes in comparatives.

Except for the above changes, the accounting policies set out below have been applied consistently by the Group. The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements.

NOTEs To THE fiNANciAL STATEMENTSFinancial Year ended 31 December 2006


2 Summary of significant accounting policies (Cont’d) 2.2 Consolidation

Business combinations

Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is credited to the consolidated income statement in the period of the acquisition.

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into consideration. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Associates and jointly controlled entities (equity accounted investees)

Associates are entities in which the Group has significant influence, but not control, over their financial and operating policies. Jointly controlled entities are entities over whose activities the Group has joint control, established by contractual agreements and requiring unanimous consent for strategic financial and operating decisions.

Associates and jointly controlled entities (collectively referred to as “equity accounted investees”) are accounted for using the equity method. The consolidated financial statements include the Group’s share of the income and expenses of associates and jointly controlled entities, after adjustments to align their accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases.

When the Group’s share of losses in an associate or a jointly controlled entity exceeds its interest in the investee, the

carrying amount of that interest (including any long-term investments) is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Transactions eliminated on consolidation

Intra-group balances, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

Accounting for subsidiaries, associates and jointly controlled entities by the Company

Investments in subsidiaries, associates and jointly controlled entities are stated in the Company’s balance sheet at cost less accumulated impairment losses.

2.3 Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying transactions, events and conditions relevant to that entity (the “functional currency”). The consolidated financial statements and balance sheets of the Company are presented in Singapore dollars, which is the Company’s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.



2 Summary of significant accounting policies (Cont’d)

2.4 Foreign currencies

Foreign currency transactions Transactions in foreign currencies are translated to the functional currencies of the respective entities in the Group at the

exchange rates on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the exchange rates on that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rates on the dates that the fair value was determined.

Foreign exchange differences arising on retranslation are recognized in the income statement except for differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment in foreign operations (see below) and available-for-sale equity instruments (see note 2.7).

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on the acquisition of foreign operations, are translated to Singapore dollars for consolidation at the exchange rates on the balance sheet date. The income and expenses of foreign operations (none of which has the currency of a hyperinflationary economy as its functional currency) are translated to Singapore dollars at the exchange rates on the dates of the transactions.

Foreign exchange differences are recognized in the foreign currency translation reserve. When a foreign operation is

disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to the income statement.

Net investment in foreign operations

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in foreign operations are recognized in the Company’s income statement. Such exchange differences are reclassified to equity in the consolidated financial statements. When the net investment is disposed of, the cumulative amount in equity is transferred to the income statement as an adjustment to the profit or loss arising on disposal.

2.5 Property, plant and equipment Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Leased assets

Leases of assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases is capitalized at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is stated at cost less accumulated depreciation and impairment losses. Leased assets are depreciated over the shorter of the lease term and their useful lives.




2.5 Property, plant and equipment (Cont’d)

Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in the income statement as incurred.

Depreciation

No depreciation is provided on assets under construction. Depreciation on other property, plant and equipment is provided on a straight-line basis over the estimated useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment as follows:

Leasehold properties Remaining lease term Plant and machinery 5 to 7 years Office equipment 3 to 5 years Renovation, furniture and fittings 5 to 10 years Motor vehicles 5 to 7 years

The depreciation method, useful lives and residual values are reassessed, and adjusted as appropriate, at each balance sheet date.

2.6 Intangible assets

Goodwill

Goodwill and negative goodwill arise on the acquisition of subsidiaries, associates and jointly controlled entities. Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is negative (negative goodwill), it is recognized immediately in the consolidated income statement.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note 2.10.

Goodwill on the acquisition of subsidiaries is presented as intangible assets. Goodwill on the acquisition of equity accounted investees is included in the carrying amount of the investments.

Goodwill/Negative goodwill previously written off against reserves

Goodwill and negative goodwill that has previously been taken to reserves is not taken to the consolidated income statement when the business is disposed of or when the goodwill is impaired.

Acquisitions of minority interests

Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the net assets acquired at the date of exchange.

Other intangible assets

Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and impairment losses. Other intangible assets are amortized in the income statement on a straight-line basis over their estimated useful lives of 10 to 15 years, from the date on which they are available for use.




2.7 Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair value through

profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition, non-derivative financial instruments are measured as described below.

A financial instrument is recognized if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognized if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognized if the Group’s obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the cash flow statement.

Held-to-maturity investments

If the Group has the positive intent and ability to hold debt securities to maturity, they are classified as held-to-maturity. Held-to-maturity investments are measured at amortized cost using the effective interest method, less any impairment losses.

Available-for-sale financial assets

The Group’s investments in certain equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than for impairment losses, and foreign exchange gains and losses on available-for-sale monetary items, are recognized directly in equity. When an available-for-sale financial asset is derecognized, the cumulative gain or loss in equity is transferred to the income statement.

Investments at fair value through profit or loss

An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated as at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value. Upon initial recognition, attributable transaction costs are recognized in the income statement when incurred. Financial instruments at fair value through profit or loss are measured at fair value and changes therein are recognized in the income statement.

Non-quasi equity inter-company loans

Loans to subsidiaries

In the Company’s financial statements, low-interest and interest-free inter-company loans to subsidiaries are recognized initially at fair value. The difference between the fair value and the loan amount at inception is recognized as additional investments in subsidiaries in the Company’s financial statements. Subsequent to initial recognition, these loans are measured at amortized cost less impairment losses. The unwinding of the difference is recognized as interest income in the Company’s income statement over the expected repayment period of the loans using the effective interest method.




2.7 Financial instruments (Cont’d)

Loans from subsidiaries

In the Company’s financial statements, low-interest and interest-free inter-company loans from subsidiaries are recognized initially at fair value. The difference between the fair value and the loan amount at inception is recognized as distributions from subsidiaries in the Company’s financial statements. Subsequent to initial recognition, these loans are measured at amortized cost. The unwinding of the difference is recognized as interest expense in the Company’s income statement over the expected repayment period of the loans using the effective interest method.

Other non-derivative financial instruments

Other non-derivative financial assets are stated at amortized cost using the effective interest method, less any impairment losses except for quasi-equity loans receivable from subsidiaries, associates and jointly controlled entities, which are stated at cost less accumulated impairment losses.

Non-derivative financial liabilities are stated at amortized cost using the effective interest method.

Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the combined instrument is not measured at fair value through profit or loss.

Derivatives are recognized initially at fair value, and attributable transaction costs are recognized in the income statement when incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are accounted for as described below.

Fair value hedges

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognized in the income statement. The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss being recognized in the income statement.

Economic hedges

Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognized in the income statement as part of foreign exchange gains and losses.

Separable embedded derivatives

Changes in the fair value of separable embedded derivatives are recognized immediately in the income statement. Intra-group financial guarantees

Intra-group financial guarantees are accounted for as insurance contracts. A provision is recognized based on the Company’s estimate of the ultimate cost of settling all claims incurred but unpaid at the balance sheet date. The provision is assessed by reviewing individual claims and tested for adequacy by comparing the amount recognized and the amount that would be required to settle the guarantee contract.




2.8 Club memberships

Club memberships are stated at cost less accumulated impairment losses.

2.9 Inventories

Inventories held for trading

Inventories are stated at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Contract work-in-progress

Contract work-in-progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus recognized profit less allowance for foreseeable losses and progress billings. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.

When it is probable that total contract costs will exceed total contract revenue, an allowance for foreseeable losses is recognized as an expense in the income statement immediately.

Contract work-in-progress is presented as part of inventories in the balance sheet. If payments received from customers exceed the income recognized, the difference is presented as deferred income in the balance sheet.

2.10 Impairment

Financial assets

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are

assessed collectively in groups that share similar credit risk characteristics.

Impairment losses in respect of financial assets measured at amortized cost are recognized in the income statement. When a decline in the fair value of an available for sale financial asset has been recognized directly in equity and there is objective evidence that the value of the financial asset is impaired, the cumulative loss that had been recognized directly in equity is recognized in the income statement even though the financial asset has not been derecognized. The amount of the cumulative loss that is recognized in the income statement is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized in the income statement.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost, the reversal is recognized in the income statement. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in equity.




2.10 Impairment (Cont’d)

Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, recoverable amount is estimated at each balance sheet date, and as and when indicators of impairment are identified.

An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in the income statement. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each balance sheet date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Reversals of impairment losses are recognized in the income statement.

2.11 Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an expense in the income statement as incurred.

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

2.12 Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.



2.13 Income tax

Income tax comprises current and deferred tax. Income tax is recognized in the income statement except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Deferred tax assets are reviewed at each balance sheet date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

2.14 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.

Where share capital recognized as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from equity. Where such shares are subsequently reissued or sold, the consideration received is recognized as a change in equity. No gain or loss is recognized in the income statement.

2.15 Revenue recognition

Sale of goods

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

Rendering of services

Revenue from rendering of services is recognized when the related services have been rendered.

Contract revenue

When the outcome of a construction contract can be estimated reliably, contract revenue and costs are recognized in the income statement using the percentage of completion method, measured by the proportion of costs incurred to-date to the estimated total costs for each contract. Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognized in the income statement as an expense in the period in which they are incurred.




2.15 Revenue recognition (Cont’d)

Commission income

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognized is the net amount of commission earned by the Group.

Rental income from operating leases

Rental income receivable under operating leases is recognized on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income to be received. Contingent rentals are recognized as income in the period in which they are earned.

Interest income

Interest income is recognized on an accrual basis using the effective interest method.

Dividend income

Dividend income is recognized when the right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

2.16 Lease payments

Payments made under operating leases are recognized in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognized in the income statement as an integral part of the total lease payments made. Contingent rentals are charged to the income statement in the period in which they are incurred.

Minimum lease payments made under finance leases are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

2.17 Finance costs

All borrowing costs are recognized in the income statement using the effective interest method, except to the extent that they are capitalized as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale.

3 Revenue

Group

2006 2005

$’000 $’000

Sale of goods 242,676 246,783

Rendering of services 13,692 9,718

Contract revenue 18,558 4,563

Commission income 2,209 527

Rental income 17,997 7,490

295,132 269,081



4 Profit from operations

The following items have been included in arriving at profit from operations:

Group

2006 2005

$’000 $’000

(Reversal of )/Allowance for impairment loss on trade receivables (435) 914

Bad trade debts written off 43 46

Cost of inventories recognized as an expense 158,481 127,338

(Write-back)/Write-down of inventories (198) 968

Depreciation of property, plant and equipment 1,882 2,358

Dividend income (1,153) (606)

Foreign exchange (gain)/loss (167) 651

Gain on disposal of plant and equipment (652) (25)

Gain on dilution of interest in a subsidiary – (6,120)

Gain on dilution of interest in a jointly controlled entity (790) –

Gain on disposal of interest in a jointly controlled entity (783) –

Gain on disposal of non-current investments* (17,364) (7,601)

Gain on disposal of current investments – (196)

Loss on disposal of interest in an associate 667 –

Interest income (2,799) (1,597)

Net loss on remeasurement of derivatives at fair value – 102

Non-audit fees paid and payable to auditors of the Company 118 –

Operating lease expense 10,996 2,442

Staff costs 21,492 11,192

Contributions to defined contribution plans, included in staff costs 1,674 1,068

* The gain on disposal of non-current investments is arrived after deducting directors’ remuneration of $495,000 (2005: $274,000).

5 Finance costs

Group

2006 2005

$’000 $’000

Interest expense on:

- Bank overdrafts 4 4

- Finance lease liabilities 78 60

- Bills payable to banks 616 516

- Bank loans 1,149 865

- Trade and other payables 222 280

- Others 26 58

2,095 1,783



6 Income tax expense

Group

Note 2006 2005

$’000 $’000

Current tax expense

Current year 9,933 4,988

Deferred tax expense

Origination and reversal of temporary differences 50 –

Adjustment for prior years – (544)

21 50 (544)

Income tax expense 9,983 4,444

Group

2006 2005

$’000 $’000

Reconciliation of effective tax rate


Share of results of associates and jointly controlled entities (net of tax) (4,215) (3,158)

Profit before income tax excluding share of results of associates and jointly controlled entities 60,691 38,380

Tax calculated using Singapore tax rate of 20% (2005: 20%) 12,138 7,676

Effect of different tax rates in other countries (860) (853)

Effect of income subject to concessionary tax rate – (59)

Income not subject to tax (3,872) (4,118)

Expenses not deductible for tax purposes 2,802 2,295

Unrecognized tax losses 29 47

Foreign tax credit (net) (254) –

Adjustment for prior years – (544)

9,983 4,444



7 Earnings per share

Basic earnings per share is based on:

Group

2006 2005 2005

$’000 $’000

As previouslyreported

$’000

Profit attributable to ordinary shareholders 50,702 33,604 33,604

2006 2005 2005

No. of shares No. of shares

As previouslyreported

No. of shares

(’000) (’000) (’000)

Number of ordinary shares in issue at beginning of the year 198,480 127,834 127,834

Effect of new shares issued – 9,068 9,068

Effect of own shares repurchased and cancelled (95) – –

Effect of bonus shares issued 39,696 101,274 60,236

Weighted average number of ordinary shares in issue during the year 238,081 238,176 197,138

Basic earnings per share (cents) 21.30 14.11 17.05

Diluted earnings per share is the same as basic earnings per share as the Company does not have any dilutive potential ordinary shares.

8 Cash and cash equivalents

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Cash and bank balances 29,795 33,310 4,729 16,210

Fixed deposits with banks 16,220 49,801 11,562 46,778

46,015 83,111 16,291 62,988

The weighted average effective interest rates per annum relating to cash and cash equivalents at the balance sheet date for the Group and the Company are 3.65% (2005: 3.32%) and 3.41% (2005: 3.35%) respectively. Interest rates reprice at intervals of one to three months.



9 Amounts due from subsidiaries

Company

2006 2005

$’000 $’000

Trade 1,240 1,014

Non-trade 25,654 6,518

Allowance for doubtful receivables (1,043) (348)

24,611 6,170

25,851 7,184

The amounts due from subsidiaries, which are mainly denominated in the United States dollars, are unsecured and repayable on demand. These amounts are interest-free except for an amount of $5,499,000 (2005: Nil) which bears interest at 8% (2005: Nil) per annum.

10 Trade receivables

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Trade receivables – Third parties 59,750 49,604 14,538 9,507

Allowance for doubtful receivables (1,929) (2,482) (482) (847)

57,821 47,122 14,056 8,660

Trade receivables:

- A company in which a director of the Company has substantial financial interest

47 – 47 –

- Associates 8 – – –

- Jointly controlled entities 10,717 – 9,871 –

68,593 47,122 23,974 8,660

Trade receivables denominated in currencies other than the Company’s functional currency relate mainly to those denominated in the United States dollars.

11 Inventories

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Finished goods 44,558 42,859 19,404 18,856

Work-in-progress 2,988 – 206 –

47,546 42,859 19,610 18,856



12 Other current assets

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Non-trade amounts due from:

- Jointly controlled entities 20,977 7,543 2,502 –

- A company related to a director of a subsidiary 859 – – –

Deposits for purchase of inventories 1,628 8,188 262 7,925

Deposits for purchase of plant and equipment 101 543 – –

Other deposits and prepayments 10,350 3,178 522 765

Other receivables 2,438 2,306 504 857

36,353 21,758 3,790 9,547

The amounts due from jointly controlled entities, which are denominated in the United States dollars, are unsecured and repayable on demand. These amounts are interest-free except for an amount of $4,635,000 (2005: Nil) which bears interest at 8% (2005: Nil) per annum.

The amount due from a company related to a director of a subsidiary is unsecured, interest-free and repayable on demand.

13 Associates and jointly controlled entities

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Investments in associates:

- Quoted 41,575 – – –

- Unquoted 1,373 2,468 398 191

42,948 2,468 398 191

Investments in jointly controlled entities 2,534 230 3,596 –

Loans to jointly controlled entities 15,176 – 15,176 –

17,710 230 18,772 –

60,658 2,698 19,170 191

Quoted shares in an associate, at fair value 35,838 – – –

Investments in associates as at 31 December 2006 include goodwill of $4,803,000 (2005: $689,000).

The loans to jointly controlled entities, which are mainly denominated in the United States dollars, are unsecured and interest-free, and settlement is neither planned nor likely to occur in the foreseeable future. These loans form part of the Company’s net investment in the jointly controlled entities.



13 Associates and jointly controlled entities (Cont’d) Details of the associates and jointly controlled entities are as follows:

Name of associates / jointly controlled entities Principal activities

Country of incorporation

Ownership interest held by the Group

2006 2005

% %

Associates

SSH Corporation Ltd Trading and dealing in industrial materials, general hardware, welding and cutting equipment and related products

Singapore 28.40 –

M.E.I. Engineers Pte Ltd Provision of consultancy services, engineering design and procurement services

Singapore 20 20

SCE Controls & Engineering Pte Ltd

Trading, marketing and installation of valves and equipment

Singapore 20 –

Genesis Express Pte Ltd Logistics, transportation and freight forwarding

Singapore 33.33 –

Jambi Supply Base Pte Ltd Supply of oil and gas equipment, consumables and provision of engineering services

Singapore 45 45

Runva Holding Pte Ltd Manufacturing and supplying winches Singapore – 25

Jointlycontrolledentities

Harta Offshore & Marine Services Pte Ltd

Ownership and charter of a vessel Singapore 50 50

United Oilfield Services Pte Ltd Lease of equipment and machinery Singapore 50 –

Global Oilfield Services Pte Ltd Provision of procurement and project management services

Singapore 50 –

Casadilla Group Pte Ltd Ownership and charter of an offshore rig

Singapore 50 –

Yakki International Pte Ltd Ownership and charter of an offshore rig

Singapore 50 –



13 Associates and jointly controlled entities (Cont’d)

Name of associates / jointly controlled entities Principal activities

Country of incorporation

Ownership interest held by the Group

2006 2005

% %

Jointlycontrolledentities

BR Offshore Services Limited Provision of offshore leasing business Malaysia 50 –

New Strong Group Limited

Carrying out offshore and rig services British Virgin Islands

50 50

Blue Ocean Explorer Ltd Ownership and charter of a vessel British Virgin Islands

50 –

KT Lion Oilfield Services Limited* Provision of rig and oilfield related services

British Virgin Islands

70 –

Girdnal Oilfield Services Inc. Ownership and charter of land rigs United States 50 –

of America

Aqua Terra Middle East Management and operation of an integrated offshore supply base

Qatar 49 49

AMS Denmark BV Rig operator Denmark – 50

* Although the Group owns more than half of the voting power of the entity, it does not control the entity as it does not

have the power to cast the majority of votes at meetings of the board of directors, which has control of the entity. Consequently, the Group does not consolidate its investment in the entity as a subsidiary.

Deloitte & Touche, Singapore is the auditor of the Group’s significant associate, SSH Corporation Ltd, whose shares are listed on the Singapore Exchange Securities Trading Limited (“SGX”). For this purpose, an associated company is considered significant as defined under the SGX Listing Manual if the Group’s share of its net tangible assets represents 20% or more of the Group’s consolidated net tangible assets, or if the Group’s share of its pre-tax profits accounts for 20% or more of the Group’s consolidated pre-tax profits.



13 Associates and jointly controlled entities (Cont’d) The summarized financial information of the associates, not adjusted for the percentage of ownership held by the Group, is

as follows:

Group

2006 2005

$’000 $’000

Assets and liabilities

Total assets 126,938 28,185

Total liabilities (44,706) (21,365)

Results

Revenue 44,356 30,749

Profit after tax 4,867 2,565

On 3 November 2006, the Group acquired 28.4% equity interest in the associate, SSH Corporation Ltd. The allocation of the purchase price to the Group’s share of the identifiable assets, liabilities and contingent liabilities of the said associate is currently being determined and has not been completed. In the meantime, the provisional goodwill that results from the difference between the purchase price and the provisional fair values assigned to the Group’s share of the assets and liabilities of the associate amounted to $4,803,000 and is included in the carrying amount of the Group’s investment in the said associate as at 31 December 2006. The Group will complete the allocation of the purchase price to its share of the associate’s assets and liabilities, and recognize any adjustments to the provisional goodwill by 31 October 2007.

The aggregate amounts of assets and liabilities of the jointly controlled entities as at the balance sheet dates, not adjusted for the percentage of ownership held by the Group, are as follows:

Group

2006 2005

$’000 $’000


Non-current assets 110,722 6,123

Current assets 35,372 16,859

Total assets 146,094 22,982

Non-current liabilities (82,671) (15,171)

Current liabilities (57,151) (7,321)

Total liabilities (139,822) (22,492)

The Group’s share of assets and liabilities of the jointly controlled entities has not been disclosed as such assets and

liabilities cannot be allocated to the Group on a reasonable basis given that the Group’s profit-sharing ratios in certain jointly controlled entities are different from the proportion of ownership interest held by the Group in those jointly controlled entities.



13 Associates and jointly controlled entities (Cont’d) Other summarized financial information of the jointly controlled entities, adjusted for the percentage of ownership held by

the Group, is as follows:

Group

2006 2005

$’000 $’000

Results

Revenue 15,309 2,523

Expenses (12,172) (26)

Profit after tax 3,137 2,497

Contingent liabilities incurred directly by the Group (1) 35,940 13,090

Capital commitments in relation to interest in jointly controlled entities 385 3,356

Group’s share of jointly controlled entities’ capital commitments 54,946 –

(1) The contingent liabilities incurred directly by the Group relate to the financial guarantees issued to certain banks by

the Group in respect of banking facilities granted to certain jointly controlled entities. Included in these contingent liabilities are the following:

(a) The Company issued a financial guarantee to a bank in respect of banking facilities granted to an associate of a jointly controlled entity amounting to US$5,000,000 (2005: US$5,000,000), of which the full amount was utilized at the balance sheet dates.

(b) The Company issued a financial guarantee to a bank in respect of banking facilities granted to a jointly controlled entity amounting to US$8,400,000 (2005: Nil), of which the amount utilized at the balance sheet date was US$7,613,000 (2005: Nil). In addition, a subsidiary of the Company, which leases certain equipment from the aforesaid jointly controlled entity, entered into an assignment agreement with the bank pursuant to which the following rights, title and interest of the subsidiary were assigned to the bank as security for the banking facilities granted to the jointly controlled entity:

(i) all earnings of the subsidiary arising from the sublease of a leased offshore rig and related equipment to a third party;

(ii) all rights, title and interest of the subsidiary to and in the above-mentioned sublease of the leased offshore rig and related equipment to a third party;

(iii) all sums owing to the subsidiary from any party in connection with the above-mentioned leased offshore rig and related equipment;

(iv) all monies held in the subsidiary’s escrow accounts with the bank;(v) a fixed charge over all the rights, title and interest of the subsidiary as set out in sub-paragraphs (i) to (iv) above;

and(vi) all sums owing to the subsidiary from the jointly controlled entity shall be subordinated to the banking facilities

granted to the jointly controlled entity and if the bank so requires, such sums owing to the subsidiary from the jointly controlled entity shall be collected by the subsidiary and paid to the bank.



14 Subsidiaries

Company

2006 2005

$’000 $’000

Quoted shares, at cost 3,420 3,420

Unquoted shares, at cost 8,027 7,009

11,447 10,429

Quoted shares, at fair value 49,376 54,293

Details of the subsidiaries are as follows:

Name of subsidiaries Principal activitiesCountry of

incorporation Ownership interest held by the Group

2006 2005

% %

HeldbytheCompany

Aqua-Terra Supply Co. Limited Trading in tools and equipment for the marine and oil and gas industries

Singapore 54.81 54.81

Atlantic Esbjerg Holding Pte Ltd Investment holding Singapore 100 100

Globaltech Group Pte Ltd Investment holding Singapore 100 75

Harta Holding Pte Ltd Investment holding Singapore 100 100

Kim Seng Hardware & Oilfield Supply Pte Ltd

Inactive Singapore 100 100

S&E Tech Pte Ltd Assembly and trading of electrical engineering goods, electronics appliances and heavy equipment

Singapore 100 100

S&E Cumford (Thailand) Ltd Distribution of electric motors, machinery, electronics equipment and chemicals

Thailand 100 100

KS Energy Services Workshop Ltd Repair services, fabrication, maintenance of pump and seals

Vietnam 100 100

KS Oilfield Support (Asia Pacific) Limited

Carrying out offshore rig services, marketing and consultancy services and leasing of equipment to the oil and gas industry

Hong Kong 100 100



14 Subsidiaries Cont’d)



2006 2005

% %

HeldbytheCompany

KS Equipment (Shanghai) Ltd Trading in hydraulic products People’s Republic of

China

100 100

KS Oilfield Support Ltd Provision of marketing services and project-based procurement services

Mauritius 100 100

KS Oilfield Services Ltd Provision of oilfield support and consultancy services

Mauritius 100 100

Heldbysubsidiaries

MarineHub Pte Ltd Trading of marine-related products and provision of marine-related services

Singapore 100 100

Orient Marine Pte Ltd Trading of marine-related spare parts and provision of ship-handling services to vessels

Singapore 100 100

Starbeam Technology Pte Ltd Testing and certification for marine, offshore and construction products

Singapore 100 99.99

Globaltech Offshore & Marine Pte Ltd

Supplying and servicing industrial/marine hoses, fittings and related products

Singapore 80 80

Globaltech Systems Engineering Pte Ltd

Design, engineering, fabrication and system integration and trading of engineering products for the marine, oil and gas, power generation and chemical industries

Singapore 70 70

Amos International (S) Pte Ltd Shipping chandlers and general traders

Singapore 51 –

Amos Solutions Pte Ltd Business of shipping and freight forwarding agents and the provision of collection and delivery services

Singapore 51 –



14 Subsidiaries Cont’d)



2006 2005

% %

Heldbysubsidiaries

S&E Cumford Sdn Bhd Inactive Malaysia 100 100

Atlantic Esbjerg Limited Inactive Mauritius 100 100

Aqua-Terra Supply (Shanghai) Co. Ltd

Supplies of consumables, spare parts and equipment, and providing rigging and related services to the oil and gas, marine and related industries

People’s Republic of

China

100 100

Aqua-Terra Offshore (Shanghai) Co. Ltd

Facilitating the use of bonded warehouse and business transactions within the Wai Gao Qiao Free Trade Zone

People’s Republic of

China

100 100

RSM Chio Lim is the auditor of a significant Singapore-incorporated subsidiary, Aqua-Terra Supply Co. Limited, whose shares are listed on the SGX. Another member firm of KPMG International is the auditor of a significant foreign-incorporated subsidiary. The other subsidiaries are not considered significant. For this purpose, a subsidiary is considered significant as defined under the SGX Listing Manual if its net tangible assets represent 20% or more of the Group’s consolidated net tangible assets, or if its pre-tax profits account for 20% or more of the Group’s consolidated pre-tax profits.

15 Property, plant and equipment

Leasehold properties

Plant and machinery Motor vehicles

Office equipment

Renovation, furniture and

fittings Total

$’000 $’000 $’000 $’000 $’000 $’000

Group

Cost

At 1 January 2005 – 9,588 1,819 2,000 1,160 14,567

Additions – 380 656 608 162 1,806

Assets acquired in business combinations

3,507 166 260 1,363 268 5,564

Disposals – (91) (323) (257) (69) (740)

Translation differences – 96 – 3 1 100

At 31 December 2005 3,507 10,139 2,412 3,717 1,522 21,297

At 1 January 2006 3,507 10,139 2,412 3,717 1,522 21,297

Additions – 391 602 678 414 2,085


– 201 688 – 43 932

Disposals – (5,407) (165) (72) (26) (5,670)

Translation differences – (457) – (3) – (460)

At 31 December 2006 3,507 4,867 3,537 4,320 1,953 18,184



15 Property, plant and equipment (Cont’d)

Leasehold properties

Plant and machinery Motor vehicles

Office equipment


fittings Total

$’000 $’000 $’000 $’000 $’000 $’000

Accumulated depreciation and impairment losses

At 1 January 2005 – 2,846 944 1,369 476 5,635

Depreciation charge for the year 64 1,187 379 550 178 2,358


1,485 104 169 987 248 2,993

Disposals – (83) (235) (232) (33) (583)

Translation differences – 14 – 1 1 16

At 31 December 2005 1,549 4,068 1,257 2,675 870 10,419

At 1 January 2006 1,549 4,068 1,257 2,675 870 10,419

Depreciation charge for the year 52 458 385 753 234 1,882


– 60 80 – 22 162

Disposals – (1,865) (110) (56) (20) (2,051)

Translation differences – (117) – (2) – (119)

At 31 December 2006 1,601 2,604 1,612 3,370 1,106 10,293

Carrying amount

At 1 January 2005 – 6,742 875 631 684 8,932

At 31 December 2005 1,958 6,071 1,155 1,042 652 10,878

At 31 December 2006 1,906 2,263 1,925 950 847 7,891



15 Property, plant and equipment (Cont’d)

Plant and machinery

Motor vehicles

Office equipment


fittings Total

$’000 $’000 $’000 $’000 $’000

Company

Cost

At 1 January 2005 2,319 973 664 767 4,723

Additions – 538 309 1 848

Disposals (975) (304) (181) (33) (1,493)

At 31 December 2005 1,344 1,207 792 735 4,078

At 1 January 2006 1,344 1,207 792 735 4,078

Additions – 54 48 1 103

Disposals (436) – (30) (25) (491)

At 31 December 2006 908 1,261 810 711 3,690

Accumulated depreciation and impairment losses

At 1 January 2005 1,668 628 522 421 3,239

Depreciation charge for the year 110 195 138 108 551

Disposals (517) (216) (179) (17) (929)

At 31 December 2005 1,261 607 481 512 2,861

At 1 January 2006 1,261 607 481 512 2,861

Depreciation charge for the year 20 178 157 69 424

Disposals (435) – (30) (20) (485)

At 31 December 2006 846 785 608 561 2,800

Carrying amount

At 1 January 2005 651 345 142 346 1,484

At 31 December 2005 83 600 311 223 1,217

At 31 December 2006 62 476 202 150 890

The carrying amount of property, plant and equipment held by the Group and the Company under finance leases at 31 December 2006 amounted to $2,454,000 (2005: $1,562,000) and $67,000 (2005: $40,000) respectively.



16 Goodwill

Group

Note $’000

Cost

At 1 January 2005 4,837

Acquisition through business combinations 24 897

At 31 December 2005 5,734

At 1 January 2006 5,734

Acquisition through business combinations 24 54

Acquisition of minority interest 24 727

At 31 December 2006 6,515

Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating units (“CGU”) in its distribution business. The recoverable amount of each CGU was determined based on its value in use. Value in use was determined by discounting the future cash flows generated from the continuing use of the CGU and was based on the following key assumptions:

Cash flows were projected based on actual operating results and the financial budgets approved by management covering a five-year period.

Cash flows for the five-year period were extrapolated using a constant growth rate of 10% (2005: 10%), which does not exceed the long-term average growth rate for the industry in which the CGU operates.

Pre-tax discount rates ranging from 9.0% to 11.6% (2005: 9.0%) were applied in determining the recoverable amounts of the CGUs. The discount rates were estimated based on the relevant industry average weighted average cost of capital.

The values assigned to the key assumptions represent management’s assessment of future trends in the Group’s distribution business and are based on both external sources and internal sources (historical data).

17 Other non-current assets

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Non-trade amount due from jointly controlled entity 4,966 – – –

Convertible loan due from a third party corporation – 193 – 193

Club memberships 328 301 301 301

5,294 494 301 494

The amount due from the jointly controlled entity, which is denominated in the United States dollars, is unsecured, bears interest at 8% per annum, and is repayable within 5 years. This amount is subordinated to a bank for banking facilities granted to the jointly controlled entity as disclosed in note 13.

During the year, the unsecured and interest-free convertible loan of $193,000 was converted into ordinary shares representing 15% of the issued share capital of the third party corporation. Upon conversion of the convertible loan, the Company held 20% ownership interest in the aforesaid corporation and accounted for it as an investment in associate.



18 Trade and other payables

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Current

Trade payables:

- Third parties 30,659 44,982 7,004 11,482

- Associate 19 – – –

- Jointly controlled entity 6,086 – – –

Amounts due to a company related to a director of a subsidiary:

- Trade 1,907 – – –

- Non-trade 3,536 2,428 – –

Accrued operating expenses 13,070 9,891 5,175 3,079

Deposits and advances received from customers 13,105 28,267 – 76

Other payables 4,092 1,372 378 331

Financial derivatives – 102 – 102

72,474 87,042 12,557 15,070

Non-current

Amounts due to a company related to a director of a subsidiary:

- Trade 959 2,218 – –

- Non-trade 592 1,372 – –

Deposits and advances received from customers 3,465 – – –

Accrued operating lease expense 2,784 – – –

7,800 3,590 – –

Total trade and other payables 80,274 90,632 12,557 15,070

The amounts due to a company related to a director of a subsidiary are unsecured and interest-free, and the non-current portion is repayable by 2008.

Trade and other payables denominated in currencies other than the Company’s functional currency relate mainly to those denominated in the United States dollars.

19 Amounts due to subsidiaries

Company

2006 2005

$’000 $’000

Non-trade payables:

- Current 1,807 –

- Non-current 37,558 38,561

39,365 38,561

The amounts due to subsidiaries, which are mainly denominated in the United States dollars, are unsecured and the non-current portion is repayable within 5 years. These amounts are interest-free except for an amount of $11,617,000 (2005: $38,561,000) which bears interest at 1% (2005: 1%) per annum.



20 Borrowings

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Current

Bills payable to banks (unsecured) 6,943 7,279 601 104

Secured bank loan 30,000 – – –

Unsecured bank loans 3,960 9,860 1,000 6,100

Finance lease liabilities 369 397 17 21

41,272 17,536 1,618 6,225

Non-current

Unsecured bank loans 8,990 2,717 250 1,250

Finance lease liabilities 999 470 23 10

9,989 3,187 273 1,260

Total borrowings 51,261 20,723 1,891 7,485

The secured bank loan is secured on the Group’s ownership interest in an associate, SSH Corporation Ltd, with a carrying amount of $41,575,000 as at 31 December 2006.

Maturity of borrowings (excluding finance lease liabilities)

Group Company

2006 2005 2006 2005

$’000 $’000 $’000 $’000

Payable:

- Within 1 year 40,903 17,139 1,601 6,204

- After 1 year but within 5 years 8,990 2,717 250 1,250

Total 49,893 19,856 1,851 7,454

Finance lease liabilities

At the balance sheet dates, the Group and the Company have obligations under finance leases that are payable as follows:

Principal Interest Payments Principal Interest Payments

2006 2006 2006 2005 2005 2005

$’000 $’000 $’000 $’000 $’000 $’000

Group

Payable:

- Within 1 year 369 60 429 397 9 406

- After 1 year but within

5 years 914 195 1,109 425 20 445

- After 5 years 85 13 98 45 – 45

999 208 1,207 470 20 490

Total 1,368 268 1,636 867 29 896



20 Borrowings (Cont’d)

Principal Interest Payments Principal Interest Payments

2006 2006 2006 2005 2005 2005

$’000 $’000 $’000 $’000 $’000 $’000

Company

Payable:

- Within 1 year 17 3 20 21 4 25

- After 1 year but within

5 years 23 4 27 10 1 11

Total 40 7 47 31 5 36

The weighted average effective interest rates per annum relating to borrowings at the balance sheet dates for the Group and

the Company are as follows:

Group Company

2006 2005 2006 2005

% % % %

Bills payable 5.95 4.64 6.88 3.60

Bank loans 5.11 5.58 5.10 5.15

The interest rates for the above bank borrowings reprice monthly.

21 Deferred tax

Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are as follows:

At 1 January2005

Recognized in income statement

(note 6)

At 31 December

2005

Recognized in income statement

(note 6)

Acquisition of

subsidiaries

At 31 December

2006

$’000 $’000 $’000 $’000 $’000 $’000

Group

Deferred tax liabilities

Plant and equipment 309 (129) 180 (8) 8 180

Other items 505 (505) – – – –

814 (634) 180 (8) 8 180

Deferred tax assets

Provisions (148) 90 (58) 58 – –

Net deferred tax liabilities 666 (544) 122 50 8 180

Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority.



22 Share capital

Group and Company

2006 2005

No. ofshares(’000)

No. ofshares(’000)

Issued and fully paid:

At 1 January 198,480 127,834

Issue of new shares – 10,000

Issue of bonus shares 39,696 60,646

Repurchase and cancellation of shares (881) –

At 31 December 237,295 198,480

At 31 December 2005, the share capital of the Company comprised shares of $0.10 each. On the commencement date of the Companies (Amendment) Act 2005 on 30 January 2006:

(a) the concept of authorized share capital was abolished;

(b) the shares of the Company ceased to have par value; and

(c) the amount standing to the credit of the Company’s share premium account was transferred to the Company’s share capital.

A bonus issue of 39,696,000 new fully-paid ordinary shares was made by the Company in April 2006 to existing shareholders, in the proportion of one bonus share for every five existing shares held.

During the year, the Company repurchased and cancelled 881,000 ordinary shares, representing 0.4% of its issued share capital, under the terms of the share buy-back mandate approved by shareholders at an Extraordinary General Meeting held on 7 August 2006. The total consideration for the shares repurchased from the market was $2,168,000, being an average market price, including incidental costs, of $2.46 per share.

The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares (excluding treasury shares) rank equally with regard to the Company’s residual assets.

23 Reserves

Foreign currency translation reserve

The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Company, as well as from the translation of foreign currency loans which form part of the Group’s net investment in foreign operations.

Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until such assets are derecognized.



24 Acquisition of subsidiaries and minority interests

Acquisition of subsidiaries

On 1 January 2006, the Group acquired 51% of the issued and paid-up share capital of Amos International (S) Pte Ltd for $382,000 in cash. This company, together with its wholly-owned subsidiary, Amos Solutions Pte Ltd, are engaged in the business of marine logistics and supply management. These subsidiaries contributed a net profit of $496,000 to the Group’s consolidated net profit for the year ended 31 December 2006.

Acquisition of minority interest

On 2 March 2006, the Group acquired the remaining 25% equity interest in Globaltech Group Pte Ltd for $1,379,000 in cash, increasing its ownership interest from 75% to 100%. Globaltech Group Pte Ltd is an investment holding company which owns 80% equity interest in Globaltech Offshore & Marine Pte Ltd and 70% equity interest in Globaltech Systems Engineering Pte Ltd. The carrying amount of the consolidated net assets of Globaltech Group Pte Ltd and its subsidiaries in the Group’s consolidated financial statements on the date of the acquisition was $2,607,000. The Group recognized a decrease in minority interests of $652,000 and an increase in goodwill of $727,000.

The effect of the acquisitions of subsidiaries and minority interests is set out below:

Group

Note 2006 2005

$’000 $’000

Property, plant and equipment 770 2,571

Investment in associate 29 –

Club membership 27 –

Inventories 164 2,242

Trade receivables 3,210 7,549

Amount due from related party – 5,754

Other current assets 140 168

Cash and cash equivalents 96 526

Trade and other payables (3,252) (10,497)

Borrowings (489) (24)

Provision for current tax (37) (234)

Deferred tax liabilities (8) –

Net identifiable assets and liabilities 650 8,055

Minority interest (322) –

Amount previously accounted for as jointly controlled entity – (4,133)

Net assets acquired 328 3,922

Goodwill on acquisition 16 54 897

Total consideration for acquisitions of subsidiaries, satisfied by cash payment 382 4,819

Consideration for acquisition of minority interests, satisfied by cash payment 1,379 791

Total cash consideration paid 1,761 5,610

Cash acquired (96) (526)

Net cash outflow 1,665 5,084



24 Acquisition of subsidiaries and minority interests (Cont’d)

Acquisition of minority interest (Cont’d)

The pre-acquisition carrying amounts of the assets and liabilities of the acquired businesses were determined based on applicable FRSs immediately before their acquisition. The values of the assets and liabilities recognized on the date of acquisition are their estimated fair values, which approximated their carrying amounts on that date.

The goodwill recognized on the acquisition of subsidiaries is attributable mainly to the anticipated profitability of the acquired businesses and the synergies expected to be achieved from integrating the acquired businesses into the Group’s existing distribution business.

25 Related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Other than disclosed elsewhere in the financial statements, the transactions with related parties are as follows:

Key management personnel compensation

The key management personnel compensation is as follows:

Group

2006 2005

$’000 $’000

Short-term employee benefits 3,985 2,219

Post-employment benefits 201 76

4,186 2,295

Included in key management personnel compensation is directors’ remuneration of $3,231,000 (2005: $1,733,000).

Other transactions with key management personnel

Group

2006 2005

$’000 $’000

Transactions with companies in which two directors of the Company have substantial financial interests

Sale of goods 284 –

Purchase of goods 88 42

Operating lease expense 1,033 1,154

Transactions with a firm in which a director of the Company is a member

Professional fees 5 11



25 Related parties (Cont’d)

Other related party transactions

Group

2006 2005

$’000 $’000

Transactions with jointly controlled entities

Sale of goods 15,580 303

Contract revenue 9,935 –

Sale of plant and equipment 4,976 –

Interest income 985 425

Management fee income 334 –

Operating lease expense 5,752 –

Transactions with associates

Purchase of goods 462 –

Transactions with other related parties

Purchase of goods from a company related to a director of a subsidiary 2,091 –

26 Financial instruments

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.

Credit risk

Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Group, as and when they fall due. Credit risk relating to financial guarantee contracts represents the financial loss that would be recognized upon a default by the parties to which the financial guarantees were issued on behalf of.

The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an on-going basis. Credit evaluations are performed on all customers requiring credit over a certain amount. Cash and fixed deposits are placed with banks and financial institutions which are regulated. Investments and transactions involving derivative financial instruments are allowed only with counterparties who have sound credit ratings.

At the balance sheet date, the Group has concentration of credit risk in 3 (2005: 3) major customers representing approximately 24% (2005: 21%) of total trade receivables. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the balance sheet.

Interest rate risk

The Group’s exposure to changes in interest rates relates primarily to its interest-earning financial assets and interest-bearing financial liabilities. Interest rate risk is managed by the Group on an on-going basis with the primary objective of limiting the extent to which net interest expense could be affected by an adverse movement in interest rates.



26 Financial instruments (Cont’d)

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The Group aims at monitoring flexibility in funding by keeping committed credit lines available.

Foreign currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in currencies other than the functional currencies of the respective entities in the Group. The currency giving rise to this risk is primarily the United States dollars.

The Group hedges receivables and payables denominated in foreign currencies over certain limits. The Group uses forward exchange contracts to hedge its foreign currency risk. Where necessary, the forward exchange contracts are rolled over at maturity at market rates.

Insurance risk

The Company issues financial guarantees on behalf of its subsidiaries and jointly controlled entities. There are no terms and conditions attached to the financial guarantee contracts that would have a material effect on the amount, timing and certainty of the Company’s future cash flows. Estimates of the Company’s obligations arising from financial guarantee contracts may be affected by future events, which cannot be predicted with certainty. The assumptions made may vary from actual experience so that the actual liability may vary considerably from the best estimates.

Fair values

At 31 December 2006, the carrying amounts of financial assets and financial liabilities approximated their fair values.

Estimation of fair values

Investmentsinequitysecurities

The fair value of available-for-sale financial assets and quoted investments in subsidiaries and associates is determined by reference to their quoted bid prices at the balance sheet dates. The fair value of quoted investments in subsidiaries and associates is determined for disclosure purposes only.

Derivatives

The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual period to maturity of the contract using a risk-free interest rate (based on government bonds).

The fair value of interest rate swaps is based on broker quotes. These quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

Non-derivativefinancialliabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet dates. For finance leases, the market rate of interest is determined by reference to similar lease agreements.



26 Financial instruments (Cont’d) Otherfinancialassetsandliabilities

The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values because of the short period to maturity. All other financial assets and liabilities are discounted to determine their fair values.

27 Commitments

Capital commitments

At 31 December 2006, the Group has entered into contracts to purchase plant and equipment of $1,891,000 (2005: Nil).

Operating lease commitments

Where the Group and the Company are lessees:

At the balance sheet dates, the Group and the Company have commitments for future minimum lease payments under non-cancellable operating leases as follows:

Group Company2006 2005 2006 2005$’000 $’000 $’000 $’000

Within 1 year 8,956 2,728 321 307After 1 year but within 5 years 33,461 15,009 – 26After 5 years 4,757 10,937 – –

47,174 28,674 321 333

The Group and the Company lease office space and warehouse from a company in which a director of the Company has

substantial financial interest under an operating lease. The Group leases an offshore rig from a third party and certain equipment from a jointly controlled entity under operating

leases, and subleases the offshore rig and equipment to another third party under an operating lease. The lease and sublease of the offshore rig and equipment expire in April 2012. Upon expiration of the initial lease period, the lease and sublease of the offshore rig and equipment may be renewed when all terms and conditions are renegotiated and agreed between the respective parties. The rental rates of the lease and sublease of the offshore rig and equipment may be revised on a periodic basis to reflect market rentals.

WheretheGroupisalessor:

At the balance sheet dates, the Group has future minimum lease payments receivable under a non-cancellable operating lease as follows:

Group2006 2005$’000 $’000

Within 1 year 14,334 16,559After 1 year but within 5 years 52,315 52,455After 5 years 3,913 17,009

70,562 86,023



28 Contingent liabilities (unsecured)

Group

In prior years, a third party supplier lodged claims against two subsidiaries for non-payment of trade balances amounting to approximately $1,612,000. During the year, the supplier and the two subsidiaries entered into a deed of settlement to have an out of court settlement of all the legal claims lodged by the supplier against the subsidiaries. Pursuant to the deed of settlement, the subsidiaries paid the supplier $750,000 in cash in December 2006, and returned $902,000 worth of inventories to the supplier in February 2007 and are currently awaiting the final acceptance of the said inventories by the supplier.

At the date of issue of these financial statements, the supplier’s legal claims against one of the subsidiaries have been withdrawn and the withdrawal of its legal claims against the other subsidiary has been lodged with the Court and is awaiting confirmation from the Court. The full and final settlement of the aforementioned claims did not have a material effect on the Group’s financial statements.

Company The Company issued financial guarantees to certain banks in respect of banking facilities granted to certain subsidiaries

and jointly controlled entities amounting to $51,520,000 (2005: $17,560,000), of which the amount utilized at the balance sheet date was $37,318,000 (2005: $14,102,000). The periods in which the financial guarantees will expire are as follows:

2006

2006 2005

$’000 $’000

Within 1 year 9,472 5,010

After 1 year but within 5 years 23,648 –

After 5 years 18,400 12,550

51,520 17,560

29 Segment reporting

Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure. Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, corporate assets and head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment.

Business segments

The Group comprises the following main business segments:

Distribution: Sale of hydraulic products, hardware products and tools and equipment to the marine and oil and gas industries.

Capital equipment and related services: Provision of capital equipment and related services to the oil and gas industry.

Geographical segments

The businesses of the Group are operated in three principal geographical areas, namely, Singapore, the People’s Republic of China and other Far East and ASEAN countries. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.



29 Segment reporting (Cont’d) Geographical segments (Cont’d)

Business segments DistributionCapital equipment and

related services Group

2006 2005 2006 2005 2006 2005

$’000 $’000 $’000 $’000 $’000 $’000

Revenue and expenses

Revenue from external customers 203,724 160,716 91,408 108,365 295,132 269,081

Segment results 18,456 11,630 22,812 12,227 41,268 23,857

Dividend income 1,153 606

Gain on dilution of interest in a subsidiary – 6,120

Gain on disposal of other investments 17,364 7,797

Gain on dilution of interest in a jointly controlled entity

– – 790 – 790 –

Gain on disposal of interest in a jointly controlled entity

– – 783 – 783 –

Loss on disposal of interest in an associate (667) – – – (667) –

Share of results of associates 1,119 793 (41) (132) 1,078 661

Share of results of jointly controlled entities 283 – 2,854 2,497 3,137 2,497


Income tax expense (9,983) (4,444)



Segment assets 102,337 136,165 76,011 37,068 178,348 173,233

Investments in associates 42,775 2,409 173 59 42,948 2,468

Investments in jointly controlled entities 686 – 17,024 230 17,710 230

Unallocated assets 83,321 66,623

Total assets 322,327 242,554

Segment liabilities 83,154 65,930 24,861 39,987 108,015 105,917

Income tax liabilities 11,671 5,743

Unallocated liabilities 23,520 5,438

Total liabilities 143,206 117,098

Other segment information

Capital expenditure 2,006 1,719 79 87 2,085 1,806

Depreciation 1,607 1,513 275 845 1,882 2,358



29 Segment reporting (Cont’d) Geographical segments (Cont’d)

Geographical segmentsRevenue from external

customers Segment assets Capital expenditure2006 2005 2006 2005 2006 2005$’000 $’000 $’000 $’000 $’000 $’000

Singapore 129,843 94,760 199,121 192,289 1,150 1,456The People’s Republic of China 39,999 27,649 42,247 19,899 90 153Other Far East and ASEAN countries 54,789 46,938 26,823 18,158 384 167Other regions 70,501 99,734 54,136 12,208 461 30Total 295,132 269,081 322,327 242,554 2,085 1,806

30 Subsequent events

Subsequent to 31 December 2006, the following events took place:

(a) The Group signed a conditional term sheet to acquire 75% of the issued and paid-up capital of Raymonds Supply Co., Ltd, a company incorporated in Hong Kong and engaged in the business of supplying parts and consumables to customers in the oil and gas industry, and providing transportation and logistics services within Hong Kong, as well as to and fro the People’s Republic of China. Subject to the satisfactory completion of a due diligence review, the purchase consideration may be approximately HK$15,750,000. At the date of issue of these financial statements, the above acquisition has not been completed.

(b) The Group entered into a conditional sale and purchase agreement to acquire 70% of the issued and paid-up capital of Fischer Engineering Pte Ltd, a company incorporated in Singapore and engaged in the business of overhaul and servicing of turbochargers for the marine industry. Subject to the satisfactory completion of a due diligence review, the purchase consideration will be $3,000,000. At the date of issue of these financial statements, the above acquisition has not been completed.

(c) The directors of the Company proposed an one-tier tax exempt final dividend of 1.8 cents per share, amounting to

approximately $4,271,000. The proposed final dividend has not been provided for in these financial statements.

(d) The Company’s subsidiary, Aqua-Terra Supply Co. Limited, proposed to undertake a renounceable non-underwritten rights issue of up to 117,000,000 new ordinary shares (the “Rights Shares”) at an issue price of $0.38 each, on the basis of one Rights Share for every two existing shares held. The said subsidiary has obtained the in-principle approval from the SGX for the listing and quotation of its proposed Rights Shares on 7 March 2007.



31 New accounting standards and interpretations issued but not yet effective for the financial year ended 31 December 2006

At the balance sheet date, the Council on Corporate Disclosure and Governance has issued the following new/revised FRSs and INT FRSs which are not yet effective for the financial year ended 31 December 2006 and which have not been adopted by the Group in the preparation of these financial statements:

Effective for annual periods beginning on or after

FRS 40 Investment Property 1 January 2007

FRS 107 Financial Instruments: Disclosures and the Amendment to FRS 1 Presentation of Financial Statements: Capital Disclosures

1 January 2007

INT FRS 107 Applying the Restatement Approach under FRS 29 Financial Reporting in Hyperinflationary Economies

1 March 2006

INT FRS 108 Scope of FRS 102 Share-based Payment 1 May 2006

INT FRS 109 Reassessment of Embedded Derivatives 1 June 2006

INT FRS 110 Interim Financial Reporting and Impairment 1 November 2006

FRS 107 and amended FRS 1, which became mandatory for the Group’s 2007 financial statements, will require extensive additional disclosures with respect to the Group’s financial instruments and share capital. These standards do not have any impact on the recognition and measurement of the Group’s financial statements.

Except for additional disclosures and changes in presentation of certain financial information, the Group does not expect the initial application of the above new/revised FRSs and INT FRSs to be relevant to its operations or have a material impact on its financial statements. The Group has not considered the impact of new/revised FRSs and INT FRSs issued after the balance sheet date.



Class of Shares - Ordinary Shares Voting Rights - One Vote per share

DISTRIBUTION OF SHAREHOLDERS BY SIZE OF SHAREHOLDINGS

Size of HoldingsNo. of Ordinary Shareholders % of Shareholders No. of Shares % of Shareholding

1 – 999 139 4.20 47,940 0.02

1,000 – 10,000 2,676 80.72 11,055,273 4.66

10,001 – 1,000,000 480 14.48 21,022,214 8.86

1,000,001 and above 20 0.60 205,170,098 86.46

3,315 100.00 237,295,525 100.00

LIST OF 20 LARGEST SHAREHOLDERS

No NAME OF SHAREHOLDER NO. OF SHARES % OF SHARES

1 PACIFIC ONE ENERGY LIMITED 51,516,000 21.71

2 DBS NOMINEES PTE LTD 29,542,576 12.45

3 CITIBANK NOMINEES SINGAPORE PTE LTD 26,981,024 11.37

4 HSBC (SINGAPORE) NOMINEES PTE LTD 16,573,772 6.98

5 KIM SENG HOLDINGS PTE LTD 14,049,600 5.92

6 ADVANTI (INT’L) PTE LIMITED 11,760,000 4.96

7 UNITED OVERSEAS BANK NOMINEES PTE LTD 9,715,592 4.09

8 DBSN SERVICES PTE LTD 7,909,640 3.33

9 RAFFLES NOMINEES PTE LTD 6,616,310 2.79

10 ADAM PAUL BRUNET 4,764,000 2.01

11 MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD 4,596,000 1.94

12 SIM YONG TENG 4,000,940 1.69

13 EZRA HOLDINGS LIMITED 4,000,000 1.69

14 MAYBAN NOMINEES (S) PTE LTD 2,735,320 1.15

15 DB NOMINEES (S) PTE LTD 2,355,000 0.99

16 OCBC SECURITIES PRIVATE LTD 2,326,296 0.98

17 KIM ENG SECURITIES PTE. LTD. 2,028,318 0.85

18 SUNFIELD PTE LTD 1,500,000 0.63

19 PHILLIP SECURITIES PTE LTD 1,125,710 0.47

20 ING NOMINEES (SINGAPORE) PTE LTD 1,074,000 0.45

Total: 205,170,098 86.45

sTATisTiCs of SHArEHoLDErSAs At 12 March 2007


SUBSTANTIAL SHAREHOLDERS

Direct Interest Deemed Interest

No. Name No. of

shares held %No. of

shares held %

1. Pacific One Energy Limited 51,516,000 21.71 - -

2. Kim Seng Holdings Pte Ltd 22,689,600 9.56 - -

3. Kris Taenar Wiluan - - 51,516,000(1) 21.71

4. Tan Kim Seng - - 22,689,600(2) 9.56

5. Tan Hoo Lang - - 22,689,600(2) 9.56

6. Tan Fuh Gih - - 22,689,600(2) 9.56

7. Tan Wei Min - - 22,689,600(2) 9.56

Note:

(1) Mr. Kris Taenar Wiluan is deemed interested in the 51,516,000 Shares held through his nominee, Pacific One Energy Limited (formerly known as “Pacific Oilfield Equipment Investment Corp”).

(2) Mr. Tan Kim Seng, Mr. Tan Hoo Lang, Mr. Tan Fuh Gih and Mr. Tan Wei Min are deemed interested in the 22,689,600 Shares held directly or indirectly by Kim Seng Holdings Pte Ltd due to their shareholdings of 373,123, 342,029, 342,029 and 310,935 shares, comprising 24.0%, 22.0%, 22.0% and 20.0%, in Kim Seng Holdings Pte Ltd respectively.

(3) Kim Seng Holdings Pte Ltd holds a 9.56% shareholding interest in the Company, comprising of 5.92% held directly and 3.64% registered in the name of nominees.

COMPLIANCE WITH RULE 723 OF THE SGX-ST LISTING MANUAL

Based on information available and to the best knowledge of the Company as at 12 March 2007, approximately 60.31% of the ordinary shares of the Company are held by the public. The Company is therefore in compliance with Rule 723 of the SGX-ST Listing Manual.

sTATisTiCs of SHArEHoLDErSAs At 12 March 2007


NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Company will be held at No. 4, Tuas Avenue 5, Singapore 639331 on Friday, 20 April 2007 at 9.30 a.m. for the purpose of transacting the following business:

AS ORDINARY BUSINESS

1. To receive and adopt the Audited Accounts of the Company for the financial year ended 31 December 2006 together with the Directors’ Report and the Auditors’ Report thereon. (Resolution 1)

2. To declare a Final Dividend of 1.8 cents per ordinary share (one-tier tax exempt) for the year ended 31 December 2006. (Resolution 2)

3. To approve Directors’ Fees of S$254,466 for the year ended 31 December 2006. (Resolution 3)

4. (a) To re-elect Mr Wong Meng Yeng, a Director who is retiring under Article 91 of the Articles of Association of the Company and have offered himself for re-election. (See Additional Information No. 1) (Resolution 4)

(b) To note the retirement of Mr Chew Thiam Keng. (See Additional Information No. 2)

5. To re-elect the following directors who are retiring under Article 97 of the Articles of Association of the Company and have offered themselves for re-election:

(a) Mr Kris Taenar Wiluan (Resolution 5)(b) Dr Adam Paul Brunet (Resolution 6)(c) Mr Goh Boon Chye (Resolution 7)(d) Mr Woo Peng Kong (Resolution 8)

6. To re-appoint Messrs. KPMG as Auditors and to authorise the Directors to fix their remuneration. (Resolution 9)

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following as Ordinary Resolution, with or without modifications:

7. Authority to issue shares (Resolution 10)

“That authority be and is hereby given to the Directors of the Company to:

(a) (i) issue shares in the capital of the Company (“Shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any instrument made or grant by the Directors while this Resolution was in force,

provided that:

(i) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50% of the issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (ii) below), of which the aggregate number of shares to be issued other than on a pro-rata basis to shareholders of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20% of the issued shares in the capital of the Company ( as calculated in accordance with sub-paragraph (ii) below);

NOTiCE of ANNuAL gENErAL MEETiNg


(ii) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities Trading Limited (“SGX-ST”)) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (i) above, the percentage of shares shall be based on the number of issued shares in the capital of the Company at the time this Resolution is passed, after adjusting for:

(aa) new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding at the time this Resolution is passed; and

(bb) any subsequent consolidation or subdivision of shares;

(iii) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company;

(iv) (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier. (See Additional Information No. 3)

8. Renewal of Share Buyback Mandate (Resolution 11)

That:

(a) for the purposes of the Companies Act (Cap. 50), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire the ordinary shares in the capital of the Company not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) on-market purchases (each a “Market Purchase”) on the SGX ST; and/or

(ii) off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with an equal access schemes as may be determined or formulated by the Directors of the Company as they consider fit, which schemes shall satisfy all the conditions prescribed by the Companies Act (Cap. 50) and the Listing Manual,

and otherwise in accordance with the conditions imposed by the Securities Industry Council (the “Council”) pursuant to the waiver granted by the Council to exempt the Pacific One Group (formerly known as the “Pacific Oilfield Group”), consisting of Mr Kris Taenar Wiluan, Mrs Hedy Kurniawan @ Hedi Wiluan, Mr Lee Seng Quee and Mr Adam Paul Brunet) and its concert parties from the requirement under the Singapore Code on Take-overs and Mergers (the “Take-over Code”) to make a general offer for the Company in the event that the Pacific One Group and its concert parties’ percentage voting rights increase by more than 1% in any period of 6 months as a result of the purchase of Shares by the Company pursuant to the Share Buyback Mandate (See Additional Information and Appendix),

(the “Share Buyback Mandate”);

(b) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of:

(i) the date on which the next annual general meeting of the Company (“AGM”) is held or required by law to be held;

(ii) the date on which the share buybacks are carried out to the full extent mandated; or

(iii) the date on which the authority contained in the Share Buyback Mandate is varied or revoked;



(c) in this Resolution:

“Prescribed Limit” means 10% of the issued ordinary share capital of the Company as at the date of passing of this Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any treasury shares that may be held by the Company from time to time);

“Relevant Period” means the period commencing from the date on which the last AGM was held and expiring on the date the next AGM is held or is required by law to be held, whichever is the earlier, after the date of this Resolution; and

“Maximum Price” in relation to a Share to be purchased, means an amount (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) not exceeding:

(i) in the case of a Market Purchase : 105% of the Average Closing Price;

(ii) in the case of an Off-Market Purchase : 120% of the Highest Last Dealt Price,

where:

“Average Closing Price” means the average of the closing market prices of a Share over the last five market days, on which transactions in the Shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant 5-day period;

“Highest Last Dealt Price” means the highest price transacted for a Share as recorded on the market day on which there were trades in the Shares immediately preceding the day of the making of the offer pursuant to the Off-Market Purchase;

“day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of Shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off- Market Purchase; and

(d) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required and to approve any amendments, alterations or modifications to any documents) as they may consider expedient or necessary to give effect to the transactions contemplated by this Resolution. (See Additional Information No. 4)

9. To transact any other ordinary business which may be properly transacted at an Annual General Meeting.

By Order of the Board

Lim Ka Bee Company Secretary

Singapore, 4 April 2007


KS Energy Services Limited • Annual Report 2006 | 79 79 Annual Report 2006 • KS Energy Group

Notes:

i. A member entitled to attend and vote at this meeting is entitled to appoint not more than two proxies to attend and vote in his stead.

ii. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his shareholding to be represented by each proxy.

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

iv. The instrument appointing a proxy must be deposited at the registered office of the Company at No. 4, Tuas Avenue 5, Singapore 639331 not less than 48 hours before the time appointed for holding the meeting.

ADDITIONAL INFORMATION RELATING TO ITEMS OF ORDINARY AND SPECIAL BUSINESS

1. Mr Wong Meng Yeng, if re-elected, will remain as Chairman of the Nominating Committee and member of Audit Committee and Remuneration Committee; and will be considered independent for the purpose of Rule 704(8) of the Listing Manual of the SGX-ST.

2. In accordance with Article 91 of the Articles of Association of the Company, Mr Chew Thiam Keng retires from office. Mr Chew Thiam Keng is not seeking re-election.

3. The Ordinary Resolution no. 10 above, if passed, will renew the authority for the Directors, effective until the next Annual General Meeting, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the issued shares in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to shareholders. For determining the aggregate number of shares that may be issued, the percentage of issued shares will be calculated based on the issued shares in the capital of the Company at the time that this Resolution is passed, after adjusting for new shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time that this Resolution is passed, and any subsequent consolidation or subdivision of shares.

4. The Ordinary Resolution no. 11 is to authorise the Directors of the Company to purchase or otherwise acquire ordinary shares of the Company up to 10% of the issued ordinary share capital of the Company from the date of the above Meeting until the next Annual General Meeting. This Ordinary Resolution is to renew the Share Buyback Mandate, which was originally approved by the Shareholders on 7 August 2006. Detailed information on the proposed renewal of the Share Buyback Mandate, including the conditions imposed by the Council, is set out in the Appendix to the annual report.

NOTICE OF BOOKS CLOSURE

NOTICE IS HEREBY GIVEN that the Shares Transfer Books and the Register of Members of the Company will be closed on 27 April 2007, for the preparation of dividend warrants for holders of ordinary shares registered in the books of the Company. Duly completed transfers received by the Share Registrar, Tricor Barbinder Share Registration Services (a division of Tricor Singapore Pte Ltd), 8 Cross Street, #11-00, PWC Building, Singapore 048424 up to 5.00 p.m. on 26 April 2007 will be registered before entitlements to the dividend are determined. The dividend, if approved at the Annual General Meeting, will be paid on 10 May 2007.



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*I/We______________________________________________________________________________________________________

of _________________________________________________________________________________________________________

being *a member/members of KS Energy Services Limited (the “Company”), hereby appoint

Name Address NRIC/ Passport No.Proportion of shareholdings to

be represented by proxy (%)

*and/or

as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company to be held at No. 4, Tuas Avenue 5, Singapore 639331 on Friday, 20 April 2007 at 9.30 a.m. and at any adjournment thereof.

*I/we direct *my/our *proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Annual General Meeting as indicated with an “X” in the spaces provided hereunder. If no specific directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion.

No. Ordinary Resolutions For Against

1. To receive and adopt the Audited Accounts of the Company for the financial year ended 31 December 2006 together with the Directors’ Report and the Auditors’ Report thereon.

2. To declare a Final Dividend of 1.8 cents per ordinary share (one-tier tax exempt) for the year ended 31 December 2006.

3. To approve Directors’ Fees of S$254,466 for the year ended 31 December 2006.

4. To re-elect Mr Wong Meng Yeng.

5. To re-elect Mr Kris Taenar Wiluan.

6. To re-elect Dr Adam Paul Brunet.

7. To re-elect Mr Goh Boon Chye.

8. To re-elect Mr Woo Peng Kong.

9. To re-appoint Messrs. KPMG as Auditors and to authorise the Directors to fix their remuneration.

10. To authorise Directors to issue shares.

11. To approve the proposed Renewal of the Share Buyback Mandate

Dated this ________day of ____________________ 2007

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

* Delete accordingly IMPORTANT. Please read notes overleaf

Total Number of Shares Held

IMPORTANT1. For investors who have used their CPF monies

to buy KS Energy Services Limited shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY.

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

Ks ENERGy sERViCEs limiTED(Company no.: 198300104G)(InCorporated In the republIC of SInGapore)

PROXy forM

Notes:-

1. A member entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. Where a member of the Company appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his holding to be represented by each proxy.

3. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert the number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members of the Company, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by the member of the Company.

4. The instrument appointing proxy or proxies must be deposited at the registered office of the Company at No. 4, Tuas Avenue 5, Singapore 639331 not later than 48 hours before the time set for the Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or under the hand of its attorney or duly authorised officer.

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

7. A corporation which is a member of the Company may, in accordance with Section 179 of the Companies Act, Cap. 50 of Singapore, authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting.

8. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register 48 hours before the time appointed for holding the Meeting as certified by The Central Depository (Pte) Limited to the Company.

Co. Reg. No 198300104G

No. 4 Tuas Avenue 5,Jurong, Singapore 639331

Tel: (65) 6415 0808Fax: (65) 6898 4418

Email: [email protected]: www.ksenergy.com.sg

F r o m S t r e n g t h t o S t r e n g t h

KS ENERGY SERVICES LIMITED

f r o m s t r e n g t h t o s t r e n g t h - ks energy · 2011-12-08 · ks energy signed a...

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