report - listed company · 2008. 4. 22. · effectiveness. liftboat also serves as a more stable...

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Making New Waves in the Right Direction

Annual

Focus brings insight that is invaluable, genuine and profitable. It creates opportunities for growth one can never imagine.

01 Chairman’s Message

03 Operations Review

05 Our Directors

07 Our Key Executives

09 Corporate Governance Report

14 Group Structure

15 Financial Report

Statistics of Shareholders

Notice of Annual General Meeting

Proxy Form

Corporate Information

annual report 2007

Report Contents

Ezion Holdings Limited proved to have steered towards the

right direction by focusing on the Offshore Marine Logistics and

Support Services Division. The assembling of a new panel of Board

of Directors (with highly regarded leaders of the industry) is also

a strategic move made to improve operations and business efficacy.

We are pleased to announce that Nylect Technology Limited

(“Nylect”) has been renamed as Ezion Holdings Limited (“Group”)

as we focus on Offshore Marine Logistics and Support Services

after the complete disposal of Fabrication, Mechanical and

Electrical (“M&E”) business in December 2007. The Group is

now purely a marine and offshore service provider. This

strategic move sets the stage for us to embark on the next phase

of growth.

Year in Review

Year 2007 was a very positive yet challenging year. Major changes

have been made to the corporate structure including its positioning

and business ventures. These changes brought about encouraging

improvements in its financial performance as demands for offshore

marine logistics and support services in the global oil and gas

industry continue to grow.

Leveraging on the expertise of our strategic partners, we managed

to establish a fleet of nine vessels over a short period of time. This

investment contributed significantly to the overall yielding in the

fiscal year of 2007 and brought us to the development, owning

and chartering of our offshore assets. We currently own and operate

16 Vessels specially designed for the global offshore oil and gas

industry.

Business Collaborations

The Group has also entered into an exclusive

5-year renewable agreement with Levingston

Corporation (“Levingston”) in 2008. Levingston

will be collaborating with the Group in areas of

designing, supplying, constructing, delivering

and warranting Liftboats in the region of Asia

Pacific and Middle East, exclusively for the

Group or its associates. We also went into a

joint venture with Nordic Maritime Pte Ltd in the

very year for the development of Premium

Offshore Accommodation Vessels.

Financial Review FY2007

The Group performed modestly well with its

new investments and diversion. It has achieved

revenue of approximately S$13.5 million and a

net profit of approximately S$3.4 million

attributable to the Offshore Marine Logistics

and Support Services business.

Moving Ahead with a Positive Outlook

The Group foresees that the Offshore Marine

Logistics and Support Services Division will

continue to grow as the demand continues to

surge in the global offshore oil and gas industry.

More activities and explorations are expected

in the mentioned industry across the continents.

We remain positive and undeterred regardless

of the unforeseen circumstances and we will

CHAIRMAN'S MESSAGE

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

EZION HOLDINGS LIMITED

Dear Shareholders

continue to leverage on the expertise of our

management team to develop strategic offshore

assets in a cost and time effective manner.

Further, we will focus on the development,

ownership and chartering of strategic offshore

assets with particular emphasis on two main

types of vessels: Multi-purpose Self-propelled

Jack Up Rig (“Liftboat”) and Premium Offshore

Accommodation Vessels, and develop a series

of them to meet the demands.

The Group will design, build, acquire and/or

modify other types of marine and offshore assets

and deploy these assets on long term charters

to our customers. The Group also hopes to

secure major projects from these efforts put

forth. We will be looking out for possible mergers

and acquisitions to expand our offshore marine

logistics and support services business and

capabilities. For further development, we will

remain vigilant in seeking opportunities to tie up

with potential partners and equipment suppliers.

We are also excited about the continual

development of our assets: Liftboats and the

Premium Offshore Accommodation Vessels to

be actualized in year 2009. Additionally, we seek

to fully utilise our fleet to expand into the marine

logistics of Special Cargo. We are certain that

this move will definitely help the Group to chart

new heights with greater profitabil ity.

Heartfelt Appreciation

I would like to thank our staff, management

team and esteemed customers for your

unwavering support throughout the year. I

would also like to extend my appreciation to

our shareholders and partners for your

continual support.

Let’s look forward to another year of new

challenges and embrace success.

Lee Kian Soo Chairman

02• • • • • • • • • • • • • • • • • • • • • • • • • • • •

EZION 320E

EZION 320E

EZION 320E

OPERATIONSREVIEW

Nylect Technology L imited (“Nylect” ) , renamed as

Ezion Holdings Limited (“Group”), saw major changes in its

corporate structure in year 2007 with its strategic foray into offering

offshore marine logistics and support services to the global oil and

gas industry. Its new found focus in this area has brought about

positive yielding and great opportunities that exposed the Group

to the global oil and gas industry. The Group continued to leverage

on the expertise of the board members who are respected leaders

in the industry; and its strategic partners. With the escalating demand

in this thriving industry, the Group has built its own fleet of vessels

to meet the challenge. Further plans in expanding the fleet are in

the pipeline and a steady flow of profit is expected from the Offshore

Marine Logistics and Support Services Division.

Year 2007 also saw the strategic alliance with Ezra Holdings Limited

(“Ezra”), shipyards and key equipment suppliers. Ezra showed its

support in lending its technical expertise and human resource to

the Group and expanded the services the Group can offer to its

growing global clientele base.

An Overview of Ventures and Projects

The Group saw a number of projects secured for both the Multi-

purpose Self-propelled Jack Up Rigs (“Liftboats”) as well as in its

Premium Offshore Accommodation Vessels business. The Group

is one of the pioneering companies to introduce Liftboats in Asia.

This not only helps to reduce costs but also improves operations

effectiveness. Liftboat also serves as a more stable and mobile

platform for offshore services.

One of the projects worth mentioning is the first

job secured for the bareback charter of two

units of Liftboats in collaboration with Ezra

Holdings Limited. Ezra will be responsible for

operating Liftboats and time charter out to the

oil and gas majors.

The second job secured in this area is one with

a state linked company in the Middle East.

The Levingston Corporation

– An Exclusive Agreement

The Group has entered into an exclusive 5-year

renewable agreement with the Levingston

Corporation (“Levingston”). Levingston is

reputed for its extensive experience in the

shipbuilding industry since 1805. It is lauded

by the world as a premier shipbuilder. Levingston

Shipbuilding Company is the company that

established Far East Levingston Shipbuilding

(“FELS”) that has grown into what today is

Keppel FELS, an international premier

shipbuilder.

It is reported that Levingston will be in-charge

of design, supply, construct, deliver and warranty

Liftboats for both Ezion Holdings Limited and

its affiliated companies in particular the regions

of Asia Pacific and the Middle East. It is

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •


also stated that the key components of Liftboats are designed and built

in the United States for quality.

Together with the Group and its associates, Levingston will see to the

assembly and completion of Liftboats in a lower cost region within Asia.

Premium Offshore Accommodation Vessels

The Group also went into a joint venture with a Norwegian ship owner

and management company that offers offshore maritime services, Nordic

Maritime Pte Ltd (“Nordic”), as it saw the rising demands for Premium

Offshore Accommodation Vessels.

The Group noticed that the current accommodation facilities in the market

are not able to meet the steep standard of the European and American

Comfort Standards. In view of the situation, the Group and Nordic have

been jointly developing Premium Offshore Accommodation Vessels to

meet the challenge.

With that, the Group managed to secure its first major project for Premium

Offshore Accommodation Vessel. An American Multinational Company

(“American”) expressed interest in collaborating with the Group in the

mentioned business. American is a company that focuses on lending

support to upstream oilfield development projects around the world.

04

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Dr Wang is also the Center Manager of Fuji Xerox Singapore

Software Center, a 132-strong R&D division of Fuji Xerox Asia

Pacific Pte Ltd.

Adding on to his credentials, Dr Wang sits on the Board of

Superbowl Holdings Ltd, Xpress Holdings Ltd, Asian Micro

Holdings Ltd, COSCO Corporation (Singapore) Limited, Hiap

Hoe Ltd, ComfortDelGro Corporation Limited, Koon Holdings

Limited, Matex International Ltd, China Lifestyle Food &

Beverages Group Ltd, HLH Corp, EOC Ltd and Carats Ltd.

MR LEE KIAN SOO Non-Executive Chairman and Non-Executive Director

Appointed the Non-Executive Chairman and Non-Executive

Director since 1 June 2007, Mr Lee Kian Soo is also the founder

of the Ezra Group of Companies (“Ezra”) with 30 years of

experience in the shipping and offshore support service

industry. Prior to founding Ezra, Mr Lee has worked in various

established companies which include Jurong Shipyard, Sembawang

Shipyard and Offshore Supply Association. Mr Lee has been

responsible for the strategic planning, business development

and marketing of Ezra since its inception in 1992.

MR CHEW THIAM KENGChief Executive Officer and Executive Director

Mr Chew Thiam Keng was appointed the Executive Director

on 1 March 2007, and was appointed as the Chief Executive Officer

on 1 June in the same year. Backed by years of experience

with public listed companies, Mr Chew adds value to the management

of Ezion Holdings Limited (“Group”) by handling the Group’s

operations in strategic planning, corporate management and

business development. Before joining the Group, Mr Chew

assumed important roles in managing companies that include KS

Energy Services Limited since 1996. He also served in the

corporate finance and retail banking division of Development Bank

of Singapore for 9 years. Mr Chew also sits on the Board of Showy

International Ltd, Pharmesis International Ltd, Multi-Chem Limited,

China Diary Group Ltd and Sim Siang Choon Ltd.

Mr Chew was last re-elected on 26 April 2007.

CAPTAIN LARRY GLENN JOHNSONChief Operating Officer and Executive Director

Captain Larry Glenn Johnson was appointed an Executive Director

cum Chief Operating Officer of the Group since 13 February 2008.

He is a seasoned Marine Professional with over 30 years of experience

in the maritime industry. He holds a valid USCG Masters License

with 16 years of management experience, which include 9 years of

P&L responsibilities. He also had the opportunity to work with

ExxonMobil Development Corporation, Chevron and Aker Kvaerner

as a marine consultant for a number of oil and gas projects.

Before joining the Group, Captain Johnson worked at Foss Maritime

Company for 24 years, with his last position as the Director International

Operations. He recently retired as Senior Vice President of America

Cargo Transport Corp (ACTC), an US Government Contractor for

Visa, MSP and USC05 cargoes operating in the Gulf of Mexico, Asia,

Australia and Middle East.

DR WANG KAI YUENIndependent Non-Executive Director

Dr Wang Kai Yuen is an Independent Non-Executive Director

appointed on 28 July 2000 and was last re-elected on 27 April 2006.

He currently also serves as the Chairman of the Audit Committee

and is a member of both the Remuneration and Nominating

Committees.

MR TEO CHUAN TECKIndependent Non-Executive Director

Mr Teo Chuan Teck is an Independent Non-Executive Director

appointed since 21 March 2007 and is also a member of the

Audit Committee, the Remuneration Committee and the

Nominating Committee. He was last re-elected on 26 April 2007.

Mr Teo has been appointed as Chairman of the Remuneration

Committee with effect from 1 June 2007.

MR TAN WOON HUMIndependent Non-Executive Director

Mr Tan Woon Hum is an Independent Non-Executive Director

appointed since 21 March 2007 and last re-elected on 26 April

2007. He is a member of the Audit Committee, the Remuneration

Committee and the Nominating Committee. Mr Tan has been

appointed as Chairman of the Nominating Committee with effect

from 1 June 2007.

Mr Tan’s involvement as a partner in the corporate finance and

international finance practice of Shook Lin & Bok includes REITs,

funds and M&A. He also advises on licensing and regulatory

matters in the financial sector and has previously advised on a

wide range of corporate finance transactions, particularly cross

border mergers and acquisitions, joint ventures, strategic

investments and listed company matters. He has been involved

in 17 of the 19 listed S-REITs (as at December 2007) transactions

of various structures, magnitude and complexity.

Mr Tan also sits on the Board of AP Oil International Ltd and

Yong Xin International Holdings Ltd.

MR LIM THEAN EEIndependent Non-Executive Director

Another Independent Non-Executive Director appointed since

28 July 2000, Mr Lim Thean Ee was last re-elected on 27 April

2006. He serves as the Managing Director of Coastal Navigation

Pte Ltd and is also the Chairman of Depot Estate Business

Association and Dover Community Centre Management

Committee; the Vice-Chairman of Telok Blangah Community

Club Management Committee and Telok Blangah Citizens'

Consultative Committee.

Our Directors

06

MR LIM THEAN EE

MR TEO CHUAN TECK

DR WANG KAI YUEN

MR CHEW THIAM KENG

MR LEE KIAN SOO

CAPTAIN LARRY GLENN JOHNSON

MR TAN WOON HUM

MR CHEAH BOON PINGroup Financial Controller

Mr Cheah Boon Pin is responsible for all accounting,

financial and taxation matters. He joined Ezion

Holdings Limited (“Group”) in June 2007 bringing

with him over 10 years of experience in auditing and

commercial accounting. Before joining the Company,

Mr Cheah had served in financial management

positions in 2 Singapore Exchange Main Board

listed companies. He holds an ACCA accounting

qualification and is a member of the Institute

of Certified Public Accountant of Singapore.

MR POH LEONG CHING (DAVID)Operation and Commercial Head

Mr Poh Leong Ching, David, is responsible for the

day-to-day operations and deployment of the Group’s

fleet of vessels as the Operation and Commercial

Head. Under his credentials is over 15 years of

experience in the sales and operations of vessels

and cranes. Mr Poh was the Marketing Manager of

Tiong Woon Marine Pte Ltd and Tat Hong Holdings

Group before joining the Group. His portfolio includes

overseeing operations of the entire fleet of tugs and

barges.

MR GURU SHARMATechnical & ISM Head

A Chartered Engineer by training, Mr Guru Sharma

joined the Group in August 2007 and is a Fellow

Member of the Institute of Marine Engineers (India).

He holds a Class 1 Competency as a Marine Engineer

Officer from United Kingdom and has been a

Classification Surveyor for 12 years. He brings with

him over 35 years of technical, operational and

management experience and a wealth of knowledge

in the shipping and offshore industry.

MR DERRICK CHING

Business Development Manager

Mr Derrick Ching joined the Group in March 2008

and is responsible for marketing of the Group’s fleet

of Jackups and vessels.

Mr Ching has more than 8 years of experience in the

oil and gas industry and has successfully completed

several upgrading and refurbishment of offshore

drilling rigs. On top of that, he is also experienced

in heavy lift accommodation barges, seismic vessels

and pipelayers.

Our Key Executives

Ezion Holdings Limited (“Ezion” or the "Company") observes high

standards of corporate governance in line with the principles and

guidelines of the Code of Corporate Governance 2005 (“Code

2005”) so as to ensure greater transparency, accountability and

protections of shareholders’ interest.

The Company’s corporate governance practices on each of the

principles of the Code are outlined in the following sections.

BOARD MATTERS

Principle 1 Board’s Conduct of its Affairs

The Board oversees the business of Company and assumes

responsibility for the overall strategic plans, key operational

initiatives, major investment and funding proposals, financial

performance reviews and corporate governance practices. The

Board provides the direction and goals for the management and

monitors the performance of these goals to enhance the

shareholders’ value. The Board also approves the financial results

for release to the Singapore Exchange Securities Trading Limited

(SGX-ST).

The Board is supported in its tasks by Board committees

such as the Audit Committee, Nominating Committee and

Remuneration Committee, which have been established to

assist in the execution of its responsibilities.

The Board conducts regular scheduled meetings at least

twice a year. Ad-hoc meetings are convened as and when

warranted by particular circumstances. The Company’s Articles

of Association provide for meetings to be held via telephone

conference. The attendance of the Directors at meetings of

the Board and Board committees, as well as frequency of

such meetings, is disclosed in this report.

Principle 2 Board Composition And Guidance

The size and composition of the Board are reviewed from

time to time by the Nominating Committee, which strives to

ensure that the size of the Board is conducive to effective

discussions and decision-making and that the Board has an

appropriate balance of independent directors.

The majority of our directors are non-executive and

independent directors. The Nominating Committee reviews

the independence of each director on an annual basis and it

considers a director as independent if he has no relationship

with the Group or its officers that could interfere, or reasonably

perceived to interfere, with the exercise of the director’s

independent business judgement with a view to the best

interest of the Company.

The Board currently comprises the following members:

i) Mr Lee Kian Soo Non-Executive Chairman

ii) Mr Chew Thiam Keng Executive Director

iii) Captain Larry Glenn Johnson Executive Director

iv) Dr Wang Kai Yuen Independent Director

v) Mr Lim Thean Ee Independent Director

vi) Mr Teo Chuan Teck Independent Director

vii) Mr Tan Woon Hum Independent Director

As a group, the Directors bring with them a broad range of

industry knowledge, expertise and experience in areas such

as accounting, finance, business and management. The diversity

of the directors’ experience allows for the useful exchange of

ideas and view as well as provide for effective decision-making.

The profile of each Board member is set out on pages 5 & 6

of this Annual Report.

The Board considers the present size appropriate for the current

nature and scope of the Group’s operations.

Principle 3 Chairman And Chief Executive Officer

There is a clear separation of the roles and responsibilities of

the Chairman and the Chief Executive Officer (”CEO”). This is

to ensure appropriate balance of power and authority,

accountability and decision-making.

Mr Lee Kian Soo, who is the Non-Executive Chairman, and Mr

Chew Thiam Keng, the CEO of the Company are not related

to each other. The CEO is responsible for the day-to-day

management of the affairs of the Company and the Group. He

plays a leading role in developing and expanding the businesses

of the Group and ensures that the Board is kept updated and

informed of the Group’s business.

The Chairman’s responsibilities include:

i) scheduling meetings and leading the Board to ensure its

effectiveness and approves the agenda of Board meetings

in consultation with the CEO;

ii) reviewing key proposals and Board papers before they are

presented to the Board and ensures that Board members

are provided with accurate and timely information;

iii) ensuring that Board members engage Management in

constructive debate on various matters including strategic

issues and business planning processes; and

iv) promoting high standards of corporate governance.

CORPORATE GOVERNANCE REPORT••••••••••

10

Principle 4 Board Membership

NOMINATING COMMITTEE

The Nominating Committee (“NC”) comprises four Directors, all

of whom, including the Chairman are independent. The NC

members are:

Mr Tan Woon Hum (Chairman)

Dr Wang Kai Yuen

Mr Lim Thean Ee

Mr Teo Chuan Teck

The NC’s responsibilities include the following:

i) review and assess all candidates for directorships before

making recommendation to the Board for appointment of

directors;

ii) reviews and recommends to the Board the retirement and re-

election of directors in accordance with the Company’s Articles

of Association at each Annual General Meeting (“AGM”);

iii) reviews the independence of directors annually;

iv) reviews the composition of the Board annually to ensure that

the Board has appropriate balance of independent directors

and to ensure an appropriate balance of expertise, skills,

attributes and ability among the directors;

v) evaluates the performance and effectiveness of the Board as

a whole.

The NC reviews and assesses candidates for directorship

before making recommendations to the Board. In

recommending new directors to the Board, the NC takes

into consideration the skills and experience and the current

composition of the Board, and strives to ensure that the

Board has an appropriate balance of independent directors

as well as directors with the right profile of expertise, skills,

attributes and ability.

In evaluating a director’s contribution and performance for

the purposes of re-nomination, the NC takes into

consideration a variety of factors such as attendance,

preparedness, participation and candour. Recommendation

for new directors and retirement of directors are made by the

NC.

The Directors submit themselves for re-nomination and

re-election at regular intervals of at least once every three

years. The Company’s Articles of Association provides that

one third of the Board, or the number nearest to one third

is to retire by rotation at every AGM. In addition, the

Company’s Articles of Association also provides that newly

appointed Directors are required to submit themselves for

re-nomination and re-election at the next AGM of the Company.

Principle 5 Board Performance

The NC has established a formal assessment process to assess

the effectiveness of the Board as a whole. The performance

criteria for Board evaluation are based on financial and

non-financial indicators such as an evaluation of the size and

composition of the Board, the Board’s access to information,

Board processes, strategy and planning, risk management,

accountability, Board performance in relation to discharging its

principal functions, communication with senior management and

standards of conduct of the directors.

The Board and Management have strived to ensure that directors

appointed to the Board possess the experience, knowledge and

skills critical to the Group’s business to enable the Board to make

sound and well-considered decisions.

Principle 6 Access To Information

The Board members are provided with adequate and

timely information prior to Board meetings and on an

ongoing basis. The Board has separate and independent

access to the Group’s senior management and the advice

and services of the Company Secretary who is responsible

to the Board for ensuring board procedures are followed

and the relevant statutory rules and regulations are

complied with. Under the Articles of Association of the

Company, the decision to appoint or remove the Company

Secretary can only be taken by the board as a whole.

The Company Secretary attends all the required board

meetings.

The Board may also take independent professional advice

as and when necessary to enable it to discharge its

responsibilities effectively at the expense of the Company.

The Board is updated on the regulations of the SGX-ST,

Companies Act, corporate governance policies and other

statutory requirements.


N/A: Not Applicable

REMUNERATION MATTERS

Principle 7 Procedures for Developing Remuneration Policies

Principle 8 Level and Mix of Remuneration

Principle 9 Disclosure of Remuneration

The Remuneration Committee (“RC”) comprises four Directors,

all of whom including the Chairman are independent. The RC

members are as follows:

Mr Teo Chuan Teck (Chairman)

Dr Wang Kai Yuen

Mr Lim Thean Ee

Mr Tan Woon Hum

The RC’s responsibilities include the following:

i) reviews and recommends to the Board an appropriate and

competitive framework of remuneration for the Board and

key executives of the Group;

ii) recommends to the Board specific remuneration packages

for each Executive Director, taking into account factors

including remuneration packages of Executive Directors in

comparable industries as well as the performance of the

Company and that of the Executive Directors;

iii) reviews and make recommendation on the fees of

independent non-executive directors for approval by the

Board; and

2

3

4

4

3

2

2

3

3

N/A

Lee Kian Soo 1

Chew Thiam Keng 2

Dr Wang Kai Yuen

Lim Thean Ee

Sim Hee Chew 3

Ong Wee Heng 4

Sim Beng Chye 5

Teo Chuan Teck 6

Tan Woon Hum 7

Captain Larry Glenn Johnson 8

N/A

N/A

4

4

N/A

1

N/A

3

3

N/A

N/A

N/A

2

2

2

N/A

N/A

1

1

N/A

N/A

N/A

1

1

N/A

N/A

1

N/A

N/A

N/A

4 4 2 1

AuditCommittee

NominatingCommittee

RemunerationCommittee

iv) ensures the remuneration policies and systems of the Group

support the Group’s objectives and strategies.

The remuneration package adopted for the Executive Directors

is as per the service contract entered into between the respective

Director and the Company. The RC will recommend on the specific

remuneration packages for an Executive Director upon recruitment.

Thereafter, the RC will review subsequent increments, bonuses

and allowances where these payments are discretionary. No

Director or member of the RC is involved in deciding his own

remuneration.

Non-Executive Directors do not have any service contracts with

the Company. Save for Directors’ fees, Non-Executive Directors

do not receive any remuneration from the Company. Directors’

fees are set in accordance with a remuneration framework

comprising basic fees and additional fees for serving on any of

the committees. Directors’ fees are subject to approval of

shareholders of the Company as a lump sum payment at the

AGM of the Company.

No immediate family members of a Director or CEO have

remuneration exceeding S$150,000 during the year.

Remuneration of Directors and Key Executives

A breakdown showing the level and mix of each individual director’s

remuneration payable for FY 2007

No. of Directors in remuneration band

Notes:1. Lee Kian Soo was appointed on 1 June 2007 2. Chew Thiam Keng was appointed on 1 March 20073. Sim Hee Chew resigned on 7 August 20074. Ong Wee Heng retired on 26 April 20075. Sim Beng Chye retired on 26 April 20076. Teo Chuan Teck was appointed on 21 March 2007 7. Tan Woon Hum was appointed on 21 March 20078. Captain Larry Glenn Johnson was appointed on 13 February 2008

Remuneration Band

$500,000 and above

$250,000 to below $500,000

Below $250,000

Total

2006

-

-

5

5

2007

-

-

8

8

Attendance at Board and Board Committees’ meetings held during the year under review is as set out below:

Board

No. of meetings held

No. of meetings attended by respective directors


12

Notes:1. Lee Kian Soo was appointed on 1 June 2007 2. Chew Thiam Keng was appointed on 1 March 20073. Sim Hee Chew resigned on 7 August 20074. Ong Wee Heng retired on 26 April 20075. Sim Beng Chye retired on 26 April 20076. Teo Chuan Teck was appointed on 21 March 2007 7. Tan Woon Hum was appointed on 21 March 20078. Captain Larry Glenn Johnson was appointed on 13 February 2008

Principle 10 Accountability

The Company keeps the shareholders updated on the Group’s financial performance, positions and prospects through half yearly financial results announcements and annual financial reports. The Company also issues announcements on developments in the Group’s business on an on-going and timely basis.

Management provides the Board with the relevant information on the performance of the Group on a timely and on going basis in order that the Board may effectively discharge its duties.

AUDIT

Principle 11 Audit CommitteePrinciple 12 Internal ControlPrinciple 13 Internal Audit (“IA”)

The Audit Committee (“AC”) comprises four Directors, all of whom including the Chairman are independent. The AC members are:

Dr Wang Kai Yuen (Chairman)Mr Teo Chuan Teck Mr Lim Thean EeMr Tan Woon Hum

The AC performs the following functions:i) reviews with the external auditors, their audit plan, evaluation

of the accounting controls, audit reports and any matters which the external auditors wish to discuss ;

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

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

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

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

The AC has full access to and receives full co-operation from Management, and has full discretion to invite members of Management to attend its meetings and has been given reasonable resources to enable it to discharge its functions. The External Auditors have direct and unrestricted access to the AC, which is empowered to conduct or authorise investigations into any matters within its terms of reference.

The AC has reviewed the overall scope of the external audits and the assistance given by the Company’s officers to the auditors. It met with the Company’s external auditors to discuss the results of their respective examinations and their evaluation of the Company’s system of internal accounting controls.

The AC has also reviewed the half yearly and annual financial statements of the Company and the Group for the financial year ended 31 December 2007 as well as the auditors report thereon. The AC has also reviewed interested person transactions of the Group in the financial year.

Details of Directors’ remunerations

-

-

100

100

-

100

100

100

100

N/A

Lee Kian Soo 1

Chew Thiam Keng 2

Dr Wang Kai Yuen

Lim Thean Ee

Sim Hee Chew 3

Ong Wee Heng 4

Sim Beng Chye 5

Teo Chuan Teck 6

Tan Woon Hum 7

Captain Larry Glenn Johnson 8

-

87

-

-

97

-

-

-

-

N/A

-

3

-

-

3

-

-

-

-

N/A

-

100

100

100

100

100

100

100

100

N/A

Fees % Salary & CPF % Other Benefits % Total %Directors

-

10

-

-

-

-

-

-

-

N/A

Bonus & CPF %

No. of Key Executives in remuneration band

Remuneration Band

Be low $250 ,000

Total

3

3


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

The AC and the Board of Directors reviews the effectiveness of the key internal controls, including financial, operational and compliance controls, and risk management on an on-going basis. There are formal procedures in place for the external auditors to report independently their findings and recommendations to the AC. The Company is in the process of outsourcing its internal audit function to a firm of certified public accountants.

In line with the Code 2005, the AC has incorporated a formal “whistle blowing policy” into the Company’s internal control procedures to provide a channel for staff to raise in good faith and in confidence, without fear of reprisals, concerns about possible improprieties in financial reporting or other matters. The objective of such a policy is to ensure independent investigation of such matters and for appropriate follow-up action.

The AC has conducted an annual review of all non-audit services by the auditor to satisfy itself that the nature and extent of such services will not prejudice the independence and objectivity of the auditors.

The Board is kept informed of the AC’s activities.

COMMUNICATION WITH SHAREHOLDERS

Principle 14 Communication with ShareholdersPrinciple 15 Greater Shareholder Participation

The Company believes in engaging in regular, effective and fair communication with shareholders and is committed to conveying pertinent information to shareholders on a timely basis. All material and price sensitive information as well as information on the Company’s new initiatives are publicly released via SGXNET on a timely basis. In addition, the Company also responds to enquiries from investors, analysts, fund managers and the press.

At the general meetings of the Company, shareholders are given the opportunity to air their views and ask questions regarding the Company and the Group. The Articles of Association of the Company allow shareholders to appoint one or two proxies to attend and vote in their stead.

Each item of special business included in the notice of the general meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting. The Chairmen of the Audit, Remuneration and Nominating Committees are normally available at the meeting to answer those questions relating to the work of these committees. The External Auditorsare also present to assist the Directors in addressing any relevant queries by shareholders.


DEALINGS IN SECURITIES

The Company has adopted an internal code with regards todealings in securities to provide guidance for its directors and officers.

The Company’s Code provides that Directors and employees are prohibited from dealing in the securities of the Company during the period commencing one month before the announcement of the Company’s half and full year financial results and ending on the date of the announcements of the results or if they are in possession of unpublished price-sensitive information on the Group. They are also made aware of the applicability of the insider trading laws at all times.

INTERESTED PERSON TRANSACTIONS (“IPTs”) POLICY

The Company has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for review and approval of the Company’s interested persons transactions with Ezra Holdings Limited and its subsidiaries, which are covered by a Shareholders’ Mandate approved at the Extraordinary General Meeting of the Company held on 24 August 2007.

The AC reviews the Shareholders’ Mandate at regular intervals, and is satisfied that the review procedures for IPTs and the reviews to be made periodically by the AC in relation thereto are adequate to ensure that the IPTs will be transacted on normal terms and will not be prejudicial to the interests of the Company and its minority shareholders.

Interested Person Transactions for FY2007

MATERIAL CONTRACTS

There were no material contracts entered into by the Company and its subsidiaries involving the interests of its CEO, Directors or Controlling Shareholders.

Name of Interested Person

Aggregate value of all IPTs during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)

Aggregate value of all IPTs conducted during the financial year under review under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than $100,000)

S$’000 S$’000

- 107

Purchase of goods and services from:

EmasOffshorePte Ltd

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14

16 Directors’ Report

19 Statement by Directors

20 Independent Auditors’ Report

21 Balance Sheets

22 Consolidated Income Statement

23 Consolidated Statement of Changes in Equity

24 Consolidated Cash Flow Statement

25 Notes to the Financial Statements

65 Statistics of Shareholders

67 Notice of Annual General Meeting

70 Proxy Form

Corporate Information

annual report 2007

As lucid and dynamic as water, Ezion Holdings Limited strives to make new waves in the right direction – Offshore Marine Logistics and Support Services Division.

Financial contents

Ezion Holdings Limited

Annual Report 2007

16

DIRECTORS’ REPORT . . . . . . . . . .

We are pleased to submit this annual report to the members of the Company together with the audited financial

statements for the financial year ended 31 December 2007.

Directors

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

Lee Kian Soo (Appointed on 1 June 2007)

Chew Thiam Keng (Appointed on 1 March 2007)

Captain Larry Glenn Johnson (Appointed on 13 February 2008)

Dr Wang Kai Yuen

Lim Thean Ee

Teo Chuan Teck (Appointed on 21 March 2007)

Tan Woon Hum (Appointed on 21 March 2007)

Change of Company’s Name

On 24 August 2007, the Company changed its name from Nylect Technology Limited to Ezion Holdings Limited.

Directors’ interests

According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act,

Chapter 50 (the “Act”), particulars of interests of directors who held office at the end of the financial year (including

those held by their spouses and infant children) in shares, debentures, warrants and share options in the Company

and in related corporations (other than wholly-owned subsidiaries) are as follows:

Direct Deemed

Name of director and corporation

in which interests are held

Holdings at

beginning of

the year/

date of

appointment

Holdings at

end of

the year

Holdings at

beginning of

the year/

date of

appointment

Holdings at

end of

the year


Lim Thean Ee 814,000 814,000 – –

Dr Wang Kai Yuen 200,000 – – –

Chew Thiam Keng – – 290,000,000 190,000,000

Lee Kian Soo – – 100,000,000 100,000,000

The number of shares at the beginning of the financial year and the date of appointment were adjusted after the sub-

division of each existing ordinary share in the capital of the Company into two ordinary shares of the Company on 26

December 2007.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares,

debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the

financial year, or date of appointment if later, or at the end of the financial year.

There were no changes in any of the above mentioned interests in the Company between the end of the financial

year and 21 January 2008.


Annual Report 2007

17


Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose

objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the

acquisition of shares in or debentures of the Company or any other body corporate.

During the financial year, the Company and its related corporation have in the normal course of business entered into

transactions with companies in which a director of the Company has a substantial financial interest. Such

transactions comprised lease of office and charter of vessel carried out on normal commercial terms as set out in

note 28 to the financial statements. The director has neither received nor become entitled to receive any benefit

arising out of these transactions other than those to which he is ordinarily entitled to as shareholder of these

companies.

Except for the transactions disclosed in the preceding paragraph and short-term employee benefits as disclosed in

note 28 to the financial statements, since the end of the last financial year, no director has received or become

entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director,

or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

Share options

During the financial year, there were:

(i) 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:

Dr Wang Kai Yuen (Chairman and Independent Director)

Lim Thean Ee (Independent Director)

Teo Chuan Teck (Independent Director)

Tan Woon Hum (Independent Director)

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

Code of Corporate Governance.

The Audit Committee has held four meetings since the last directors’ report. In performing its functions, the Audit

Committee met with the Company’s external auditors to discuss the scope of their work, the results of their

examination and evaluation of the Company’s internal accounting control system.

The Audit Committee also reviewed the following:

� assistance provided by the Company’s officers to the external auditors;

� interim financial information and annual financial statements of the Group and the Company prior to their

submission to the directors of the Company for adoption; and

� interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).


Annual Report 2007

18


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.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has

recommended to the Board of Directors that the auditors, KPMG, be nominated for re-appointment as auditors at the

forthcoming Annual General Meeting of the Company.

Auditors

At the Extraordinary General Meeting held on 10 December 2007, KPMG were appointed as auditors of the

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

On behalf of the Board of Directors

────────────────────

Lee Kian Soo

Director

────────────────────

Chew Thiam Keng

Director

Singapore

29 February 2008


Annual Report 2007

19

STATEMENT BY DIRECTORS ……….

In our opinion:

(a) the financial statements set out on pages 21 to 64 are drawn up so as to give a true and fair view of the state of

affairs of the Group and of the Company as at 31 December 2007 and the results, changes in equity and cash

flows of the Group for the year ended on that date in accordance with the provisions of the Singapore

Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(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, authorised these financial statements for issue.

On behalf of the Board of Directors

────────────────────

Lee Kian Soo

Director

────────────────────

Chew Thiam Keng

Director

Singapore

29 February 2008


Annual Report 2007

20

INDEPENDENT AUDITORS’ REPORT ……….

Members of the Company


We have audited the financial statements of Ezion Holdings Limited (formerly known as Nylect Technology Limited)

(the “Company”) and its subsidiaries (the “Group”), which comprise the balance sheets of the Group and the

Company as at 31 December 2007, the income statement, statement of changes in equity and cash flow statement of

the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as

set out on pages 21 to 64. The financial statements for the year ended 31 December 2006 were audited by another

firm of auditors whose report dated 2 March 2007 expressed an unqualified opinion on those financial statements.

Directors’ responsibility for the financial statements

The Company’s directors are responsible for the preparation and fair presentation of these financial statements in

accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial

Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant

to the preparation and fair presentation of financial statements that are free from material misstatement, whether due

to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are

reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit

in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are

free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of

material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,

the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial

statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors,

as well as evaluating the overall presentation of the financial statements.

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

opinion.

Opinion

In our opinion:

(a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn

up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and

fair view of the state of affairs of the Group and of the Company as at 31 December 2007 and the results,

changes in equity and cash flows of the Group for the year ended on that date; and

(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.

KPMG

Certified Public Accountants

Singapore

29 February 2008


Annual Report 2007

21

BALANCE SHEETS ……….

As at 31 December 2007

Group Company

Note 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Non-current assets

Property, plant and equipment 3 76,354 4,555 268 –

Investment properties 4 – 600 – –

Subsidiaries 5 – – 44,117 4,342

Joint ventures 6 4,814 – 4,786 –

Other assets 7 177 44 – –

81,345 5,199 49,171 4,342

Current assets

Inventories 8 – 252 – –

Trade and other receivables 9 4,767 8,561 984 40

Other investment 10 – 11 – –

Cash and cash equivalents 11 64,879 5,968 60,736 61

69,646 14,792 61,720 101

Total assets 150,991 19,991 110,891 4,443

Equity attributable to equity holders

of the Company

Share capital 13 117,926 12,862 117,926 12,862

Reserves 14 (1,900) 33 – –

Accumulated losses (4,564) (8,675) (8,623) (8,651)

111,462 4,220 109,303 4,211

Minority interests – 318 – –

Total equity 111,462 4,538 109,303 4,211

Non-current liabilities

Financial liabilities 16 20,769 321 396 –

Current liabilities

Trade and other payables 17 12,865 9,062 802 216

Financial liabilities 16 5,512 5,734 145 –

Provision for taxation 365 271 227 –

Employee benefits 18 18 65 18 16

18,760 15,132 1,192 232

Total liabilities 39,529 15,453 1,588 232

Total equity and liabilities 150,991 19,991 110,891 4,443

The accompanying notes form an integral part of these financial statements.


Annual Report 2007

22

CONSOLIDATED INCOME STATEMENT

……….

Financial year ended 31 December 2007

Group

Note 2007 2006

$’000 $’000

Continuing operations

Revenue 19 13,505 –

Cost of sales and servicing (6,925) –

Gross profit 6,580 –

Other income 204 360

Administrative expenses (2,037) (380)

Other expenses (575) –

Results from operating activities 4,172 (20)

Finance income 583 182

Finance expense (429) –

Net finance income 21 154 182

Share of results of joint ventures, net of tax 28 –

Profit before income tax 20 4,354 162

Income tax expense 22 (901) –

Profit from continuing operations 3,453 162

Discontinued operations

Profit from discontinued operations, net of tax 24 565 121

Profit for the year 4,018 283

Attributable to:

Equity holders of the Company 4,111 274

Minority interests (93) 9


Earnings per share

Continuing and discontinued operations

Basic earnings per share (cents) 23 0.86 0.16

Diluted earnings per share (cents) 23 0.86 0.16


Basic earnings per share (cents) 23 0.72 0.10

Diluted earnings per share (cents) 23 0.72 0.10



Annual Report 2007

23

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ……….



Share

Capital

Share

premium

Foreign

currency

translation

reserve

Statutory

reserve

Accumulated

losses

Total

attributable

to equity

holders

of the

Company

Minority

interests

Total

equity

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2006 12,607 255 50 31 (8,914) 4,029 317 4,346

Exchange differences on translation of financial statements of

foreign operations recognised directly in equity – – (83) – – (83) (8) (91)

Profit for the year – – – – 274 274 9 283

Total recognised income and expense for the year – – (83) – 274 191 1 192

Transfer from share premium account to share capital upon

implementation of the Companies (Amendment) Act 2005 255 (255) – – – – – –

Appropriation to statutory reserve – – – 35 (35) – – –

At 31 December 2006 12,862 – (33) 66 (8,675) 4,220 318 4,538

Exchange differences on translation of financial statements of

foreign operations recognised directly in equity – – (1,900) – – (1,900) 8 (1,892)

Profit for the year – – – – 4,111 4,111 (93) 4,018

Total recognised income and expense for the year – – (1,900) – 4,111 2,211 (85) 2,126

Issue of shares 107,328 – – – – 107,328 – 107,328

Share issue expenses (2,264) – – – – (2,264) – (2,264)

Disposal of subsidiaries – – 33 (66) – (33) (233) (266)

At 31 December 2007 117,926 – (1,900) – (4,564) 111,462 – 111,462


Annual Report 2007

24

CONSOLIDATED CASH FLOW STATEMENT ……….


Note 2007 2006

$’000 $’000

Operating activities


Adjustments for:

Income tax expense 22 912 24

Depreciation expense 3 1,134 265

Decrease in fair value of investment property – 20

Fair value gain on current investments (8) (7)

Gain on disposal of property, plant and equipment – (103)

Gain on sale of discontinued operations (23) –

Interest expense 585 344

Interest income (629) (105)

Reversal of impairment losses on other assets – (5)

Reversal of impairment losses on leasehold properties – (71)

Share of results of joint ventures (28) –

Operating profit before changes in working capital 5,961 645

Changes in working capital:

Inventories (85) 4

Trade and other receivables (601) 1,800

Employee benefits 2 27

Trade and other payables 39 (1,718)

Cash generated from operations 5,316 758

Income taxes paid (664) –

Cash flows from operating activities 4,652 758

Investing activities

Disposal of discontinued operations, net of cash disposed of 24 2,301 –

Interest received 515 105

Payment for investing in joint ventures (4,786) –

Pledged fixed deposits 3,125 (8)

Proceeds from disposal of property, plant and equipment – 132

Purchase of property, plant and equipment (71,266) (144)

Cash flows from investing activities (70,111) 85

Financing activities

Interest paid (294) (344)

Net proceeds from issue of new shares 105,064 –

Proceed from borrowings 27,960 –

Repayment of borrowings (815) (239)

Repayment of finance leases (20) (106)

Cash flows from financing activities 131,895 (689)

Net increase in cash and cash equivalents 66,436 154

Cash and cash equivalents at beginning of the year (1,667) (1,747)

Effect of exchange rate fluctuations 110 (74)

Cash and cash equivalents at end of the year 11 64,879 (1,667)

During the financial year ended 31 December 2007, the Group acquired property, plant and equipment with an aggregate

cost of $80,574,000 of which $9,308,000 were amounts owing to third party.

During the last financial year ended 31 December 2006, the Group acquired property, plant and equipment with an

aggregate cost of $244,000 of which $100,000 were acquired by means of finance lease.



Annual Report 2007

25

NOTES TO THE FINANCIAL STATEMENTS ……….

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 29 February 2008.

1 Domicile and activities

Ezion Holdings Limited (formerly known as Nylect Technology Limited) (the “Company”) is incorporated in the

Republic of Singapore and has its registered office at 15, Hoe Chiang Road, #13-03 Tower Fifteen, Singapore

089316.

On 24 August 2007, the Company changed its name from Nylect Technology Limited to Ezion Holdings Limited.

The principal activities of the Company are those of an investment holding company and provision of management

services to its subsidiaries. For the financial year ended 31 December 2006, the Group was engaged in the

Mechanical, Electrical and Fabrication division. During the current financial year, the Group diversified into the

provision of offshore and marine services. Subsequently, the Group disposed its interests in the Mechanical,

Electrical and Fabrication division as disclosed in note 24 to the financial statements. The principal activities of the

subsidiaries are set out in note 5 to the financial statements.

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”)

and the Group’s interests in joint ventures.

2 Summary of significant accounting policies

2.1 Basis of preparation

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

New/Revised FRSs/INT FRSs that came into effect for the first time for 2007

In 2007, the Group adopted the following new/revised FRSs/INT FRSs which are relevant to its operations:

FRS 32 (revised) Financial Instruments: Presentation

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

Statements: Capital Disclosures

INT FRS 108 Scope of FRS 102

INT FRS 110 Interim Financial Reporting and Impairment

The initial adoption of the above mentioned new/revised FRS and INT FRS in 2007 has no material impact on the

financial statement of the Group’s financial result and position for the year ended 31 December 2007, except for the

extensive additional disclosures with respect to the Group’s financial instruments and share capital. The Group’s

comparative information in relation to FRS 107 was not disclosed in the financial statements as the operations were

discontinued, as discussed in note 24.

The financial statements have been prepared on the historical cost basis except for the following assets and liabilities

which are stated at fair value; investment properties and non-current assets and disposal groups held for sale are

measured at the lower of the carrying amount and fair value less costs to sell.

The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial

information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.

The preparation of financial statements in conformity with FRS requires management to make judgements, estimates

and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,


Annual Report 2007

26


income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimates are revised and in any future periods affected.

Judgement made by management in the application of FRSs, and accounting policies that have the most significant

effect on the amounts recognised in the financial statements are discussed in note 29.

The accounting policies set out below have been applied consistently to all periods presented in these financial

statements by the Group.

2.2 Consolidation

Business combinations

Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the

fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange,

plus costs directly attributable to the acquisition.

The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities

over the cost of acquisition is credited to the consolidated income statement in the period of the acquisition.

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial

and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting

rights that are presently exercisable are taken into consideration. The financial statements of subsidiaries are

included in the consolidated financial statements from the date that control commences until the date that control

ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies

adopted by the Group.

Joint ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual

agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures are

accounted for using the equity method. The consolidated financial statements include the Group’s share of the

income, expenses and equity movements of joint ventures, after adjustments to align the accounting policies with

those of the Group, from the date that significant influence or joint control commences until the date that significant

influence or joint control ceases.

When the Group’s share of losses exceeds its interest in a joint venture, the carrying amount of that interest

(including any long-term investments) is reduced to zero and the recognition of further losses is discontinued except

to the extent that the Group has an obligation or has made payments on behalf of the investee.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions,

are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with joint

ventures are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses

are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Accounting for subsidiaries and joint ventures by the Company

Investments in subsidiaries and joint ventures are stated in the Company’s balance sheet at cost less accumulated

impairment losses.


Annual Report 2007

27


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 of the Group and balance sheet of the Company are

presented in Singapore dollars, which is the Company’s functional currency. All financial information presented in

Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.

2.4 Foreign currencies

Foreign currency transactions

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

exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the

reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary

assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the

functional currency at the exchange rate on the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in the income statement except for differences

arising on the retranslation of monetary items that in substance form part of the Group’s net investment in foreign

operations (see below), available-for-sale equity instruments and financial liabilities designated as hedges of the net

investment in a foreign operation (see note 2.8).

Foreign operations

The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the

reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates

prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign

operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operation and translated at the

closing rate. For acquisitions prior to 1 January 2006, the exchange rates at the date of acquisition were used.

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

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

income statement.

Net investment in foreign operations

Exchange differences arising from monetary items that in substance form part of the Company’s net investment in a

foreign operation are recognised in the Company’s income statement. Such exchange differences are reclassified to

equity in the consolidated financial statements. When the foreign operation is disposed of, the cumulative amount in

equity is transferred to the income statement as an adjustment to the profit or loss arising on disposal.

2.5 Property, plant and equipment

Owned assets

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

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as

separate items (major components) of property, plant and equipment.

Costs incurred on subsequent dry-docking of vessels are capitalised and depreciated over the shorter of period to

next estimated dry-docking and five years. When significant dry-docking costs are incurred prior to the expiry of the

depreciation period, the remaining costs of the previous dry-docking are written off in the month of the next dry-

docking.


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28


Leased assets

Leases of assets in which the Group assumes substantially all the risks and rewards of ownership are classified as

finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases is capitalised

at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition,

the asset is stated at cost less accumulated depreciation and impairment losses. Leased assets are depreciated over

the shorter of the lease term and their estimated useful lives.

Subsequent expenditure

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item

if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be

measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the

income statement as incurred.

Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the

difference between the estimated net sale proceeds and the carrying amount of the asset and are recognised in the

income statement on the date of retirement or disposal.

Depreciation

Depreciation on other property, plant and equipment is recognised in the income statement on a straight-line basis

over the estimated useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment as

follows:

Vessels 20 – 25 years

Assets on board the vessels 3 – 10 years

Freehold building 33 years

Leasehold properties over terms of lease which is between 20 – 60 years

Plant and equipment 3 – 10 years

Depreciation method, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting

date.

No depreciation is provided on vessels under construction.

2.6 Intangible assets

Goodwill

Goodwill and negative goodwill arise on the acquisition of subsidiaries and joint ventures. Goodwill represents the

excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities

and contingent liabilities of the acquiree.

When the excess is negative (negative goodwill), it is recognised immediately in the consolidated income statement.

Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill arising on the acquisition

of joint ventures is presented together with investments in joint ventures.

Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in

note 2.10.

Acquisitions of minority interest

Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the


Annual Report 2007

29


additional investment over the carrying amount of the net assets acquired at the date of exchange.

Other intangible assets

Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less

accumulated amortisation and impairment losses. Other intangible assets are amortised in the income statement on a

straight-line basis over their estimated useful lives, from the date on which they are available for use.

2.7 Investment properties

Investment property is property held either to earn rental income or capital appreciation or both. It does not include

properties for sale in the ordinary course of business, used in the production or supply of goods or services, or for

administrative purposes.

Investment property is measured at fair value, with any change recognised in the income statement.

2.8 Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables,

cash and cash equivalents, financial liabilities, and trade and other payables.

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

profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial

instruments are measured as described below.

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument.

Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire

or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the

risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date,

i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the

Group’s obligations specified in the contract expire or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on

demand and form an integral part of the Group’s cash management are included as a component of cash and cash

equivalents for the purpose of the consolidated cash flow statement.

Financial assets at fair value through profit or loss

An instrument is classified as at fair value through profit or loss if it is acquired principally for the purpose of selling in

the short term or is designated as such upon initial recognition. Financial instruments are designated as fair value

through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their

fair value in accordance with the Group’s documented risk management and investment strategies. Upon initial

recognition, attributable transaction costs are recognised in the income statement when incurred. Financial

instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in the

income statement.

Held-to-maturity investments

If the Group has the positive intent and ability to hold debt securities to maturity, they are classified as held-to-

maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any

impairment losses.


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30


Available-for-sale financial assets

The Group’s investments in certain equity securities are classified as available-for-sale financial assets if they are not

classified in any of the other categories. Subsequent to initial recognition, they are measured at fair value and

changes therein, other than for impairment losses, and foreign exchange gains and losses on available-for-sale

monetary items (see note 2.4), are recognised directly in equity. When an available-for-sale financial asset is

derecognised, the cumulative gain or loss in equity is transferred to the income statement.

Other non-derivative financial instruments

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less

any impairment losses.

Derivative financial instruments and hedging activities

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.

Embedded derivatives are separated from the host contract and accounted for separately if the economic

characteristics and risks of the host contract and the embedded derivative are not closely related, a separate

instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the

combined instrument is not measured at fair value, through profit or loss.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the income statement

when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are

accounted for as described below.

Cash flow hedges

Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised

directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair

value are recognised in the income statement.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or

exercised, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in

equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount

recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the

amount recognised in equity is transferred to the income statement in the same period that the hedged item affects

profit or loss.

Fair value hedges

Changes in the fair value of a derivative hedging instrument designated as a fair value hedge are recognised in the

income statement. The hedged item also is stated at fair value in respect of the risk being hedged; the gain or loss

attributable to the hedged risk is recognised in the income statement and the carrying amount of the hedged item is

adjusted.

Hedge of net investment in a foreign operation

Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net

investment in a foreign operation are recognised in the Company’s income statement. On consolidation, such

differences are recognised directly in equity, in the foreign currency translation reserve, to the extent that the hedge is

effective. To the extent that the hedge is ineffective, such differences are recognised in the income statement. When

the hedged net investment is disposed of, the cumulative amount in equity is transferred to the income statement as

an adjustment to the profit or loss on disposal.


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31


Economic hedges

Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities

denominated in foreign currencies. Changes in the fair value of such derivatives are recognised in the income

statement as part of foreign currency gains and losses.

Separable embedded derivatives

Changes in the fair value of separable embedded derivatives are recognised immediately in the income statement.

Impairment of financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is

impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have

had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between

its carrying amount, and the present value of the estimated future cash flows discounted at the original effective

interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its

current fair value.

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

assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale

financial asset recognised previously in equity is transferred to the income statement.

Impairment losses in respect of financial assets measured at amortised cost are reversed if the subsequent increase

in fair value can be related objectively to an event occurring after the impairment loss was recognised.

Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not

reversed through the income statement. Any subsequent increase in fair value of such assets is recognised directly in

equity.

Intra-group financial guarantees

Financial guarantees are financial instruments issued by the Group that requires the issuer to make specified

payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet payment when due in

accordance with the original or modified terms of a debt instrument.

Financial guarantees are recognised initially at fair value and are classified as financial liabilities. Subsequent to initial

measurement, the financial guarantees are stated at the higher of the initial fair value less cumulative amortisation

and the amount that would be recognised if they were accounted for as contingent liabilities. When financial

guarantees are terminated before their original expiry date, the carrying amount of the financial guarantees is

transferred to the income statement.

Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a

deduction from equity, net of any tax effects.

Where share capital recognised as equity is repurchased (treasury shares), the amount of the consideration paid,

including directly attributable costs, net of any tax effects, is presented as a deduction from equity. Where such


Annual Report 2007

32


shares are subsequently reissued, sold or cancelled, the consideration received is recognised as a change in equity.

No gain or loss is recognised in the income statement.

2.9 Leases

When entities within the Group are lessees of a finance lease

Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as

finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases are

capitalised at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial

recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased

assets are depreciated over the shorter of the lease term and their estimated useful lives. Lease payments are

apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each

period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the

liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining

term of the lease when the lease adjustment is confirmed.

At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even

though the arrangement is not in the legal form of a lease.

When entities within the Group are lessees of an operating lease

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in

the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in

the income statement as an integral part of the total lease payments made. Contingent rentals are charged to the

income statement in the accounting period in which they are incurred.

When entities within the Group are lessors of an operating lease

Rental income (net of any incentives given to lessees) from investment properties are recognised on a straight-line

basis over the lease term.

2.10 Impairment – non-financial assets

The carrying amounts of the Group’s non-financial assets, other than investment properties, inventories and deferred

tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any

such indication exists, the assets’ recoverable amounts are estimated. For goodwill, the recoverable amount is

estimated at each reporting date, and as and when indicators of impairment are identified.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated

recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that

largely are independent from other assets and groups. Impairment losses are recognised in the income statement

unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses

recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill

allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro

rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less

costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the

asset or cash-generating unit.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in

prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable


Annual Report 2007

33


amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the

carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had

been recognised.

Reversals of impairment losses are recognised in the income statement.

2.11 Club memberships

Club memberships are stated at cost less accumulated impairment losses.

2.12 Inventories

Inventories are stated at the lower of cost and net realisable value.

Inventories valued at cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their

present location and condition on a first-in-first-out basis less any applicable allowance for obsolescence. When

inventories are consumed, the carrying amount of those inventories is recognised in the income statement in the year

in which the consumption occurs.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of

completion and selling expenses.

2.13 Contract work-in-progress

Contract work-in-progress represents the gross unbilled amount expected to be collected from customers for contract

work performed to-date.

Contract work-in-progress at the reporting date are recorded in the balance sheet at cost plus attributable profits less

recognised losses, allowance for foreseeable losses and net of progress billings, and are presented in the balance

sheet as “Contract work-in-progress” (as an asset) or “Excess of progress billings over work-in-progress” (as a

liability) as applicable. Contract costs include cost of direct materials, direct labour and costs incurred in connection

with the construction and an allocation of fixed and variable overheads incurred in the Group’s contract activities

based on normal operating activities. Allowance is made where applicable for any foreseeable losses on

uncompleted contracts as soon as the possibility of the loss is ascertained.

Progress billings not yet paid by the customers are included in the balance sheet under “Trade receivables”. Amounts

received before the related work is performed are included in the balance sheet, as a liability, as “Advances on

construction work”.

2.14 Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income

statement as incurred.

Short-term employee benefits

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

service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if

the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the

employee and the obligation can be estimated reliably.


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34


Share-based payments

The share option programme allows the Group employees to acquire shares of the Company. The fair value of

options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is

measured at grant date and spread over the vesting period during which the employees become unconditionally

entitled to the options. At each reporting date, the Company revises its estimates of the number of options that are

expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense

and with a corresponding adjustment to equity over the remaining vesting period.

The proceeds received net of any directly attributable transactions costs are credited to share capital when the

options are exercised.

2.15 Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that

can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the

obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects

current market assessments of the time value of money and the risks specific to the liability.

2.16 Revenue recognition

Sale of goods

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of

returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and

rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated

costs and possible return of goods can be estimated reliably, there is no continuing management involvement with

the goods, and the amount of revenue can be measured reliably.

Rendering of services

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

Rental income

Rental income receivable under operating leases is recognised in the income statement on a straight-line basis over

the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income to be

received. Contingent rentals are recognised as income in the accounting period in which they are earned.

Contract revenue

As soon as the outcome of a construction contract can be estimated reliably, contract revenue and costs are

recognised in the income statement in proportion to the stage of completion of the contract, measured by the

proportion of contract costs incurred for work performed to-date to the estimated total contract costs for each

contract. Contract costs consist of costs that relate directly to the specific project, costs that are attributable to

contract activity in general and can be allocated to the project and such other costs as are specifically chargeable to

the customer under the terms at the contract.

Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and

incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an

expense in the income statement immediately.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the

extent of contract costs incurred that are likely to be recoverable and contract costs are recognised in the income

statement as an expense in the period in which they are incurred.


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35


Charter income

Charter income from vessel is recognised in the income statement on a straight-line basis over the respective term of

the charter.

Management services fees

Management services fees are recognised when the related services are rendered.

2.17 Finance income and expenses

Finance income comprises interest income on bank deposit, dividend income and gains on the disposal of available-

for-sale financial assets that are recognised in the income statement. Interest income is recognised as it accrues,

using the effective interest method. Dividend income is recognised on the date that the Group’s right to receive

payment is established, which in the case of quoted securities is the ex-dividend date.

Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, and

impairment losses recognised on financial assets that are recognised in the income statement. All borrowing costs

are recognised in the income statement using the effective interest method, except to the extent that they are

capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily

takes a substantial period of time to be prepared for its intended use or sale.

2.18 Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement

except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively

enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial

recognition of assets or liabilities in a transaction that is not a business combination and that affects neither

accounting nor taxable profit, and differences relating to investments in subsidiaries and joint ventures to the extent

that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that

are expected to be applied to the temporary differences when they reverse, based on the laws that have been

enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a

legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same

tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and

assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against

which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are

reduced to the extent that it is no longer probable that the related tax benefit will be realised.

2.19 Discontinued operations

A discontinued operation is a component of the Group’s business that represents a separate major line of business or

geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively

with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets

the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the

comparative income statement is restated as if the operation had been discontinued from the start of the comparative

period.


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36


3 Property, plant and equipment

Note

Freehold

building

Leasehold

properties Vessels

Assets on

board the

vessels

Vessels

under

construction

Plant and

equipment Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

Cost

At 1 January 2006 177 6,735 – – – 2,021 8,933

Additions – – – – – 244 244

Disposals – – – – – (482) (482)

Translation differences on consolidation (2) (23) – – – (3) (28)

At 31 December 2006 175 6,712 – – – 1,780 8,667

Additions – – 43,267 3,956 33,000 351 80,574

Transfer to disposal group 24 (179) (6,724) – – – (1,799) (8,702)

Translation differences on consolidation 4 12 (1,730) (158) (1,320) 2 (3,190)

At 31 December 2007 – – 41,537 3,798 31,680 334 77,349

Accumulated depreciation and impairment losses

At 1 January 2006 16 2,666 – – – 1,690 4,372

Depreciation charge for the year 1 92 – – – 172 265

Reversal of impairment loss – (71) – – – – (71)

Disposals – – – – – (452) (452)

Translation differences on consolidation – – – – – (2) (2)

At 31 December 2006 17 2,687 – – – 1,408 4,112

Depreciation charge for the year – 35 728 245 – 126 1,134

Transfer to disposal group 24 (18) (2,723) – – – (1,474) (4,215)

Translation differences on consolidation 1 1 (28) (10) – – (36)

At 31 December 2007 – – 700 235 – 60 995

Carrying amount

At 1 January 2006 161 4,069 – – – 331 4,561

At 31 December 2006 158 4,025 – – – 372 4,555

At 31 December 2007 – – 40,837 3,563 31,680 274 76,354


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37


(i) As discussed in note 24, the Group has disposed the property, plant and equipment under the discontinued

operations. The net book value relating to the disposal amounted to $4,487,000.

(ii) The vessels are pledged to secure the term loan facilities granted by financial institutions (note 16).

(iii) A motor vehicle included in plant and equipment is held in trust by a director of the Company.

The depreciation expense and impairment loss are charged as follows:

Group

2007 2006

$’000 $’000

Cost of sale 972 –

Administrative expenses 162 265

Other credits/(charges) – (71)

1,134 194

Plant and

equipment Total

$’000 $’000

Company

Cost

At 1 January 2006 and 2007 – –

Additions 329 329

At 31 December 2007 329 329

Accumulated depreciation and impairment losses

At 1 January 2006 and 2007 – –

Depreciation charge for the year 61 61

At 31 December 2007 61 61

Carrying amount

At 1 January 2006 and 31 December 2006 – –

At 31 December 2007 268 268


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38


4 Investment properties

Group

Note 2007 2006

$’000 $’000

At 1 January 600 620

Revaluation decrease included in income statement under

other charges

– (20)

Transfer to disposal group 24 (600) –

At 31 December – 600

Rental income – 17

Direct operating expense (including repairs and maintenance)

arising from investment property that generated rental income

during the year

– 13

The investment properties are stated at fair value on the existing use basis to reflect the actual market state and

circumstances as of the balance sheet date and not as of either a past or future date. The fair value was based on a

valuation made by CKS Property Consultants Pte Ltd, a firm of independent professional valuers. A gain or loss

arising from a change in the fair value is included in the reserves except that a debit balance in the reserve account is

included in the income statement for the period in which it arises. The revaluations are made yearly.

Investment properties of the group are as follows:

1 A 3rd

storey warehouse unit within a 6-storey industrial development building. It is a freehold unit used as office

cum store with gross floor area of 167 sq.m., located at 30 Mandai Estate #03-07 “Mandai Industrial Building”

Singapore 729918; and

2 A flatted factory unit located on the 3rd

storey of a 6-storey building with semi-basement car park within a light

industrial development building. It is a leasehold property with 60 years lease commencing 9 January 1995

used as office cum store with gross floor area of 160 sq.m., located at 23 Woodlands Industrial Park E1 #03-02

“Admiralty Industrial Park” Singapore 757741.

5 Subsidiaries

Company

2007 2006

$’000 $’000

Equity investments, at cost 2,414 9,854

Impairment losses (200) (8,550)

Loan to subsidiaries 41,903 3,038

44,117 4,342

Loan to subsidiaries which form part of the Company’s net investments in subsidiaries are interest-free (2006:

6.375% per annum), unsecured and settlement is neither planned nor likely to occur in the foreseeable future.


Annual Report 2007

39


Details of the subsidiaries are as follows:

Name of subsidiary Principal activities Country of

incorporation

Equity held by the

Group 2007 2006 % %


Teras Transporter 2 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras 335 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras 336 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Northern Offshore Pte Ltd Shipping agent and provision of ship chartering

services, ship management services and engineering works

Singapore 100 –

Teras Offshore Pte Ltd Shipping agent and provision of ship chartering

services, ship management services and engineering works

Singapore 100 –

Teras Transporter Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras 331 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras 338 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras 339 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras 3652 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras 281 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras Conquest 1 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Teras Conquest 2 Pte Ltd Ship owner and provision of ship chartering services Singapore 100 – Northern Offshore (Australia) Pty Ltd

Shipping agent and provision of ship chartering services

Australia 100 –


MST Precision Pte Ltd Customised design and manufacture of

enclosures/frames for telecommunication and data communication markets

Singapore – 60

Nylect Engineering Pte Ltd and its subsidiaries

Mechanical and electrical design and installation and investment holding

Singapore – 100

Nylect Engineering (M) Sdn Bhd

Mechanical and electrical design and installation Malaysia – 70

Shanghai Nylect

Engineering Consultant Co., Ltd

Mechanical and electrical design and consultation services

People’s Republic of China

– 60

NEPL Pte Ltd Mechanical and electrical design and installation Singapore – 100 Shanghai Nylect Engineering Co., Ltd.

Mechanical and electrical design and installation People’s Republic of China

– 100

PT Nylect Indonesia Mechanical and electrical works Indonesia – 100 NT Industries Co., Ltd Mechanical and electrical design and installation People’s Republic

of China – 100


Annual Report 2007

40


KPMG Singapore is the auditor of all significant Singapore-incorporated subsidiaries.

RSM Chio Lim was the auditor of the discontinued operations.

For this purpose, a subsidiary is considered significant as defined under the Singapore Exchange Limited Listing

Manual if its net tangible assets represent 20% or more of the Group’s consolidated net tangible assets, or if its pre-

tax profits account for 20% or more of the Group’s consolidated pre-tax profits.

6 Joint ventures

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Investment in joint ventures 1,493 – 1,465 –

Loans to joint ventures 3,321 – 3,321 –

4,814 – 4,786 –

The loans to joint ventures are unsecured and settlement is neither planned nor likely to occur in the foreseeable

future. These loans form part of the Company’s net investments in the joint ventures. The loans bear fixed interest

rate at 8% per annum.

Details of significant joint ventures are as follows:

Name of joint ventures Country of incorporation

Equity held

by the Group

2007 2006

% %

Singapore Ocean Hotels Pte Ltd and its subsidiaries: Singapore 50 –

Ocean H1 Ltd British Virgin Islands 50 –

Ocean H2 Ltd British Virgin Islands 50 –

Eminent Offshore Logistics Pte Ltd and its subsidiaries: Singapore 50 –

Eminent 237 Pte Ltd Singapore 50 –







KPMG Singapore is the auditor of all significant Singapore-incorporated joint ventures. For this purpose, a company

is considered significant as defined under the Singapore Exchange Limited Listing Manual if the Group’s share of its

net tangible assets represent 20% or more of the Group’s consolidated net tangible assets, or if the Group’s share of

its pre-tax profits accounts for 20% or more of the Group’s consolidated pre-tax profits.

The summarised financial information of the joint ventures represents the Group’s share.


Annual Report 2007

41


The financial information of the Group’s interests in the joint ventures are as follows:

Joint ventures

2007 2006

$’000 $’000

Assets and liabilities

Non-current assets 2,673 –

Current assets 2,488 –

Total assets 5,161 –

Current liabilities (473) –

Non-current liabilities – –

Total liabilities (473) –

Results

Revenue 152 –

Expenses (124) –

Profit after taxation 28 –

Capital commitments in relation to interest in joint ventures 78,202 –

Group’s share of joint ventures’ capital commitments 39,101 –

7 Other assets

Group

2007 2006

$’000 $’000

Club memberships, at cost – 191

Impairment losses – (147)

Net club memberships – 44

Refundable deposits 177 –

177 44

The above club memberships were held in trust by a director.

8 Inventories

Group

2007 2006

$’000 $’000

Raw material and consumables – 63

Work-in-progress – 39

Finished goods and goods for resale – 150

– 252

In 2007, raw materials and consumables, and changes in finished goods and work-in-progress, were recognised in

“Discontinued operations” (Note 24).


Annual Report 2007

42


9 Trade and other receivables

Group Company

Note 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Trade receivables 3,892 5,594 20 –

Impairment losses (260) (101) – –

Net trade receivables 3,632 5,493 20 –

Long-term contract receivables 12 – 1,281 – –

Unbilled contract revenue – 1,566 – –

Other receivables 14 51 1 –

Deposits 236 82 33 –

Prepayments 283 48 6 40

Advance to suppliers 6 17 2 –

Interest receivables 68 – 67 –

Tax recoverable – 22 – –

Amount due from related party (trade) 402 1 – –

Amount due from subsidiaries (trade) – – 830 –

Amount due from joint venture (non-trade) 25 – 25 –

Others 101 – – –

4,767 8,561 984 40

Trade receivables for the Group include retention sums relating to contract work-in-progress of $Nil (2006: $363,000).

Outstanding balances with related party, joint venture and subsidiaries are unsecured. There is no allowance for

doubtful debts arising from the outstanding balances.

The Group’s primary exposure to credit risk relating to trade receivables arising mainly from the chartering income

undertaken by the subsidiaries. These customers are internationally dispersed, engage in a wide spectrum of

offshore activities, and sell in a variety of end markets. Management believes that no additional credit risk beyond

amounts provided for collection losses is inherent in the Group’s trade receivables.

The maximum exposure to credit risk for loans and receivables at the reporting date (by type of customer) is:

Group Company

2007 2007 2006

$’000 $’000 $’000

Multi-national companies 2,368 – –

Small-medium enterprises 1,194 – –

Government related entities 70 20 –

Related parties 427 855 –

4,059 875 –

The Group’s most significant customer, a multi-national company, accounts for $811,000 of the trade receivables

carrying amount at 31 December 2007.


Annual Report 2007

43


Impairment losses

The ageing of loans and receivables at the reporting date is:

Group Company

Gross

Impairment

Losses Gross

Impairment

losses

2007 2007 2007 2007

$’000 $’000 $’000 $’000

Not past due 1,739 (260) 20 –

Past due 0 – 30 days 1,790 – 830 –

Past due 31 – 120 days 790 – 25 –

4,319 (260) 875 –

The change in impairment loss in respect of trade receivables during the year is as follows:

Group

2007

$’000

At 1 January 101

Impairment loss recognised 260

Transfer to disposal group (101)

At 31 December 260

Based on historical default rates, the Group believes that no impairment allowance is necessary in respect of trade

receivables past due up to 120 days. These receivables are mainly arising by customers that have a good record with

the Group.

10 Other investment

Group

2007 2006

$’000 $’000

Equity securities held for trading – 11

11 Cash and cash equivalents

Group Company

Note 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Cash at bank and in hand 8,636 2,843 5,933 61

Fixed deposits 56,243 3,125 54,803 –

64,879 5,968 60,736 61

Bank overdrafts 16 – (4,510)

Restricted cash 16(b) – (3,125)

Cash and cash equivalents in the cash

flow statement

64,879

(1,667)


Annual Report 2007

44


The rate of interest for the cash on interest earning accounts is between 0.5% to 5.48% per annum, receivable from

daily to monthly basis (2006: 1.70% to 5.77% per annum, receivable from monthly to yearly basis). These

approximate the weighted effective interest rate.

12 Contract work-in-progress

Group

Note 2007 2006

$’000 $’000

Aggregate amount of costs incurred and recognised profits/

(less recognised losses) to date on uncompleted contracts – 32,362

Less: progress payments received and receivable to date – (31,884)

Net amount due from contract customers at end of year – 478

Comprising:

Work-in-progress 9 – 1,281

Excess of progress billings over work-in-progress 17 – (803)

– 478

13 Share capital

Group and Company

2007 2006

No. of shares No. of shares

(’000) $’000 (’000) $’000

Issued and fully paid ordinary shares, with no par value:

At 1 January 84,048 12,862 84,048 12,607

Shares issued during the year 237,941 105,064 – –

Sub-division of each shares 321,989 – – –

Transfer of share premium balance – – – 255

At 31 December 643,978 117,926 84,048 12,862

(a) On 22 February 2007, the Company increased its issued and paid up capital from $12,862,000 to $20,671,000

(after deducting expenses) via the placement of 145,000,000 new ordinary shares for cash at an issue price of

$0.056 per share. The newly issued shares rank pari passu in all respects with the previously issued shares.

(b) On 4 May 2007, the Company increased its issued and paid up capital from $20,671,000 to $27,344,000 (after

deducting expenses) via the placement of 16,800,000 new ordinary shares for cash at an issue price of

$0.42107 per share. The newly issued shares rank pari passu in all respects with the previously issued shares.

(c) On 20 July 2007, the Company increased its issued and paid up capital from $27,344,000 to $63,979,000 (after

deducting expenses) via the placement of 28,810,000 new ordinary shares for cash at an issue price of $1.2914

per share. The newly issued shares rank pari passu in all respects with the previously issued shares.

(d) On 7 September 2007, the Company increased its issued and paid up capital from $63,979,000 to $83,721,000

(after deducting expenses) via the placement of 4,200,000 and 14,252,000 new ordinary shares for cash at an

issue price of $0.42107 and $1.2914 per share, respectively. The newly issued shares rank pari passu in all

respects with the previously issued shares.


Annual Report 2007

45


(e) On 10 December 2007, the Company increased its issued and paid up capital from $83,721,000 to $117,926,000 (after deducting expenses) via the placement of 28,879,000 new ordinary shares for cash at an issue price of $1.21 per share. The newly issued shares rank pari passu in all respects with the previously issued shares.

(f) On 26 December 2007, the Company sub-divided each existing ordinary share in the capital of the Company

into two ordinary shares of the Company. The Company's share capital after the share sub-division comprises of 643,978,000 issued and fully paid ordinary shares. All new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.

(g) The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from

time to time and are entitled to one vote per share at meetings of the Company. All shares (excluding treasury shares) rank equally with regard to the Company’s residual assets.

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by the average total shareholders’ equity excluding minority interest. There were no changes in the Group’s approach to capital management during the year. The vessels owning companies are required to have a minimum share capital of $100,000 as required by the Maritime and Port Authority of Singapore.

14 Reserves

Foreign currency translation reserve

The foreign currency translation reserve comprises: (a) foreign exchange differences arising from the translation of the financial statements of foreign operations whose

functional currencies are different from the functional currency of the Company; (b) the gains or losses on instruments used to hedge the Company’s net investment in foreign operations that are

determined to be effective hedges; and (c) the exchange differences on monetary items which form part of the Group’s net investment in foreign operations,

provided certain conditions are met. Statutory reserve

The subsidiaries incorporated in the People’s Republic of China (“PRC”) are required by the PRC regulations to appropriate 10% of the net profit after tax (after offsetting all recognised tax losses carried forward from previous financial years) arrived at in accordance with PRC Generally Accepted Accounting Principles each year to statutory reserve. The appropriation to statutory reserve must be made before distribution of dividends to shareholders. This statutory reserve is not distributable in the form of cash dividends. The accumulated profits of the Group includes an amount of $28,000 (2006: $Nil) attributable to joint ventures.

15 Employee share options

The Employee Share Option Scheme (the Scheme) of the Company was provided by Unique Counsel Limited (“Unique Counsel”), a wholly-owned company of a controlling shareholder/director. Information regarding the Scheme are as follows: (a) The exercise price of the options shall be determined at the discretion of Unique Counsel.


Annual Report 2007

46


(b) The options shall immediately lapse without any claims against Unique Counsel in the following situation:

(i) upon the offeree ceasing to be in the employment of the Company or its subsidiaries or for any reason

whatsoever;

(ii) upon the bankruptcy of the offeree or the happening of any other event which results in his being deprived

of the legal or beneficial rights to such Offer; or

(iii) in the event of any misconduct on the part of the offeree as determined by Unique Counsel in its

discretion.

(c) All options are settled by physical delivery of shares by Unique Counsel.

Movements in the number of share options and their related weighted average exercise prices are as follows:

Weighted average

exercise price* No. of options*

2007 2007

$ (’000)

At 1 January – –

Granted 0.385 2,220

At 31 December 0.385 2,220

Exercisable at 31 December –

No options were exercised in 2007.

As at 31 December 2007, the total number of outstanding share options amounted to 2,220,000 which were granted

in 2007. The exercise period ranges from 1 January 2009 to 31 December 2011 with a weighted average exercise

price of $0.385.

The fair value of services received in return for share options granted are measured by reference to the fair value of

share options granted. The estimate of the fair value of the services received is measured based on a binominal

model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects

of non-transferability, exercise restrictions and behavioural considerations.

The details of the fair value of share options and assumptions during the year ended 31 December 2007 are as

follows:

Weighted average fair value at measurement date $0.053

Weighted average share price at the date of grant* $0.385

Expected volatility 25.0%

Expected option life Ranges from 4.6 to 4.7 years

Expected dividends 0%

Risk-free interest rate 2.5%

The expected volatility is based on the historic volatility (calculated based on the weighted average expected life of

the share options), adjusted for any expected changes to future volatility due to publicly available information.

There are no market conditions associated with the share option grants. Service conditions and non-market

performance conditions are not taken into account in the measurement of the fair value of the services to be received

at the grant date.


Annual Report 2007

47


* The weighted average price and the number of share options have been adjusted as a result of the share sub-

division on 26 December 2007.

16 Financial liabilities

Group Company

Note 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Non-current liabilities

Secured bank loans

- Bank loan (a) 20,769 – – –

- Bank loans (b) – 239 – –

Finance lease liabilities – 82 – –

Intra-group financial guarantee – – 396 –

20,769 321 396 –

Current liabilities

Bills payable (secured) (b) – 315 – –

Bank overdrafts (secured) (b) 11 – 4,510 – –

Secured bank loans

- Bank loan (a) 5,512 – – –

- Bank loans (b) – 876 – –

Finance lease liabilities – 33 – –

Intra-group financial guarantee – – 145 –

5,512 5,734 145 –

Total financial liabilities 26,281 6,055 541 –

Total loans and borrowings 26,281 6,055 – –

Intra-group financial liabilities – – 541 –

Total financial liabilities 26,281 6,055 541 –

The carrying value of long-term borrowings approximates the fair value. All the borrowings are interest bearing. The

borrowings are measured using the effective interest method.

(a) The bank loan was secured by corporate guarantee from the Company, first legal charge on the Group’s

vessel, legal assignment of the rental proceeds from the Group’s vessels, assignment of insurances in respect

of vessels in bank’s favour and all monies standing to the credit of the Group’s receiving operating account in

respect of the vessel maintained by the Group with the bank.

The bank loan is repayable over 45 instalments and 1 final instalment or otherwise specified or fixed by the

bank and it shall be repaid in full by year 2011.

(b) The bank loans were secured by corporate guarantee from the Company, first legal charge on the Group’s

leasehold property, legal assignment of the rental proceeds from the Group’s leasehold property, deed of

assignment of receivables and deed of subordination of loan from the Company and directors.

The short-term borrowings were secured by fixed deposits (note 11), all monies legal mortgage over investment

properties (note 4), first legal mortgage over a leasehold property (note 3), corporate guarantee of the


Annual Report 2007

48


Company, legal assignment of rental proceeds of a leasehold property and deed of subordination of loans from

the Company and directors.

All the bank loans (secured), bills payable (secured) and bank overdraft (secured) were disposed together with

the discontinued operations (note 24).

The corporate guarantee of the Company expires when the bank loans are fully settled.

The exposure of the borrowings to interest rate changes and the contractual repricing dates at the balance sheet

dates are as follows:

Group

2007 2006

$’000 $’000

Below 6 months 2,756 5,563

Within 6 to 12 months 2,756 138

Within 2 to 5 years 20,769 239

Total financial liabilities excluding finance lease liabilities 26,281 5,940

Finance lease liabilities

As at 31 December 2006, the Group have obligations under finance leases that are payable as follows:

<----------------- 2006 ----------------->

Principal Interest Payments

$’000 $’000 $’000

Group

Repayable within 1 year 33 7 40

Repayable after 1 year but within 5 years 82 15 97

Total 115 22 137

Terms and debt repayment schedule

Terms and conditions of outstanding loans and borrowings are as follows:

Nominal

interest

rate

<-------- 2007 --------> <-------- 2006 -------->

Year of

maturity

Face

value

Carrying

amount

Face

value

Carrying

amount

Group % $’000 $’000 $’000 $’000

Bills payable 5.75 – 6.00 2007 – – 315 315

US$ floating rate loans 6.12 – 7.25 2011 26,842 26,281 – –

S$ floating rate loans 5.75 – 6.25 2017 – – 323 323

Rmb floating rate loans 5.75 – 6.25 2015 – – 192 192

S$ floating rate loans 6.22 – 6.38 2007 – – 600 600

Finance lease liabilities 3.00 – 5.25 2008 – 2012 – – 115 115

Bank overdrafts 5.50 – 6.75 2007 – – 4,510 4,510

26,842 26,281 6,055 6,055


Annual Report 2007

49


The following are the expected contractual undiscounted cash inflows (outflows) of financial liabilities, including

interest payments and excluding the impact of netting agreements:

Carrying

amount

Cash flows

Contractual

cash flows

Within 1

year

Within 1 to

5 years

$’000 $’000 $’000 $’000

Group

2007

Non-derivative financial liabilities

Variable interest rate loans 26,281 (30,028) (6,985) (23,043)

Trade and other payables* 12,024 (12,024) (12,024) –

38,305 (42,052) (19,009) (23,043)

Company

2007

Trade and other payables* 367 (367) (367) –

2006

Trade and other payables* 89 (89) (89) –

* Excludes excess of progress billing over work-in-progress and accrued expenses

17 Trade and other payables

Group Company

Note 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Trade payables 1,146 7,302 – 2

Payables to vendor/contractor of vessels 9,308 – – –

Long-term contract payable 12 – 803 – –

Deposits and advances 728 – – –

Other payables 270 349 157 –

Amount due to related parties (trade) 247 192 – –

Amount due to a subsidiary (non-trade) – – 123 –

Amount due to a company related to a common director of

a subsidiary (non-trade)

108 – – –

Ex-director

87 87 87 87

Accrued interest payable 130 – – –

Accrued expenses 841 329 435 127

12,865 9,062 802 216

Outstanding balances with related parties are unsecured, interest-free and repayable on demand.


Annual Report 2007

50


18 Employee benefits

Group Company

Note 2007 2006 2007 2006

$’000 $’000 $’000 $’000

At 1 January 65 38 16 5

Provisions made 18 27 18 11

Provision utilised (16) – (16) –

Transfer to disposal group 24 (49) – – –

At 31 December 18 65 18 16

Employee benefits relates to accrual of unutilisation employee leave entitlements.

19 Revenue

Continuing

operations


(see note 24) Consolidated

2007 2006 2007 2006 2007 2006

$’000 $’000 $’000 $’000 $’000 $’000

Offshore logistics support services 10,865 _ – – 10,865 –

Marine services 2,640 _ – – 2,640 –

Sale of goods – _ 684 5,062 684 5,062

Contract revenue – _ 5,346 32,640 5,346 32,640

Other income – _ – 1 – 1

Rental income – _ 110 170 110 170

Total revenue 13,505 _ 6,140 37,873 19,645 37,873

20 Profit before income tax

The following items have been included in arriving at profit before income tax:

Group

2007 2006

$’000 $’000

Non-audit fees paid to:

- other auditors 16 –

Foreign exchange gains (28) –

Impairment losses on trade receivables 272 –

Staff costs 1,369 242

Employee benefits expense 18 11

Contributions to defined contribution plans, included in staff costs 93 9

Operating lease expense 1,221 –

Staff costs include key management personnel compensation as disclosed in note 28.


Annual Report 2007

51


21 Finance income and expense

Group

2007 2006

$’000 $’000

Interest income from cash at bank 520 –

Interest income from related corporations 63 182

Finance income 583 182

Interest expense on bank loans (429) –

Finance expense (429) –

Net finance income and expense recognised in income statement 154 182

22 Income tax expense

Group

2007 2006

$’000 $’000

Current tax expense

Current year 371 –

Foreign tax suffered 530 –

901 –

Income tax expense

- continuing operations 901 –

- discontinued operations 11 24

Total income tax expense 912 24

Reconciliation of effective tax rate

Profit before income tax 4,907 307

Share of results of joint ventures (net of tax) (28) –

Profit before income tax excluding share of results of joint ventures 4,879 307

Tax calculated using Singapore tax rate of 18% (2006: 20%) 878 61

Effect of different tax rates in other countries 13 49

Income not subject to tax (460) (79)

Net tax exempt income under Section 13A of Income Tax Act (890) –

Expenses not deductible for tax purposes 413 70

Overprovision in prior years – (34)

Foreign tax suffered 530 –

Unrecognised deferred tax assets during the year 258 –

Others 170 (43)

912 24


Annual Report 2007

52


23 Earnings per share

Basic and diluted earnings per share for the years ended 31 December 2006 and 2007 were based on the net profit

attributable to ordinary shareholders and weighted average number of ordinary shares, calculated as follows:

Group

2007 2006

$’000 $’000

Net profit attributable to ordinary shareholders of the Company 4,111 274

Basic and diluted earnings per share

No. of shares No. of shares

(’000) (’000)

Issued ordinary shares at 1 January 168,096 84,048

Weighted average of new shares issued during the year 156,347 –

Effect of share split 156,347 84,048

Weighted average number of ordinary shares for the purposes of

earnings per share 480,790 168,096

Diluted earnings per share is the same as basic earnings per share as the Company does not have any dilutive

potential ordinary shares.

The earnings per share for the year ended 31 December 2006 has been restated for comparable purposes as a

result of the share sub-division on 26 December 2007.

Earnings per share for continuing and discontinued operations

For the year ended 31 December 2007, earnings per share for continuing and discontinued operations have been

calculated using the profit relating to continuing operations of $3,453,000 (2006: $162,000) and the profit relating to

discontinued operations of $565,000 (2006: $121,000).

24 Discontinued operations

With effect from 30 June 2007, the Group sold both its entire mechanical and electrical design and fabrication of steel

enclosures/frames and fasteners segments. As at 31 December 2006, the segments were not classified as held for

sale. In this connection, the comparative income statement has been re-presented to show the results of the

discontinued operations separately from those of the continuing operations.


Annual Report 2007

53


The results of the discontinued operations are as follows:

Group

Period from 01/01/2007

to 30/06/2007

Year ended

31 December 2006

$’000 $’000

Revenue 6,140 37,873

Expense (7,520) (37,730)

(Loss)/Profit before income tax (1,380) 143

Income tax expense (11) (24)

(Loss)/Profit after tax from operations (1,391) 119

Other income 1,933 2

Minority interests 93 (9)

Gain on sale of discontinued operations 23 –

Income tax on gain on sale of discontinued operations – –

Profit from discontinued operations 658 112

Basis earnings per share (cents) 0.14 0.06

Diluted earnings per share (cents) 0.14 0.06

Cash flows from discontinued operations

Operating activities 1,743 (782)

Investing activities 30 85

Financing activities (274) 862

1,499 165

The effects of the disposal on individual assets and liabilities of the Group are as follows:

Note 2007

$’000

Property, plant and equipment 3 (4,487)

Investment properties 4 (600)

Inventories (337)

Current investments (19)

Trade and other receivables (4,332)

Cash and cash equivalents (6,329)

Other assets (44)

Bank overdraft 3,730

Trade and other payables 5,835

Financial liabilities 1,270

Employee benefits 18 49

Income tax payable 154

Minority interests 233

Net identifiable assets and liabilities (4,877)

Gain on disposal (23)

Cash consideration received, satisfied in cash (4,900)

Cash disposed of 2,599

Net cash flows (2,301)


Annual Report 2007

54


The corporate guarantees granted by the Company to the Disposal Group of approximately $13,315,000 has been

scheduled to be released by 31 March 2008.

25 Segment reporting

Segment information is presented in respect of the Group’s business and geographical segments. The primary format

business segment is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be

allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, loans and

expenses, corporate assets and head office expenses, and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment.

Business segments

The Group comprises the following main business segments:

(a) Offshore logistics support services division: engaged in ship owning, chartering and ship management;

(b) Marine services division: engaged in procurement of equipment and provision of management and engineering

services; and

(c) Mechanical, electrical and fabrication division: Services relating to mechanical and electrical design and

installation, spare customised design and manufacture of enclosures/frame for the telecommunication and data

communication markets (This business segment was sold in June 2007. See note 24).

Geographical segments

The businesses of the Group are operated in four principal geographical areas, namely, Singapore, Australia, East

Asia and Europe. In presenting information on the basis of geographical segments, segment revenue is based on the

geographical location of customers. Segment assets are based on the geographical location of the assets.


Annual Report 2007

55


Business segments

Offshore

logistics

support

services

Marine

services

Total continuing

operations

Mechanical,

electrical and

fabrication

(Discontinued)

Total

operations

$’000 $’000 $’000 $’000 $’000

31 December 2007

Revenue 10,865 2,640 13,505 6,140 19,645

Segment results 4,180 538 4,718 (1,380) 3,338

Unallocated expenses (1,059) – (1,059)

Unallocated income 667 7 674

Share of results of joint

ventures, net of tax 28 – 28 – 28

Recovery of

misappropriation of funds

by an ex-director – 1,926 1,926

Profit before income tax 4,354 553 4,907

Income tax expense (901) (11) (912)

Profit after tax 3,453 542 3,995

Minority interests – 93 93

Gain on disposal of

subsidiary companies – 23 23

Profit for the year 3,453 658 4,111

31 December 2006

Revenue – – – 37,873 37,873

Segment results – – – 143 143

Unallocated expense (380) – (380)

Unallocated income 542 – 542

Other income – 2 2

Profit before income tax 162 145 307

Income tax expense – (24) (24)

Profit after tax 162 121 283

Minority interests – (9) (9)

Profit for the year 162 112 274


Annual Report 2007

56


Geographical segments

Singapore Australia East Asia Europe

Total

continuing

operations

Mechanical

electrical and

fabrication

(Discontinued)

Total

operations

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Revenue from

external customers 2,092 – 6,006 – 2,864 – 2,543 – 13,505 – 6,140 37,873 19,645 37,873

Segment assets 150,596 101 395 – – – – – 150,991 101 – 19,890 150,991 19,991

Capital expenditure 80,557 – – – – – – – 80,557 – 17 244 80,574 244

Offshore logistics

support services Marine services Other operations

Total

continuing

operations

Mechanical

electrical and

fabrication

(Discontinued)

Total

operations

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Assets and liabilities

Segment assets 83,397 – 1,620 – – 4,382 85,017 4,382 – 15,548 85,017 19,930

Investment in joint ventures 4,814 – – – 4,814 –

Unallocated assets 61,160 61 – – 61,160 61

Total assets 150,991 4,443 – 15,548 150,991 19,991

Segment liabilities 37,765 – 502 – – – 38,267 – – 14,950 38,267 14,950

Provision for taxation 365 – – 271 365 271

Unallocated liabilities 897 232 – – 897 232

Total liabilities 39,529 232 – 15,221 39,529 15,453

Other segment information

Capital expenditure 80,228 – – – 329 – 80,557 – 17 244 80,574 244

Depreciation and amortisation 973 – – – 61 – 1,034 – 100 265 1,134 265


Annual Report 2007

57


26 Commitments

(a) Capital commitment

Group

2007 2006

$’000 $’000

Contracted for but not provided for 126,720 –

(b) Operating lease commitments (as lessee)

At the balance sheet dates, the Group have commitments for future minimum lease payments under non-

cancellable operating leases as follows:

Group

2007 2006

$’000 $’000

Within 1 year 2,285 99

After 1 year but within 5 years 1,145 310

After 5 years – 2,358

3,430 2,767

Rental expense for the year 1,221 146

Operating lease payments for the financial year ended 31 December 2007 represents rentals payable by the

Group for its office space and vessel charter. The lease from office rental and vessel charter is for two years

from 1 July 2007 to 30 June 2009.

Operating lease income commitments (as lessor)

The Group charter out its vessels in 2007. Rental receivable in 2006 relates to rental receivable from tenants on

the Group’s investment properties. At the balance sheet dates, the total future minimum lease receivables

under non-cancellable operating lease rentals are as follows:

Group

2007 2006

$’000 $’000

Within 1 year 2,759 115

After 1 year but within 5 years – 8

2,759 123

Rental income for the year 10,865 170

Rental income represents rentals receivable from customer on the Group’s vessels charter. The lease terms

are negotiated on fixed terms till expiry of the lease.


Annual Report 2007

58


27 Contingent liabilities (unsecured)

On 14 September 2007, a potential customer took legal action against a subsidiary, Northern Offshore Pte Ltd, which

is in a net liability position as at 31 December 2007. The plaintiff is claiming $3.24 million (US$2.25 million) in

damages for a potential charter. Based on legal advice, the directors do not expect the outcome of the action to have

a material effect on the Group’s financial position. Accordingly, no provision has been made for the claim.

28 Related parties

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the

ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and

operating decisions, or vice versa, or where the Group and the party are subject to common control or common

significant influence. Related parties may be individuals or other entities.

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

Key management personnel compensation

The key management personnel compensation is as follows:

Group

2007 2006

$’000 $’000

Short-term employee benefits 608 905

The above amounts are included under staff costs. Included in the above amounts are the following items:

Group

2007 2006

$’000 $’000

Directors’ fees 106 48

Directors’ remuneration of directors of the Company 394 148

Other transactions with key management personnel

Group

Note 2007 2006

$’000 $’000

Transactions with companies in which a director of the

Company has substantial financial interests

Chartering income received and receivable (a) 730 –

Fees paid and payable for marine services 225 –

Rental expense paid and payable 66 –

(a) The charter contracts were entered into before the appointment of the director.


Annual Report 2007

59


Other related party transactions

Group

2007 2006

$’000 $’000

Transactions with joint ventures

Interest income received and receivable 63 –

Transactions with other related parties

Purchases of goods paid and payable 151 236

Rental expense paid and payable 414 –

Purchase of a vessel from a company related to a director of a

subsidiary

5,904 –

Marine services 450 –

29 Accounting estimates and judgement

Management assessed and reviewed the development, selection and disclosure of the Group’s critical accounting

policies and estimates, and the application of these policies and estimates.

Key sources of estimation uncertainty and critical judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made certain judgements, which have a

significant effect on the amounts recognised in the financial statements. These, together with the key assumptions

concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next

financial year are discussed below.

� Recognition of contract revenue and expenses

The Group recognises contract revenue and contract costs as revenue and expense respectively, in the income

statement by reference to the stage of completion of the contract activity at the balance sheet date.

Management uses judgement to estimate the physical proportion of the contract work completed to determine

the stage of completion of the contracts in progress. While these estimates take into consideration the contract

costs incurred for materials, direct labour and subcontractor claims, not all the projects have independent

assessment by external parties on the stage of completion to consider in preparing such estimation.

The stage of completion is applied on a cumulative basis in each accounting period to the current estimates of

contract revenue and contract costs. Changes in the estimate of contract revenue or contract costs, or the effect

of a change in the estimate of the outcome of a contract could impact the amount of revenue and expenses

recognised in the income statement in the period in which the change is made and in subsequent periods. Such

impact could potentially be significant.

Significant judgement is required in estimating reasonable amounts of variation claims to be recognised as

revenue in project budgets and in determining if the Group has to make provisions for any potential liquidated

damages exposure.

� Useful lives and depreciation of vessels and vessel component costs

The vessels are depreciated on a straight-line basis over their useful lives. Management estimates the

economic useful life of the Group’s vessels to be 20 years based on their age and condition, with a new vessel

estimated to have a useful life of a maximum of 25 years. This is a common life expectancy applied in the

shipping industry. Changes in the expected level of use of the assets and market factors could impact the

economic useful lives of the vessels, therefore future depreciation charges could be revised.


Annual Report 2007

60


The residual values of the vessels for the purpose of calculating the annual depreciation expense for the year is

estimated using the scrap steel price in United States dollars per light displacement ton less estimated costs of

disposal.

The Group estimates the useful life of its vessel components by reference to the average historical periods

between two dry-dockings of vessels of similar age, and expected usage of the vessel until its next dry-docking.

Any changes in the economic useful lives and residual life of the vessels and the vessel components would

impact the depreciation charges and consequently affect the Group’s results.

30 Financial risk management

Overview

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to

create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The

management continually monitors the Group’s risk management process to ensure that an appropriate balance

between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect

changes in market conditions and the Group’s activities.

The Audit Committee oversees how management monitors compliance with the Group’s risk management policies

and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the

Group.

The Group’s principal financial instruments comprise cash and cash equivalents and bank loans. The main purpose

of these financial instruments is to finance the Group’s operations. The other financial instruments such as trade and

other payables are directly from its operations.

Credit risk

The Group’s maximum exposure to credit risk are carrying amount of trade and other receivables, amount due from

joint venture, fixed deposits and cash and bank balances.

The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an

ongoing basis. Therefore, the Group does not expect to incur material credit losses. Fixed deposits and cash and

cash equivalent are placed with regulated financial institutions. Hence, minimal credit risk exists with respect to these

assets.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade

and other receivables. The main components of this allowance are a specific loss component that relates to

individually significant exposures, and a collective loss component established for groups of similar assets in respect

of losses that have been incurred but not yet identified. The collective loss allowance is determined based on

historical data of payment statistics for similar financial assets.

The allowance account in respect of trade and other receivables is used to record impairment losses unless the

Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered

irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the

impaired financial asset.

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by

management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. Typically the

Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days,

including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that


Annual Report 2007

61


cannot reasonably be predicted, such as natural disasters.

The Group’s funding is obtained from shares placement, funds generated from operations and bank loans.

Market risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices

will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk

management is to manage and control market risk exposures within acceptable parameters, while optimising the

return on risk.

Interest rate risk

The Group interest rate exposure relates primarily to its long-term debt obligations as they are subject to fluctuating

interest rates that reset according to market rates change. Surplus funds are placed in fixed deposits accounts with

regulated banks that interest rate varies according to market rates.

Sensitivity analysis

For the variable rate financial assets and liabilities, a change of 100 bp in interest rate at the reporting date would

increase / (decrease) equity and income statement by the pre-tax amounts shown below. This analysis assumes that

all other variables, in particular foreign currency rates, remain constant.

Income statement Equity

100 bp 100 bp 100 bp 100 bp

increase Decrease increase decrease

$’000 $’000 $’000 $’000

Group

31 December 2007

Fixed deposits 562 (562) 562 (562)

Interest-bearing loans (263) 263 (263) 263

299 (299) 299 (299)

Company

31 December 2007

Fixed deposits 548 (548) 548 (548)

Foreign currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a

currency other than Singapore dollars. The currencies giving rise to this risk are primarily United States dollar.

In respect of other monetary assets and liabilities held in currencies other than the functional currencies of respective

entities, the Group ensures that the net exposure is kept to an acceptable level by buying currencies at spot rates,

where necessary, to address short term imbalances.


Annual Report 2007

62


The following table entails the Group’s and the Company’s exposure at the reporting date to currency risk arising

from financial assets and liabilities denominated in a currency other than the functional currency of the entity to which

they relate.

31 December 2007

Singapore dollar US dollar Australian dollar

$’000 $’000 $’000

Group

Loans from the Company to joint ventures – 3,321 –

Trade and other receivables 670 25 –

Cash and cash equivalents 430 753 –

Trade and other payables (689) (123) (9)

Overall net exposure 411 3,976 (9)

31 December 2007 31 December 2006

US dollar US dollar

$’000 $’000

Company

Loans from the Company to joint ventures 3,321 –

Trade and other receivables 25 –

Cash and cash equivalents 753 –

Trade and other payables (123) –

Overall net exposure 3,976 –

Sensitivity analysis

The following table indicates the approximate change in the Group’s profit before income tax and equity in response

to a 10% change in the foreign exchange rates to which the Group has significant exposure at the reporting date. The

sensitivity analysis includes balances between group entities where the denomination of the balances is in a currency

other than the functional currencies of the lender or the borrower.

A 10% strengthening of Singapore dollar against the following currencies at the reporting date would increase /

(decrease) equity and income statement by the pre-tax amounts shown below. This analysis assumes that all other

variables, in particular interest rates, remain constant.

Group Company

Equity

Income

statement Equity

Income

statement

$’000 $’000 $’000 $’000

31 December 2007

S$ dollars (4,190) 41 – –

US dollar (167) (232) – (398)

Australian dollar – 1 – –

A 10% weakening of Singapore dollar against the above currencies would have had the equal but opposite effect on

the above currencies to the pre-tax amounts shown above, on the basis that all other variables remain constant.


Annual Report 2007

63


Estimation of fair values

The following summarises the significant methods and assumptions used in estimating the fair values of financial

instruments of the Group and Company.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal

and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market

rate of interest is determined by reference to similar lease agreements.

Intra-group financial guarantees

The value of financial guarantees provided by the Company to its subsidiaries is determined by reference to the

difference in the interest rates, by comparing the actual rates charged by the bank with these guarantees made

available, with the estimated rates that the banks would have charged had these guarantees not been available.

Other financial assets and liabilities

The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other

receivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values

because of the short period to maturity. All other financial assets and liabilities are discounted to determine their fair

values.

31 Changes in accounting policies

(a) New/Revised FRS adopted in 2007

The accounting policies set out in note 2 have been applied in preparing the financial statements for the year

ended 31 December 2007.

The adoption of these new/revised FRS did not give rise to any adjustments to the opening balance of

accumulated loss of the prior and current periods or changes in comparatives.

(b) New accounting standards and interpretations not yet adopted

The Group has not applied the following accounting standards (including its consequential amendments) and

interpretations that have been issued as of the balance sheet date but are not yet effective:

■ FRS 23 (revised) Borrowing Costs

■ FRS 108 Operating Segments

■ INT FRS 111 FRS 102 Group and Treasury Share Transactions

■ INT FRS 112 Service Concession Arrangements

FRS 23 will become effective for financial statements for the year ending 31 December 2009. FRS 23 removes the

option to expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the

acquisition, construction or production of a qualifying asset as part of the cost of that asset. The Group’s current

policy is consistent with the FRS 23 requirements to capitalise borrowing costs.


Annual Report 2007

64


FRS 108 will become effective for financial statements for the year ending 31 December 2009. FRS 108, which

replaces FRS 14 Segment Reporting, requires identification and reporting of operating segments based on internal

reports that are regularly reviewed by the Group’s Chief Executive Officer in order to allocate resources to the

segment and to assess its performance.

Currently, the Group presents segment information in respect of its business and geographical segments (note 25).

The adoption of FRS 108 will not result in a significant difference in segment reporting by the Group.

Other than the change in disclosures, relating to FRS 108, the initial application of these standards (and its

consequential amendments) and interpretations is not expected to have any material impact on the Group’s financial

statements. The Group has not considered the impact of accounting standards issued after the balance sheet date.

32 Comparative information

The comparatives in the financial statements were audited by another firm of Certified Public Accountants, RSM Chio

Lim.

The comparative income statement has been re-presented to show the results of the discontinued operations

separately from those of the continuing operations (note 24) as a result of the disposal of its entire mechanical and

electrical design and fabrication of steel enclosures/frames and fasteners segments in June 2007.

Ezion Holdings Limited Annual Report 2007 65

STATISTICS OF SHAREHOLDERS ……….

Statistics of Shareholders as at 19 March 2008

GENERAL INFORMATION ON SHARE CAPITAL Total no. of Shares : 643,978,000 ordinary shares

Voting Rights : 1 vote per share

DISTRIBUTION OF SHAREHOLDINGS

Range of Shareholdings

No. of

Shareholders %

No. of

Shares %

1 - 999 0 0.00 0 0.00

1,000 - 10,000 510 40.22 2,994,000 0.46

10,001 - 1,000,000 724 57.10 40,477,000 6.29

1,000,001 and above 34 2.68 600,507,000 93.25

1,268 100.00 643,978,000 100.00

SUBSTANTIAL SHAREHOLDERS

Direct

Interest

%

Deemed

Interest

%

Unique Counsel Limited 190,000,000 29.50 - -

Ezra Holdings Limited 100,000,000 15.53 - -

Stichting Pensioenfonds ABP 42,000,000 6.52 - -

Nylect Holdings Pte Ltd 36,072,000 5.60 - -

Legg Mason, Inc - - 51,580,000 8.01

Chew Thiam Keng 1 - - 190,000,000 29.50

Lee Kian Soo 2 - - 100,000,000 15.53

Lee Chye Tek Lionel 3 - - 100,000,000 15.53

Sim Hee Chew 4 1,000,000 0.16 39,518,000 6.14

Chua Ah Suai 5 3,446,000 0.54 37,072,000 5.76

Notes:

1. Mr Chew Thiam Keng is deemed interested in the shares held by Unique Counsel Limited, which is a company

wholly owned by him.

2. Mr Lee Kian Soo is deemed interested in the shares held by Ezra Holdings Limited.

3. Mr Lee Chye Tek Lionel is deemed interested in the shares held by Ezra Holdings Limited.

4. In addition to his direct interest, Mr Sim Hee Chew is also deemed interested in the shares held by his spouse,

Madam Chua Ah Suai and by Nylect Holdings Pte Ltd, in which he has an interest of 44.2% in its issued and

paid up share capital.

5. Deemed interest arising from interest of spouse of Mr Sim Hee Chew.

SHAREHOLDING HELD IN HANDS OF PUBLIC

Based on the information made available to the Company as at 19 March 2008, approximately 34.01% were held in

the hands of the public. Under Rule 723 of the Listing Manual of the SGX-ST, a listed issuer must ensure that at least

10% of its listed securities are at all times held by the public.

Ezion Holdings Limited Annual Report 2007

66

STATISTICS OF SHAREHOLDERS ……….

TOP TWENTY SHAREHOLDERS AS AT 19 MARCH 2008

S/No Name No. of Shares %

1 Unique Counsel Limited 190,000,000 29.50

2 Ezra Holdings Limited 100,000,000 15.53

3 DBSN Services Pte Ltd 47,569,000 7.39

4 Nylect Holdings Pte Ltd 36,072,000 5.60

5 DBS Nominees Pte Ltd 32,399,000 5.03

6 HSBC (Singapore) Nominees Pte Ltd 29,178,000 4.53

7 Citibank Nominees Singapore Pte Ltd 26,823,000 4.17

8 UOB Kay Hian Pte Ltd 24,839,000 3.86

9 OCBC Securities Private Ltd 18,963,000 2.94

10 United Overseas Bank Nominees Pte Ltd 15,127,000 2.35

11 Waterworth Pte Ltd 14,838,000 2.30

12 Kim Eng Securities Pte. Ltd. 6,186,000 0.96

13 Kim Seng Holdings Pte Ltd 6,000,000 0.93

14 Guan Hongwei 5,290,000 0.82

15 DBS Vickers Securities (S) Pte Ltd 4,741,000 0.74

16 Royal Bank Of Canada (Asia) Ltd 4,668,000 0.72

17 Chow Joo Ming 3,900,000 0.61

18 Chua Ah Suai 3,446,000 0.54

19 Hong Leong Finance Nominees Pte Ltd 3,179,000 0.49

20 Teo Kok Kheng 2,800,000 0.43

576,018,000 89.44


NOTICE OF ANNUAL GENERAL MEETING ……….


Company Registration No 199904364E

(Incorporated in The Republic of Singapore)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Ezion Holdings Limited (“the Company”) will be

held at No. 87 Science Park Drive, Science Hub, Kent Ridge Room Level 1, Singapore Science Park I, Singapore

118260 on Tuesday, 29 April 2008 at 10.00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1 To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended

31 December 2007 together with the Auditors’ Report thereon. (Resolution 1)

2 To re-elect the following Directors of the Company retiring pursuant to Article 107 of the Articles of

Association of the Company:

Dr Wang Kai Yuen (Resolution 2)

Mr Lim Thean Ee (Resolution 3)

(See Explanatory Note 1)

3 To re-elect the following Directors of the Company retiring pursuant to Article 117 of the Articles of

Association of the Company:

Mr Lee Kian Soo (Resolution 4)

Captain Larry Glenn Johnson (Resolution 5)

4 To approve the payment of Directors’ fees of S$106,000 for the year ended 31 December 2007.

(Resolution 6)

5 To re-appoint KPMG as the Auditors of the Company and to authorise the Directors of the Company to fix

their remuneration. (Resolution 7)

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

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any

modifications:

7 Authority to issue shares in the capital of the Company

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of Section B of the Singapore

Exchange Securities Trading Limited (“SGX-ST”) Listing Manual (the “Catalist Rules”), the Directors of the

Company be authorised and empowered to:

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

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would

require shares to be issued, including but not limited to the creation and issue of (as well as

adjustments to) options, warrants, debentures or other instruments convertible into shares,

Ezion Holdings Limited Annual Report 2007

68


at any time and upon such terms and conditions and for such purposes and to such persons as the

Directors of the Company may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue

shares in pursuance of any Instrument made or granted by the Directors of the Company while this

Resolution was in force,

provided that:

(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made

or granted pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed one

hundred per centum (100%) of the total number of issued shares (excluding treasury shares) in the

capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the

aggregate number of shares to be issued other than on a pro rata basis to existing shareholders of the

Company shall not exceed fifty per centum (50%) of the total number of issued shares (excluding

treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2)

below);

(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of determining the

aggregate number of shares that may be issued under sub-paragraph (1) above, the percentage of

issued shares shall be based on the total number of issued shares (excluding treasury shares) in the

capital of the Company at the time of the passing of this Resolution, after adjusting for:

(a) new shares arising from the conversion or exercise of the Instruments;

(b) new shares arising from exercising share options or vesting of share awards outstanding or

subsisting at the time of the passing of this Resolution provided the share options or share awards

(as the case may be) were granted in compliance with Part VIII of Chapter 8 of the Catalist Rules;

and

(c) any subsequent bonus issue, consolidation or subdivision of shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions

of the Catalist Rules for the time being in force (unless such compliance has been waived by the

SGX-ST) and the Articles of Association of the Company; and

(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force

until the conclusion of the next Annual General Meeting of the Company or the date by which the next

Annual General Meeting of the Company is required by law to be held, whichever is earlier.

(See Explanatory Note 2) (Resolution 8)

BY ORDER OF THE BOARD

Lim Ka Bee

Company Secretary

Singapore, 14 April 2008



Explanatory Notes:

1 Dr Wang Kai Yuen will, upon re-election as Director of the Company, remain as Chairman of the Audit

Committee, member of the Nominating Committee, member of the Remuneration Committee and will be

considered independent.

Mr Lim Thean Ee will, upon re-election as Director of the Company, remain as member of the Audit

Committee, member of the Nominating Committee, member of the Remuneration Committee and will be

considered independent.

2 The Ordinary Resolution (8) in item (7) above, if passed, will empower the Directors of the Company from

the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by

which the next Annual General Meeting of the Company is required by law to be held or such authority is

varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or

grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number

not exceeding, in total, 100% of the total number of issued shares (excluding treasury shares) in the capital

of the Company, of which up to 50% may be issued other than on a pro-rata basis to existing shareholders

of the Company.

For determining the aggregate number of shares that may be issued, the percentage of issued shares in

the capital of the Company will be calculated based on the total number of issued shares (excluding

treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting

for new shares arising from the conversion or exercise of the Instruments, the exercise of share options or

the vesting of share awards outstanding or subsisting at the time when this Ordinary Resolution is passed

and any subsequent bonus issue, consolidation or subdivision of shares.

Notes:

1 A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint

not more than two proxies to attend and vote in his/her stead. A proxy need not be a Member of the

Company.

2 The instrument appointing a proxy must be deposited at the Registered Office of the Company at 15 Hoe

Chiang Road, #13-03 Tower Fifteen Singapore 089316 not less than forty-eight (48) hours before the time

appointed for holding the Meeting.

EZION HOLDINGS LIMITEDCompany Registration 199904364E (Incorporated in The Republic of Singapore)

PROXY FORM(Please see notes overleaf before completing this Form)

Dated this

Signature of Shareholder(s)or, Common Seal of Corporate Shareholder

*Delete where inapplicable

*I/We

ofbeing *a member/members of Ezion Holdings Limited (the "Company"), hereby appoint

AgainstOrdinary Resolutions For

and/or (delete as appropriate)

Proxy FormFor investors who have used their CPF monies to buy Ezion Holdings Limited’s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

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

CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.

1

2

3

IMPORTANT:• • • • • • • • • • • • • •

or failing the person, or either or both of the persons, referred to above , the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held at No. 87, Science Park Drive, Science Hub, Kent Ridge Room, Level 1 Singapore Science Park I, Singapore 118260 on Tuesday, 29 April 2008 at 10.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [ 3 ] within the box provided.)

Directors’ Report and Audited Accounts for the year ended 31 December 2007

Re-election of Dr Wang Kai Yuen as a Director

Re-election of Mr Lim Thean Ee as a Director

Re-election of Mr Lee Kian Soo as a Director

Re-election of Captain Larry Glenn Johnson as a Director

Approval of Directors’ fees amounting to S$106,000

Re-appointment of KPMG as Auditors

Authority to issue new shares

1

2

3

4

5

6

7

8

Name:

Address:

Proportion of ShareholdingsNRIC/Passport NoNo. of Shares %

Name:

Address:

Proportion of ShareholdingsNRIC/Passport NoNo. of Shares %

Total number of Shares in:

(a) CDP Register

(b) Register of Members

No. of Shares

No.

2008day of

Notes :

1 Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2 A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3 Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4 Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.

The Company SecretaryEZION HOLDINGS LIMITED15 Hoe Chiang RoadTower Fifteen#13-03Singapore 089316

Affix stamp here

Proxy Form• • • • • • • • • •

1st fold

5 The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 15 Hoe Chiang Road, #13-03 Tower Fifteen Singapore 089316 not less than forty-eight (48) hours before the time appointed for the Meeting.

6 The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

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

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

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CORPORATEINFORMATION

PRINCIPLE BANKERS

OVERSEA-CHINESE BANKING CORPORATION LIMITED65 Chulia StreetOCBC CentreSingapore 049513 DBS BANK LTD6 Shenton WayDBS Building Tower OneSingapore 068809 UNITED OVERSEAS BANK LIMITED80 Raffles Place UOB PlazaSingapore 048624 AUDITORS

KPMGPartner-in-charge - Tan Huay Lim(Appointed since 10 December 2007) 16 Raffles Quay#22-00 Hong Leong BuildingSingapore 048581

SHARE REGISTRAR

M&C SERVICES PRIVATE LIMITED138 Robinson Road #17-00The Corporate OfficeSingapore 068906

COMPANY SECRETARY

Lim Ka Bee

BOARD OF DIRECTORS

Lee Kian SooChew Thiam KengCaptain Larry Glenn JohnsonDr Wang Kai YuenLim Thean EeTeo Chuan TeckTan Woon Hum AUDIT COMMITTEE

Dr Wang Kai Yuen – ChairmanLim Thean EeTeo Chuan TeckTan Woon Hum NOMINATING COMMITTEE

Tan Woon Hum – ChairmanDr Wang Kai YuenLim Thean EeTeo Chuan Teck REMUNERATION COMMITTEE

Teo Chuan Teck – ChairmanDr Wang Kai YuenLim Thean EeTan Woon Hum REGISTERED ADDRESS

15 Hoe Chiang Road #13-03Tower FifteenSingapore 089316

Telephone 65 6309 0555Facsimile 65 6222 7848

Website www.ezionholdings.comEmail [email protected]

COMPANY

ADDRESS

CONTACT

FACSIMILE

WEBSITE

EMAIL


15 Hoe Chiang RoadTower Fifteen #13-03Singapore 089316

65 6309 0555

65 6222 7848

www.ezionholdings.com

[email protected]

report - listed company · 2008. 4. 22. · effectiveness. liftboat also serves as a more stable...

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