A Steadfast Partner, All the waybhglobal.listedcompany.com/misc/ar2007.pdf · Shipbuilders & EPC...

A Steadfast Partner, All the way

BH GLOBAL MARINE LIMITED

14 Financial Highlights

15 Corporate Information

16 Financial Contents

17 Corporate Governance Report

25 Directors’ Report

28 Statement by Directors

29 Auditors’ Report

30 Consolidated Income Statement

31 Balance Sheets

32 Statements of Changes in Equity

33 Consolidated Cash Flow Statement

35 Notes To The Financial Statements

55 Statistics of Shareholdings

57 Notice of Annual General Meeting

Proxy Form

contents

01 Corporate Profile

02 Company’s Business

05 Geographical Market

06 Chairman’s Statement08 Financial Review

10 Board of Directors

12 Senior Management

BH Global Marine Ltd ( “BH Global”) has been in the marine & offshore electrical business for more than 30 years, operational headquarter in Singapore, providing One-Stop supply services to the buoyant shipbuilding / repair, petrochemical, offshore oil & gas industries in the region.

We are a Global supply chain logistic provider of the most comprehensive range of quality electrical products and accessories, lighting fixtures, power, control & instrumentation cables to ensure safe and efficient operation of all systems on board specialized marine vessels and MODUs.

We have a Global clientele outreach with international ship management agents, ship owners, ship chandlers, shipyards & FPSO conversion contractors, specialized rig fabricators from Asia Pacific to Middle-East & Americas based oil operators.

BH Global creates valued partnership with various committed renowned manufacturers / principals for product safety & branding specification essential in the “hazardous environment” of the marine & offshore industries. Most products are certified with ABS, CCS & DNV approvals.

BH Global provides large-scale product inventory management, technical support & solutions with logistic capabilities for fast response and on-time deliveries as customer service core values.

Corporate Profile

01

Company’s Business

BH GLOBAL MARINE LIMITED • Annual Report 2007

Market Challenges to Shipbuilding, Repairs and Mobile Offshore Drilling Units MODU’s Fabrication.

“BH Global enhances performance in shipyards and on the high seas”

Major shipbuilders and specialized rig fabricators have to:

• Create new customers services

• Transform & improve manufacturing efficiency and processes to remain profitable and reduce production cost.

• Manage the whole supplier/subcontractor chain critical to maintain a competitive edge while delivering on-

time quality compliance systems.

Shipbuilders & EPC contractors normally look for multi-systems packages from a single source supplier/vendor and expect quality and conformity to the latest & highest maritime standards and product specification.Expectation of ship chandlers, ship owners, ship-management companies, shipyard repair and fabrication contractors:

1. A full range of cables, lighting and electrical equipments & consumables to cover increasing complex shipboard supplies.

2. Ability to meet all maritime specification and classification certifications, plus interoperability.3. Quality and reliability of products to ensure safe & efficient operations of all systems.4. Approved supplier status, approved product / brands status.5. Product availability on-demand, on-time delivery, technical support services.

BH Global - Solutions as One-Stop electrical specialist

Since shipbuilding & shipping are global, BH Global is a Singapore based Public-listed Company with global resources.

As a major supplier to the world shipbuilding & MODUs fabricators, BH Global provides specialized electrical products & services to the following business sectors and customers profiles:

• MRO business: ship chandlers, ship owners, ship management companies, ship-repair yards, sub-contractors & marine electrical services support industries, regional industrial resellers.

• New Built Projects: Major shipyards, marine offshore EPCC fabrication contractors, Offshore MODU’s project owners/operators/drilling contractors.

02

Marine Electrical Product Porfolio:

1. Full range of cables – Medium / Low Voltage Power / VFD cables, control / instrumentation, LAN network and field bus cables, coax and optical fibre cables, all conforming to the highest IEC / IEEE standards and approved by leading classification societies: ABS, BV, CCS, DNV, GL, LR, RINA, RMRS, ISO 9001 quality standards.

2. Cable Glands and Accessories – electrical tapes, joints, terminations, connectors, lugs, heat shrink technology products, cable tray & ladders to support the entire cable installation systems.

3. Niche Marine Lighting Systems – high performance Searchlights, LED Navigation & Signalling lights with control panels, on-board Floodlights, indoor & outdoor watertight luminaries for ship’s special compartment areas, emergency lightings, decorative lights for Cruise ships, heli-deck and other special maritime operations light systems.


03


4. Lighting & Electrical Equipment for Hazardous Locations, mainly for applications in specialized

vessels & MODUs, all with ATEX approvals for explosion proof protection.

Marine Electrical Consumables: for spares parts and replacement.

1. Marine grade incandescent lamps, high intensity discharge, fluorescent & halogen with bulbs / tubes of different length sizes & shapes in variety of operating voltages and wattage intensity & energy saving types.

2. Light fitting components – lamp / bulb base-holders, ballast components of different voltages ratings / electronic types

3. MRO sourcing for all other supplementary electrical supplies to complete the customer’s entire procurement packages.

BH Global: Services & Capabilities

Global Expertise and excellent customer service dimension is the cornerstone of our core business values of

a full-service supplier. We can get what you need, when and where you need it in a horizon of professional services.

1. Cables/accessories, Marine Lighting Systems are our core business & with the related family of marine electrical products, we are able to support all sourcing & procurement functions & ensure prompt global logistics deliveries.

2. Working closely with all in the shipping procurement agencies, prime installers & integrators, we employ best practices to cut costs & increase efficiency.

3. In the field of safety, we only supply products conforming to international quality standards and certified by numerous world certification bodies.

InventoryUnmatched inventory > S$35 million, 8000 product line items from 370 international premium manufacturers / suppliers. Renowned quality brands at competitive price and ex-stock delivery status for literally every kind of shipboard electrical items.

One-Stop supply for all marine electrical procurement.

Warehouse Facilities70,000 square feet with state of art storage facilities and material handling equipment and cable cutting / reeling machines. Inventory management systems. Provide interim storage for ordered stock product to support customer’s on-going projects for just-in-time delivery.

Global Logistic MobilityOwn fleet of trucks and strong alliance with international freight forwarders. On-site / Off-site support. Fast response on-time, same day delivery where possible. Fast track, air-lift deliveries to middle-east key accounts within 3 working days. Able to service remote and new shipyard locations (Vietnam, Indonesia, East-Malaysia, UAE-Dubai, China provinces, India ). Impeccable and sustained logistic supply operations.



Sales SupportDedicated key account, customer relations representatives-client contacts from project initiation stage to delivery. Benchmark to generate commercial & technical quotation proposals within same working day. Global MRO sourcing capabilities. Product applications consultancy and Cross-Reference Capabilities and international product standards & specification support. Full budgetary price support during RFQ /RFI tender process. Material Take-offs. Local support 365 days. Flexible contractual commercial terms & conditions.

Technical & Engineering SupportFull project technical submission, product certification, type approvals, drawings, test reports, vendor data approvals dossier. Expediting & inspection on-sites. Warranty tracking. Marine Lighting consultation for optimal lighting design solution, customized in-house production of specialized light fixtures with accessories for different shipboard application, function & locations.

Cable Management ProgramFor new-built program with project owners, complete cable size/quantity/drum lengths, total cable management solution with project inventory reports. Cutting / re-drumming services. On-site & Offsite staging.

PartnershipsBeing customer focused, we have a on-going process to develop strategic alliances with OGP owners, EPC fabricators for frame / support agreements ( to ensure continued supplies with price stability ) vendor / product approvals and MRO business with reseller-distributor partnerships. As a preferred supplier, we offer counseling in terms of design, installation, maintenance, technical support, warranty and priority customer & logistic support as listed above. By sharing our intelligence & network, we widen opportunities for major contracts to be awarded.

04

GeographicalMarket


Our excellent logistical infrastructure enables us to offer our services and deliver our products worldwide in the shortest possible time. For example, we are able to deliver to Dubai within one to three days. In FY2007, 86% of our revenue contribution came from Singapore, 12% from South-East Asia, East Asia and Middle East, while 2% came from diverse countries worldwide, including Argentina, Australia, Canada, England, Finland, France, Greece, Germany, Holland, India, Mauritius, United Kingdom and United States of America.

05

Dear Shareholders,

It is my pleasure to address you once again,

古人说, “先有伯乐, 后有千里马. 千里马常有而伯乐不常有,

固虽有明马, 却只辱与奴群人之手, 不以千里称也.＂

As the ancient Chinese saying goes, “Without being recognised and given the support and nurturing, a good horse, and there are many good horses, will remain but a good horse and not

become a ‘thousand-mile’ horse.”

Since our beginning, BH Global has received the recognition and support from many friends and business associates to achieve the success that it has today. At this juncture, let me say a word of thank you to these old friends. Without these old friends who recognized the ability and potential of and nurtured BH Global, we would not have had the opportunity to display our capabilities and fulfil our potential to becoming a ‘thousand-mile’ horse..

This thousand-mile horse started to gather pace in FY2006 and continued its momentum into FY2007.

We had a successful FY2007. BH Global had more business and generated more income for our shareholders this year. Turnover jumped 39% to S$81.9 million. Net profit surged by 56% to S$17.5 million, an all time high. We have proposed a 1-for-2 bonus shares issue to increase the liquidity of the shares, which we hope would attract more institutional investors onboard. We paid out a record tax-exempt dividend of 1.2 cents per share (based on enlarged share capital after the proposed bonus shares issued) to reward our loyal shareholders.

When we were listed on 12 September 2005, our primarily objective was to raise funds and build a business to last. A business where all shareholders are treated equally with respect and gratitude. Today, that belief remains firmly in our business philosophy. We would continue to build on our strength and confidence to be a leader in our industry – a leader for many more years to come.

In 2007, we implemented what we said we would. We have expanded and diversified our customer base in both Singapore and the global markets, enhanced our product range and increased key value-added services such as project management services and warehousing support. I am happy to update our shareholders that we executed our plans smoothly and achieved highly satisfactory results in 2007. Let me elaborate :

1) Expanded warehousing facilities to enhance its supply chain management capabilities.Expanded warehousing facilities to enhance its supply chain management capabilities. The Group has recently announced the successful acquisition of 10 Penjuru Lane. The property is approximately 11,700m2. This property is adjacent to BH Global’s current headquarters at 8 Penjuru Lane and will be an addition to the existing land area of 8,533m2.

2) Increased the range of products and services.Increased the range of products and services. On top of the current distributorships, on 16 January 2008, the Group was appointed by, global cables leader, Prysmian Group as its sole distributor in Asia Pacific region for its Prysmian range of marine cable products. Prysmian’s cables rank among the top selling brands in marine cables. This sole distributorship will enhance BH Global’s product offering to our customers

3) Added more value-added services.Added more value-added services. Aside from the physical supply of cables and lighting products to customers, we have identified key value-added services such as project management and warehousing support. This includes working with customers’ engineers to develop optimal solutions so that costs and wastage are kept to a minimum. Such services improve the Group’s operating efficiency and enhance profit margins.

Over the years, we have indeed moved up the value chain. BH Global is no longer just another distributor of quality electrical lighting equipment and cables. We have started to establish our position as a supply chain manager to the ship owners, operators, chandlers and shipyards. Looking ahead, we hope to cement that image in their minds.

We won several awards this year. In May 2007, the Company was awarded the Merit Award for Best Investor Relations for a newly listed company at the Singapore Corporate Award (SCA). In September 2007, we were selected by Forbes Asia as one of the “200 Best Companies Under A Billion” in Asia Pacific in 2006. The winners were drawn from a list of over 22,500 listed companies in the Asia Pacific. In October 2007, BH Global scored a total of 72 points out of a possible 100 to rank 32nd out of 672 companies in The Business Times Corporate Transparency Index. Just in February 2008, we won another accolade – Singapore Corporate Awards -- Silver Award for the Best Investor Relations for Companies under S$500 million market capitalization. It caps a fine year indeed.

Reflecting on our growth in the past few years, our prospects have never looked brighter. BH Global is expanding fast. We are growing our warehousing facilities to cater to the increased demand for our products and services. We have strengthened our earnings fundamentals resulting in our remaining confident about the Group’s outlook in the near future.

Currently, the Group is exploring M&A opportunities so as to expand its regional presence across strategic markets in Asia. This includes the Middle East and China, where the shipbuilding industry is enjoying robust demand. The Group is exploring several potential strategic local partners in this area.

Broadly speaking, I am optimistic about the sustainable growth of BH Global in the near term. However, I do have to caution against being overly confident. The US Subprime crisis looks to have a larger than expected impact on the US and global economy. The weakening US dollar, though not having any direct impact on us, may indirectly affected our customers. China is also looking to control its inflation worries and may curb demand by tightening its fiscal and monetary policies. We have to monitor the situation carefully.

On behalf of the Board, I wish to thank the management team and all our staff for their hard work and commitment to the Group. To our customers, suppliers, bankers and business associates, thank you for your support, which has given us better profits, improved share price performance and better shareholder returns. Thank you once again.

Alvin Lim Hwee HongExecutive Chairman

we were listed on 12 September 2005, our primarily objective was to raise funds and

build a business to last. A business where all shareholders are treated equally with respect and gratitude.

Financial Review


Top-Line GrowthThe Group’s revenue increased by $23 million or 39% from $58.9 million in FY2006 to $81.9 million in FY2007. This was due to an overall increase in revenue in both marine electrical equipment and marine consumables segments.

S$’000 FY2007 FY2006 Change (%)Sales 81,870 58,923 39Gross Profit 33,328 22,642 47Profit Before Tax 21,337 14,260 50Profit After Tax 17,516 11,215 56

The strong performance highlighted the following trends;

1) Increase in rig and ship building activities in Singapore has resulted in a substantial increase in revenue from Singapore. Revenue increased by $21.3 million or 43% from $49.4 million in FY2006 to $70.7 million in FY2007.

2) Sales from marine cables now contributed 77% of the sales from the marine electrical equipment. This demonstrates that the Group’s strategy of increasing its inventory levels to meet customers’ demand for timely delivery is working out well. More shipyard operators, faced with demanding delivery schedules, are outsourcing their supply logistics to suppliers with warehousing facilities. We embraced this new role of “Supply Chain Manager” in response to customer needs in order to further cement our business relationships with our customers.

3) Our overseas sales improved as we managed to secure more sales for the shipbuilding and ship conversion projects outside of Singapore. This is a market that we would be focusing more of our efforts in 2008.

Gross Profit Our overall gross profit increased by $10.7million or 47% from $22.6million in FY2006 to $33.3million in FY2007.The increase was due to higher revenue and increase in overall gross margin from 38% in FY2006 to 41% in FY2007. The higher overall gross margin was due to better margin from sales of marine cables and accessories.

Operating ExpensesThe Group’s operating expenses comprise mainly marketing and administrative expenses.

The operating expenses increased by $3.3million from $8.8million in FY2006 to$12.1 million in FY2007. This was mainly due to increases in head count and higher staff related cost, as well as higher provisions for stock obsolescence and doubtful debts.

Finance costFinance cost increased by $175,000 from $6,000 in FY2006 to $181,000 in FY2007. The increase was due to higher usage of trade facilities for purchases to meet the increase in turnover.08

Income taxThe higher income tax is in line with higher profit before tax for the year

Net Earnings and Dividend PayoutNet profit increased by 56% to S$17.5 million in FY2007. This is in line with the strong growth in revenue and gross profit.

To reward our shareholders, we have proposed a first and final dividend of 1.2 cents per ordinary share (based on the enlarged share capital after the proposed bonus shares issue of 140,000,000 new ordinary shares on the basis of one bonus share for every two existing ordinary shares in the issued share capital of the Company which was allotted and issued to shareholders of the Company on 21 February 2008). If approved at the AGM, the dividend will be payable on 7 May 2008.

Strong Balance SheetOverall, our financial position has improved since the past year.

The increase in inventories of $17.2million was in line with the Group’s strategy to position ourselves as a supplier of a comprehensive range of marine electrical products.

Despite the increase in revenue by 39%, trade receivables increased only by 2% from $21.7 million in FY2006 to $22.1 million in FY2007 due to better credit policy and control.

The increase in other receivable of $324,000 was mainly due to a deposit paid for the acquisition of a new leasehold property.

The increase in other payables of $2.2million was mainly due to higher provision of staff related cost.

The increase in bank borrowings of $4.7million was due to higher usage of trade facilities for purchases to meet the increase in turnover. However, our net gearing ratio is still in a healthy position.

Industry OutlookThe outlook for the marine industry is expected to remain positive in view of theincreasing offshore oil and gas exploration and production activities, infrastructure projects in the Middle East and general fleet renewal of ship owners.

According to Clarkson Research Services (CRS), the total amount of newbuildingcontracts placed in 2007 reached 240.9 million dwt, far outstripping the previous high of 172.2 million dwt in 2006. The report also highlighted that the “…shipping industry has plenty of cash and although the global credit squeeze and a softer dry-bulk chartering market may caused some to draw in their horns, there is little sign that owners have become investment shy….”

Based on the generally positive industry environment, and recognizing the current uncertainties surrounding the global economic, financial and credit markets, the Group is cautiously optimistic about its business prospects in FY2008.


09

Board ofDirectors


Alvin Lim Hwee Hong Executive Chairman

Vincent Lim Hui Eng Executive Director and Chief Executive Officer

Patrick Lim Hui PengExecutive Director and Chief Operating Officer

Vincent Lim Hui Eng is our Managing Director, re-designated as the Chief Executive Officer of the Company on 24 January 2008. He has also been a Director of our Company since April 2004. He is responsible for overseeing the sales and procurement functions within our Group. Vincent Lim is also in charge of our Group’s business development activities. He has about 20 years of working experience, all of which has been in the marine electrical supply industry. Since 1994, Vincent Lim has also been an executive director of SMSEA. Prior to joining our Company, he was an executive director of BHHS from 1987 to 2003.

Patrick Lim Hui Peng is our Executive Director, re-designated as the Chief Operating Officer of the Company on 24 January 2008. He has also been a Director of our Company since April 2004. He is responsible for overseeing our Group’s shipbuilding project tenders. He also shares the responsibility of overseeing the sales and procurement functions of our Group with Vincent Lim. He has about 20 years of working experience, of which about 14 years is related to the marine electrical supply industry. Since 1994, Patrick Lim has been an executive director of SMSEA. Prior to joining our Company, he was an executive director of BHHS from 1993 to 2003 and a technician with the Republic of Singapore Navy from 1986 to 1992.

Alvin Lim Hwee Hong is our Executive Chairman and has been a Director of our Company since April 2004. He has overall responsibility for the day-to-day operations of our Group. He is also responsible for the strategic and business development of our Group. Alvin Lim has more than 20 years of working experience, most of which is related to the marine electrical supply industry. He has in-depth knowledge of the supply of marine electrical products and has an extensive network of contacts in this industry. Since 1994, he has also been an executive director of Sanshin Marine (S.E.A.) Pte Ltd (“SMSEA”). Prior to joining our Company, Alvin Lim was the managing director of Beng Hui Holding (S) Pte Ltd (formerly known as Beng Hui Electric Trading Pte Ltd) (“BHHS”)from 1987 to 2003 and sales executive of Guan Hup Electrical & Hardware Pte Ltd from 1985 to 1988.

10


Winston Kwek Choon Lin was appointed as an Independent Director of our Group on 3 August 2005. He is currently a partner in the law firm of Rajah & Tann. Specialising in admiralty and shipping law, Mr. Kwek is experienced in maritime issues. Since 2000, he has been nominated by various established legal publications as one of the leading lawyers in the region, especially in areas of shipping and maritime law. Mr. Kwek graduated with a Bachelor of Law (Honours) from the National University of Singapore in 1990 and was called to the Singapore Bar in March 1991. Since 2003, he is also Adjunct Assistant Professor in the Faculty of Law at the National University of Singapore.

David Chia Tian Bin was appointed as an Independent Director of our Group on 3 August 2005. He is currently a director of AXIA Equity Pte. Ltd. which provides business advisory services to companies in Singapore and the region. Prior to this and since 1990, he was actively involved in the private equity and venture capital industry in Asia as a director of an investment advisory firm engaged in direct investments in the region. From 1980 to 1990, Mr Chia was engaged in providing audit and financial consulting services in Singapore and Hong Kong with an international firm of accountants. Mr Chia is also an independent director on the board of Avaplas Limited. Mr Chia holds a Bachelor of Accountancy (Honours) from the National University of Singapore. He is a Fellow of the Institute of Certified Public Accountants of Singapore.

Loh Weng Whye Independent Director

David Chia Tian Bin Independent Director

Loh Weng Whye was appointed as an Independent Director of our Group on August 3, 2005. He is a veteran in infrastructure projects and energy businesses with 36 years of experience in senior positions in the civil service, government-linked companies as well as private sector. For 15 of his 25 years with the Public Utilities Board, he headed Generation Projects responsible for the management and commissioning of power station projects worth more than S$3 billion. He was the founding General Manager (Projects) of Tuas Power Ltd. Mr Loh was formerly President of ST Energy Pte Ltd and SembCorp Energy Pte Ltd with business activities in the Asia-Pacific region. He was later appointed Advisor to Green Dot Capital Pte Ltd, an investment and holding company under Temasek Holdings. Currently, Mr Loh is the Senior Advisor to an international infrastructure group, and sits on the boards of several Singapore and overseas companies, including SGX mainboard-listed companies. He also holds advisory appointments in various external councils and institutions of tertiary education. Holding B Eng. (Mechanical) and MSc. (Industrial Eng.) degrees, he is a Member of the Singapore Institute of Directors and was elected a Fellow of the Institution of Engineers, Singapore in 1995.

Winston Kwek Choon Lin Independent Director 11

SeniorManagement


A Steadfast Partner, All the way

12


Benson Loh Kuan HweeBenson Loh Kuan Hwee came on board as a Sales Director in 2007 to reinforce BH Global’s position in the Industrial, Infrastructure Development and on-shore OGP projects within ASEAN countries. Benson Loh has been recognized as a commercially versatile & tenacious Sales Developer & Marketer in the Singapore Electrical Supply Chain-wholesalers-distribution channels especially in the niche products of Low Voltage Neoprene rubber cables + weather-proof plugs/sockets/receptacles/flood-lights for Temporary Power Supplies. Since 1985, he acquired industrial purchasing and international business trading experience while working for German electrical powerhouse AEG and Rittal Pte Ltd and eventually run his successful trading business under B&C Pte Ltd which is acquired by BH Global in 2007.

Johnny LimJohnny Lim Huay HuaHuay Hua is our Director of Operations since April 2004. He is responsible for managing the logistics and distribution functions within our Group. Johnny Lim has about 16 years of working experience, of which about 13 years is related to the marine electrical supply industry. Since 1994, he was an executive director of SMSEA. Prior to joining our Company, Johnny Lim has been an executive director of BHHS from 1993 to 2003. In 1991, he was an employee of BHHS in-charge of logistics.

Lee Ka MengLee Ka Meng is a Director of Yorkshire Marine & Offshore (S) Pte Ltd (YMO), our subsidiary, since October 2005. He is responsible for the marketing and procurement functions as well as the daily operations of YMO. With close to 40 years of working experience in the electrical engineering field, he is also responsible for building up YMO’s relationship with customers and suppliers. Mr Lee was one of the pioneer trainees of and had extensive training, both local and overseas, with the Republic of Singapore Navy. Thereafter, he had close to 20 years of in-depth experience with reputable companies like Behn Meyer & Co Pte Ltd, ASEA Pte Ltd, United Motor Works Pte Ltd, etc. Prior to joining our Group, Mr Lee was running his own company trading similar products as the Group.

Eileen Lim Chye HoonEileen Lim Chye Hoon is our Director of Human Resource and Administration since April 2004. She is responsible for overseeing human resource and administration matters. Eileen Lim has more than 20 years of working experience and has been in-charge of finance, personnel and administrative functions. Prior to joining our Company, she was an executive director of BHHS from 1998 to 2003 and an accounts clerk of Guan Hup Electrical & Hardware Pte Ltd from 1982 to 1988. From 1988 to 1998, she was an employee of BHHS in-charge of accounting matters.

Keegan Chua Tze WeeKeegan Chua Tze Wee is our Group Financial Controller, re-designated as Chief Financial Officer on 24 January 2008. He is responsible for all aspects of financial planning, financial budgeting and control matters. Keegan Chua has about 14 years of experience in accountancy, audit and finance. Prior to joining our Group in 2006, he had assumed auditing, finance and accounting positions in various accounting firms and an SGX mainboard-listed company. Keegan Chua obtained his Bachelor of Accountancy (Honours) degree from The Nanyang Technological University in 1994 and is a member of the Institute of Certified Public Accountants of Singapore.

Jonathan Wong Teck FattJonathan Wong Teck Fatt joined our Group in October 2007 as Regional Marketing Manager Asia - Pacific to reinforce the Group global business development & management with our valued product principals and export key accounts. An industry veteran with 26 years of proven expertise in the arena of industrial procurement, manufacturing, logistics, customer service & business administration with exceptional technical competency in the field of specialty electric cables for the marine offshore upstream & downstream energy industries. Given the executive accountability for international corporate marketing, he is assigned to develop strategic alliances with OGP owners, EPCC fabricators for frame supply/support agreements, vendor/product approvals and MRO businesses with reseller-distributor partnerships. Since 1991-2005, he was Country Manager Singapore for Pirelli Cables, a world renowned Cable brand now acquired by Goldman Sachs and renamed Prysmian Cables in 2006 whom he assumed the Trade & Installers business portfolio for ASEAN.

1. Mr. Benson Loh Kuan Hwee2. Johnny Lim Huay Hua3. Lee Ka Meng4. Eileen Lim Chye Hoon5. Keegan Chua Tze Wee6. Jonathan Wong Teck Fatt

1 65432

13

Financial Highlights

2003 2004 2005 2006 2007

S$’000 S$’000 S$’000 S$’000 S$’000Singapore 14,917 21,081 24,297 49,382 70,671South-East Asia 1,431 1,218 1,982 3,971 3,839East Asia 360 642 1,240 2,438 3,768Middle East 1,217 1,360 1,460 1,568 2,194Other 167 250 1,308 1,564 1,398

18,092 24,551 30,287 58,923 81,870

Geographical Segment - Revenue Sales Breakdown by Product

2003 2004 2005 2006 2007

S$’000 S$’000 S$’000 S$’000 S$’000Marine Electrical Equipment 12,816 19,020 23,935 51,485 73,817Marine Consumables 5,276 5,531 6,352 7,438 8,053

18,092 24,551 30,287 58,923 81,870

Shareholder’s Equity ($ ‘000)

2003 2004 2005 2006 2007

55

50

45

40

35

30

25

20

15

10

5

0

29,860

Turnover ($ ‘000)

2003 2004 2005 2006 2007

90

80

70

60

50

40

30

20

10

0

58,923

18,092


81,870

2003 2004 2005 2006 2007

6.5

6.0

5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

Earnings Per Share* (cents)

2003 2004 2005 2006 2007

18

16

14

12

10

8

6

4

2

0

Net Profi t ($ ‘000)

4.01

3,144

3.29

* EPS for 2003 to 2004 have been calculated based on pre-invitation ordinary shares of 210,000,000 shares

17,516

6.26

14

11,215

7,103

24,551

2.94

1.5

51,311

6,7916,902

10,500

38,275

30,287

Corporate information

Board of DirectorsAlvin Lim Hwee Hong Executive ChairmanVincent Lim Hui Eng Executive Director and Chief Executive OfficerPatrick Lim Hui Peng Executive Director and Chief Operating OfficerLoh Weng Whye Independent DirectorDavid Chia Tian Bin Independent DirectorWinston Kwek Choon Lin Independent Director

Company SecretaryEileen Koh

Audit CommitteeDavid Chia Tian Bin (Chairman)Loh Weng WhyeWinston Kwek Choon Lin

Nominating CommitteeWinston Kwek Choon Lin (Chairman)Loh Weng WhyeVincent Lim Hui Eng

Remuneration CommitteeLoh Weng Whye (Chairman)David Chia Tian BinWinston Kwek Choon Lin

Risk Management CommitteeAlvin Lim Hwee Hong (Chairman) Vincent Lim Hui EngKeegan Chua Tze Wee

Share Registrar and Share Transfer OfficeTricor Barbinder Share Registration Services(A division of Tricor Singapore Pte. Ltd.)8 Cross Street #11-00PWC BuildingSingapore 048424

Auditors and Reporting AccountantsBaker Tilly TFWLCLCertified Public Accountants15 Beach Road #03-10Beach CentreSingapore 189677Partner-in-charge: Tiang Yii*(a member of the Institute of Certified Public Accountants of Singapore)*Appointed in financial year 2005

Registered Office8 Penjuru LaneSingapore 609189Registration Number: 200404900H


Financial contents17 Corporate Governance Report

25 Directors’ Report

28 Statement by Directors

29 Auditors’ Report

30 Consolidated Income Statement

31 Balance Sheets

32 Statements of Changes in Equity

33 Consolidated Cash Flow Statement

35 Notes To The Financial Statements

55 Statistics of Shareholdings

57 Notice of Annual General Meeting

Proxy Form


17


CORPORATEGOVERNANCE REPORT

The Group is committed to good corporate governance. The Group has substantively complied with the recommendations of the new Code of Corporate Governance 2005 (“Code”) through effective self-regulatory corporate practices to protect and enhance the interests of its shareholders. This report describes the Group’s corporate governance processes and activities in conjunction with the Singapore Securities Exchange Trading Limited’s requirement that issuers describe their corporate governance practices with specific reference to the Code in their annual reports.

Principle 1: The Board’s conduct of its AffairsPrinciple 1: The Board’s conduct of its Affairs

The Board’s principal functions are:

1. approving the Group’s strategic plans, key operational initiatives, major investments and divestments and funding requirements;

2. reviewing the performance of the business and approving the release of the financial results of the Group to shareholders;

3. providing guidance in the overall management of the business and affairs of the Group;

4. overseeing the processes for internal control, risk management, financial reporting and compliance; and

5. approving the recommended framework of remuneration for the Board and key executives as may be recommended by the Remuneration Committee.

The Board has delegated certain specific responsibilities to four (4) Committees, namely, the Audit Committee (“AC”), Nominating Committee (“NC”), Remuneration Committee (“RC”) and Risk Management Committee (“RMC”). More information on them is set out below. The Board accepts that while these Committees have the authority to examine particular issues and will report back to the Board with their decisions and recommendations, the ultimate responsibility for the final decision on all matters lies with the entire Board.

With effect from the beginning of 2007, the Board will meet at least four (4) times in a year. The frequency of meetings and the attendance of each director at every board and board committee meeting are disclosed on page 24 in this Report.

Matters which are specifically reserved to the Board for decision include those involving business plans, material acquisitions and disposals of assets, corporate or financial structuring, corporate strategy, share issuances, dividends, and shareholder matters.

All Directors are regularly updated by Management on the industry, business, operations and corporate governance practices of the Group. The Company will, from time to time, organise seminars and briefing sessions for the Directors to keep pace with financial, corporate governance, regulatory and other changes. Most of the Directors are members of the Singapore Institute of Directors (“SID”), and eligible to receive updates and training from SID. Directors and Senior Management are encouraged to attend SID courses and subscribe for journal updates on matters of topical interest.

A formal letter is provided to each executive director upon his appointment, setting out the director’s duties and obligations.

Guideline 1.1 of the Code: The Board’s role

Guideline 1.3 of the Code: Disclosure on delegation of authority by Board to Board Committees

Guideline 1.4 of the Code: Board to meet regularly

Guideline 1.5 of the Code: Matters requiring Board approval

Guideline 1.6 and 1.8 of the Code: Directors to receive appropriate training

Guideline 1.7 of the Code: Formal letter to be provided to directors setting out duties and obligations

18


Principle 2: Board Composition and GuidancePrinciple 2: Board Composition and Guidance

The Board currently comprises six (6) Directors of whom three (3) are non-executive and independent Directors. The Board is supported by various committees, namely, the NC, the AC, the RC and the RMC whose functions are described below. The Board has been able to exercise objective judgement independently from Management and no individual or small group of individuals dominate the decisions of the Board.

The Board is of the opinion that, given the scope and nature of the Group’s operations, the present size of the Board is appropriate for effective decision making. The Board is made up of Directors who are qualified and experienced in various fields including business and management, accounting and finance, engineering and industry, and legal practices. The profiles of each of the Directors are provided in Pages 10 and 11 of this Annual Report. Accordingly, the current Board comprises directors who as a group, have core competencies necessary to lead and manage the Company.

The non-executive directors (“NEDs”) are involved in reviewing the corporate strategies, business operations and practices of the Group, and also involved in reviewing and monitoring the performance of Management in achieving agreed goals and objectives. In addition, the NEDs meet to discuss and review the Group’s affairs on an ad hoc basis during the year without the presence of Management.

Principle 3: Chairman and Chief Executive OfficerPrinciple 3: Chairman and Chief Executive Officer

Mr Alvin Lim Hwee Hong is the Executive Chairman of the Board and Mr Vincent Lim Hui Eng was the Managing Director of the Company, re-designated as the Chief Executive Officer of the Company on 24 January 2008 . Mr Alvin Lim and Mr Vincent Lim are siblings.

The roles of the Chairman and Chief Executive Officer are separated and their responsibilities are clearly defined to ensure a check and balance of power and authority.

The Chairman will, amongst other responsibilities, lead the Board, ensure effective communication with shareholders, encourage constructive relationship between the Board and Management, as well as between Board members, and promote high standards of corporate governance. The Chief Executive Officer manages the business of the Company and implements the Board’s decisions.

In view of the sibling relationship between the Chairman and the Chief Executive Officer, the Board has appointed Mr Loh Weng Whye as the Lead Independent Director in February 2007.

Principle 6: Access to InformationPrinciple 6: Access to Information

The Board is provided with adequate and timely information prior to Board meetings and on an on-going basis. Board papers are distributed in advance of each meeting to Directors. The Company circulates copies of the minutes of the meetings of all Board Committees to all members of the Board to keep them informed of on-going developments within the Group.

Guideline 2.1 of the Code: One-third of directors to be independent

CORPORATE GOVERNANCE REPORT

Guideline 2.3 and 2.4 of the Code: Board to determine its appropriate size and comprise directors with core competencies

Guideline 2.5 and 2.6 of the Code: Role of NEDs and regular meetings of NEDs.

Guideline 3.1 of the Code: Chairman and CEO should be separate persons

Guideline 3.2 of the Code: Chairman’s role

Guideline 3.3 of the Code: Appointment of LID where Chairman and CEO are related by close family ties

Guideline 6.1 and 6.2 of the Code: Management obliged to provide Board with adequate and timely information and include background and explanatory information

19


The Directors have separate and independent access to the Company’s senior management and the Company Secretary at all times. Should the Directors, whether as a group or individually, require independent professional advice, such professionals (who will be selected with the approval of the Executive Chairman or the Chairman of the Committee requiring such advice) will be appointed at the Company’s expense.

The Company Secretary attends the Company’s Board and Committee Meetings and is responsible for ensuring that Board procedures are followed. The Company Secretary’s role is also to advise the Board on governance matters and to assist senior management in ensuring that the Company complies with rules and regulations which are applicable to the Company.

BOARD COMMITTEESBOARD COMMITTEES

Principle 7: Remuneration Matters / Procedures for Developing Remuneration Principle 7: Remuneration Matters / Procedures for Developing Remuneration PoliciesPolicies

The RC is comprised entirely of non-executive Directors, all of whom, including the Chairman, are independent:

Mr Loh Weng Whye (Chairman)Mr David Chia Tian Bin (Member)Mr Winston Kwek Choon Lin (Member)

The RC is responsible for ensuring a formal and transparent procedure for developing an appropriate executive remuneration policy and a competitive framework and will recommend to the Board for endorsement, a framework of remuneration which should cover all aspects of remuneration, including but not limited to, directors’ fees, salaries, allowances, bonuses, and benefits-in-kind, and the specific remuneration packages for each director and key executive to ensure that it is appropriate to attract, retain and motivate each of them to run the Group successfully. External consultants’ advice will be sought when a major remuneration review is conducted.

Principle 8: Level and Mix of RemunerationPrinciple 8: Level and Mix of Remuneration

In recommending a remuneration framework, the RC takes into account the performance of the Group as well as the Directors and key executives, aligning their interests with those of shareholders and linking rewards to corporate and individual performance as well as industry benchmarks. The review of remuneration packages takes into consideration the longer term interests of the Group. It covers all aspects of remuneration including salaries, fees, allowances, bonuses, perks and benefits-in-kind. The Committee’s recommendations are based on Management’s reports and recommendations, made in consultation with the Chairman of the Board and submitted for endorsement by the entire Board. The payment of Directors’ fees is subject to the approval of shareholders. Factors such as level of contribution, effort and time spent, and responsibilities and leadership of the various non-executive directors are considered when determining the level of their fees.

The service contracts for the Chairman and Chief Executive Officer are for a fixed period of three (3) years with effect from 1 October 2005. The RC is responsible for reviewing the compensation commitments in the event of an early termination, as stipulated in the service contracts.


Guideline 6.3 and 6.5 of the Code: Directors to have access to Company Secretary; role of Company Secretary to be clearly defined and procedure for Board to take independent professional advice at company’s expense

Guidelines 7.1 and 7.2 of the Code: RC to consist entirely of NEDs; majority, including RC chairman, must be independent & RC to recommend remuneration of directors and CEO, and to review remuneration of senior management

Guideline 8.1 of the Code: Package should align executive directors’ interests with shareholders’ interests

Guideline 8.2 Remuneration to consider contribution, effort, time spent and responsibilities

Guideline 8.3 of the Code: Fixed appointment period for executive directors, RC to review compensation for early termination

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Principle 9: Disclosure on RemunerationPrinciple 9: Disclosure on Remuneration

The remuneration of the Directors for the financial year are as follows:

Name of DirectorsName of Directors SalarySalaryBonus / Profit-Bonus / Profit-

SharingSharingFeesFees

Below S$250,000Below S$250,000

Mr Loh Weng Whye 100%

Mr David Chia Tian Bin 100%

Mr Winston Kwek Choon Lin 100%

Mr Laurance Bong* 100%

S$500,000 to S$749,999S$500,000 to S$749,999

Mr Patrick Lim Hui Peng 46% 46% 8%

S$1,500,000 to S$1,749,999S$1,500,000 to S$1,749,999

Mr Alvin Lim Hwee Hong 20% 77% 3%

Mr Vincent Lim Hui Eng 20% 77% 3%

The remuneration of Mr Alvin Lim Hwee Hong, our Executive Chairman and Mr Vincent Lim Hui Eng, our Chief Executive Officer, is governed by their respective service agreements entered into with the Company on 1st August 2005 and duly disclosed in the Company’s IPO Prospectus.

*Mr Laurance Bong has resigned as a director on 9 April 2007.

The remuneration of the Top Six (6) Key Executives for the financial year are as follows:

Name of Key ExecutivesName of Key Executives Below S$250,000Below S$250,000 S$250,000 to S$499,999S$250,000 to S$499,999

Mr Johnny Lim Huay Hua X

Ms Eileen Lim Chye Hoon X

Mr Lee Ka Meng X

Mr Benson Loh Kuan Hwee X

Mr Jonathan Wong Teck Fatt X

Mr Keegan Chua Tze Wee X

Mr Johnny Lim Huay Hua and Ms Eileen Lim Chye Hoon are siblings of Mr Alvin Lim Hwee Hong, Mr Vincent Lim Hui Eng and Mr Patrick Lim Hui Peng.

Principle 4 : Board Membership Principle 4 : Board Membership Principle 5 : Board PerformancePrinciple 5 : Board Performance

The Nominating Committee comprises the following Directors:-

Mr Winston Kwek Choon Lin (Chairman) Mr Loh Weng Whye (Member) Mr Vincent Lim Hui Eng (Member)


Guideline 9.1 and 9.2 of the Code: Disclosure of directors’ remuneration and top 5 executives of the Company in bands of $250,000

Guideline 4.1 of the Code: NC to comprise at least three directors, majority of whom are independent; chairman not associated with a substantial shareholder

Guideline 9.3 of the Code: Disclosure of remuneration of employees who are immediate family members of a director or CEO, and whose remuneration exceed $150,000 during the year.

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Save for Mr Vincent Lim Hui Eng, the other members of the NC are non-executive and independent Directors.

The NC makes recommendations to the Board on all board appointments. It is responsible for re-nomination of directors at regular intervals taking into consideration the Directors’ contribution and performance at Board meetings, including attendance, preparedness and participation.

The independence of each Director has been reviewed annually by the NC based on the Code’s definition of what constitutes an independent director. Based on this review, the NC has confirmed the independence of the Directors concerned.

The NC is also of the view that the Directors are able to and have adequately carried out their duties as Directors of the Company. As Board meetings are planned and scheduled well in advance of the meeting dates, Directors have been able to attend almost all of the Board and Committee meetings.

Pursuant to the Articles of Association of the Company:

(a) one third of the Directors shall retire from office at the Annual General Meeting;

(b) Directors appointed during the course of the year will submit themselves for re-election at the next Annual General Meeting of the Company; and

(c) the Chief Executive Officer shall be subjected to retirement and re-appointment by shareholders.

The NC has adopted guidelines for annual assessment of the effectiveness of the Board as a whole and of the contribution of each individual director to the effectiveness of the Board and has performed the necessary assessment for the financial year.

Principle 10 : Accountability of the Board and AuditPrinciple 10 : Accountability of the Board and Audit

The Board is responsible for providing a balance and understandable assessment of the Company’s performance, position and prospects, including interim and other price sensitive reports. Management also provides to members of the Board for their endorsement, annual budgets and targets, and monthly management accounts.

Principle 11 : Audit CommitteePrinciple 11 : Audit Committee

The AC comprises:

Mr David Chia Tian Bin (Chairman) Mr Loh Weng Whye (Member) Mr Winston Kwek Choon Lin (Member)

The Committee members are all non-executive and independent Directors capable of discharging their responsibilities appropriately. The members collectively have many years of experience in accounting and audit, business and financial management, law and engineering. The Board considers that the members of the AC are appropriately qualified to discharge the responsibilities of the AC.


Guideline 4.3 of the Code: NC to determine directors’ independence annually

Guideline 10.1 & 10.2 of the Code: Board’s responsibility to provide balanced, understandable assessment of Company’s performance and position on interim basis and management accounts

Guideline 11.1 and 11.2 of the Code: AC should comprise at least three directors, all non-executives and the majority of whom, including the chairman, are independent and Board to ensure AC members are qualified

Guideline 5.1 of the Code: The NC should decide how the Board’s performance may be evaluated and propose objective performance criteria.

22


The AC has explicit authority to investigate any matter within its terms of reference. It has full access to and the co-operation of Management and the full discretion to invite any Director or executive officer to attend its meetings, and has reasonable resources to enable it to discharge its functions properly.

The AC has written terms of reference. Specifically, the AC meets on a periodic basis to perform the following functions:

(a) assist the Board of Directors in the identification and monitoring of areas of significant business risks with the help of internal and external auditors;

(b) review the effectiveness of the financial and accounting control systems and management of exposure to financial and business risks;

(c) review compliance with the Listing Manual and the Best Practices Guide of the Singapore Exchange Securities Trading Limited and the Code of Corporate Governance;

(d) review with the external and internal auditors their respective audit plans, reports and their evaluation of the Group’s system of risk management and internal controls;

(e) recommend the appointment of auditors and to review the level of audit fees;

(f) review the independence of the Company’s auditors on an annual basis;

(g) review the adequacy of the internal audit function;

(h) review the Group’s quarterly and annual reports and announcements before they are submitted to the Board for approval;

(i) review the consolidated balance sheet and income statement of the Group and other financial statements and other documents accompanying the same and thereafter to submit the same to the Board for approval; and

(j) review interested person transactions.

The AC has reviewed and is satisfied with the level of co-operation rendered by Management to the external auditors, the adequacy of the scope and quality of their audits, and the independence and objectivity of the external auditors. In the course of its review, the AC also met with the external auditors without the presence of Company’s Management.

Management has put in place a whistle-blowing policy duly endorsed by the AC and approved by the Board where employees of the Group can access the appropriate person to raise concerns about possible improprieties in matters of financial management and reporting or other matters.

Principle 12: Internal controlsPrinciple 12: Internal controls

The AC has, with the assistance of the internal and external auditors, reviewed the effectiveness of the Group’s material internal controls relating to financial, operational and compliance controls regularly. Based on this review, the Board is satisfied that the internal controls of the Group are adequate to safeguard shareholders’ investments and the Group’s assets, as well as ensure the integrity of its financial statements.


Guideline 11.3 of the Code: AC to have explicit authority to investigate and have full access to management and reasonable resources

Guideline 11.4 of the Code: Duties of AC

Guideline 11.6 of the Code: AC to review independence of external auditors annually

Guideline 11.5 of the Code: AC to meet internal and external auditors, without presence of management, annually

Guideline 11.7 of the Code: AC to review arrangements for staff to raise possible improprieties to AC

Guideline 12.1 and 12.2 of the Code: AC to review adequacy of financial, operational and compliance controls and risk management policies and Board to comment on the adequacy of the internal controls

23


The Board and AC are assisted by the RMC (whose members comprise the Executive Chairman, Chief Executive Officer and Chief Financial Officer) whose role is to identify, assess and manage key risks and to put in place controls and measures to mitigate these risks. Internal Auditors are tasked to perform independent reviews of these risks and controls to provide reasonable assurance to the Board and the AC that the risks and controls have been adequately addressed and operating effectively.

Principle 13: Internal auditPrinciple 13: Internal audit

The Company outsourced its internal audit function to an independent assurance service provider (“IA”) which specialises in risk management and internal auditing. IA reports directly to the AC Chairman on audit matters, and to the Executive Chairman or Chief Executive Officer on administrative matters. The AC is satisfied that the appointed internal auditor meets the standards set by internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

The primary objective of the internal audit is to assure the AC and the Board that sound risk management processes and controls are in place and operating effectively.

The internal auditor reports primarily to the Chairman of the AC. The AC is satisfied that the internal audit function is adequately resourced and will comprehensively cover the major activities within the Group.

Principle 14 and 15 : Communications with ShareholdersPrinciple 14 and 15 : Communications with Shareholders

(a) Communications with Shareholders

The Company ensures that timely and adequate disclosure of information on matters of material impact on the Group are made to shareholders of the Company, in compliance with the requirements set out in the Listing Manual of the Singapore Exchange Securities Trading Limited with particular reference to the Corporate Disclosure Policy set out therein. In this respect, the Company will, commencing in 2008, announce its results to shareholders on a quarterly basis.

(b) Greater Shareholder Participation

At general meetings, shareholders of the Company will be given the opportunity to present their views and to ask Directors and Management questions regarding the Group. The Directors and Management will be present at these meetings to address any questions that shareholders may have. The external auditors will also be present to assist the Board in addressing queries by shareholders.

The Articles allow a member of the Company to appoint a proxy to attend and vote at general meetings. For the time being, the Board is of the view that this is adequate to enable shareholders to participate in general meetings of the Company and is not proposing to amend their Articles to allow votes in absentia. Separate resolutions on each distinct issue are tabled at general meetings.


Guideline 13.2 of the Code: IA should meet standards set by internationally-recognised professional bodies

Guideline 13.1 and 13.3 of the Code: IA to report to AC chairman, and CEO administratively and is adequately resourced

Guideline 14.1 of the Code: Company to regularly convey pertinent information

Guideline 15.3 of the Code: Committee chairman and external auditors to be present at AGMs

Guideline 15.4 of the Code: Companies encouraged to amend Articles to avoid imposing limit on number of proxies for nominee companies

24


ATTENDANCE AT BOARD & COMMITTEE MEETINGSATTENDANCE AT BOARD & COMMITTEE MEETINGS

The number of Directors’ and other committees’ meetings and the record of attendance of each Director during the financial year ended 31 December 2007 is set out below:

NameName BoardBoard Audit CommitteeAudit CommitteeRemuneration Remuneration

CommitteeCommitteeNominating Nominating CommitteeCommittee

No. ofNo. ofMeetingsMeetings

HeldHeld

No. ofNo. ofMeetingsMeetingsAttendedAttended


HeldHeld



HeldHeld



HeldHeld


Alvin Lim Hwee Hong 4 4 NA NA NA NA NA NA

Vincent Lim Hui Eng 4 4 NA NA NA NA 1 1

Patrick Lim Hui Peng 4 4 NA NA NA NA NA NA

Laurance Bong 4 1 NA NA NA NA NA NA

Loh Weng Whye 4 4 4 4 1 1 1 1

David Chia Tian Bin 4 4 4 4 1 1 NA NA

Winston Kwek Choon Lin 4 4 4 3 1 1 1 1

Note:Mr Laurance Bong resigned as a director on 9 April 2007. Accordingly, he was only eligible to attend 1 Board meeting.Mr Winston Kwek Choon Lin replaced Mr Alvin Lim Hwee Hong as a member of the Remuneration Committee on 27 July 2006.

ADDITIONAL INFORMATIONADDITIONAL INFORMATION

Dealings in SecuritiesDealings in Securities

The Company has adopted the Singapore Exchange Securities Trading Limited’s Best Practices Guide applicable in relation to dealings in the Company’s securities by its officers. The Company has informed its officers not to deal in the Company’s shares whilst they are in possession of unpublished material price sensitive information and during the period commencing one month before half-year or full year, as the case may be, and ending on the date of announcement of such financial results.

Material ContractsMaterial Contracts

There were no other material contracts entered into by the Company or its subsidiary, involving the interests of any Director or controlling shareholder nor have such other contracts been entered into since the end of the previous financial year.

Interested Person TransactionsInterested Person Transactions

There were no interested person transactions.


25


The directors are pleased to present their report to the members together with the audited consolidated financial statements of the Group for the financial year ended 31 December 2007 and the balance sheet and statement of changes in equity of the Company as at 31 December 2007.

1 Directors1 Directors

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

Alvin Lim Hwee Hong (Executive Chairman) Vincent Lim Hui Eng (Executive Director and Chief Executive Officer) Patrick Lim Hui Peng (Executive Director and Chief Operating Officer) Loh Weng Whye (Independent Non-executive) Winston Kwek Choon Lin (Independent Non-executive) David Chia Tian Bin (Independent Non-executive)

2 Arrangement to enable directors to acquire benefits2 Arrangement to enable directors to acquire benefits

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.

3 Directors’ interest in shares or debentures3 Directors’ interest in shares or debentures

(a) The directors of the Company holding office at the end of the financial year had no interests in the shares or debentures of the Company and related corporations as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 164 of the Companies Act, Cap. 50, except as follows:

Number of ordinary shares Number of ordinary shares

Holdings registered in Holdings in which a director Holdings registered in Holdings in which a director name of director/nominee is deemed to have an interest name of director/nominee is deemed to have an interest

At At At At At At At At 1.1.2007 31.12.2007 1.1.2007 31.12.2007 1.1.2007 31.12.2007 1.1.2007 31.12.2007

The Company The Company Alvin Lim Hwee Hong 2,552,460 2,552,460 188,552,400 188,552,400Vincent Lim Hui Eng 2,552,460 2,552,460 188,552,400 188,552,400Patrick Lim Hui Peng 2,552,460 2,552,460 188,552,400 188,552,400

Immediate and Ultimate Holding Company Immediate and Ultimate Holding Company Beng Hui Holding (S) Pte LtdBeng Hui Holding (S) Pte Ltd

Alvin Lim Hwee Hong 420,000 420,000 – – Vincent Lim Hui Eng 420,000 420,000 – – Patrick Lim Hui Peng 420,000 420,000 – –

Subsidiary Companies Subsidiary Companies Beng Hui Marine Electrical Pte LtdBeng Hui Marine Electrical Pte Ltd

Alvin Lim Hwee Hong – – 6,700,100 6,700,100 Vincent Lim Hui Eng – – 6,700,100 6,700,100 Patrick Lim Hui Peng – – 6,700,100 6,700,100

DiRECTORS’ REPORT

26


3 Directors’ interest in shares or debentures (cont’d)3 Directors’ interest in shares or debentures (cont’d)

Number of ordinary shares Number of ordinary shares

Holdings registered in Holdings in which a director Holdings registered in Holdings in which a director name of director/nominee is deemed to have an interest name of director/nominee is deemed to have an interest

At At At At At At At At 1.1.2007 31.12.2007 1.1.2007 31.12.2007 1.1.2007 31.12.2007 1.1.2007 31.12.2007

Sanshin Marine (S.E.A.) Pte LtdSanshin Marine (S.E.A.) Pte Ltd

Alvin Lim Hwee Hong – – 200,000 200,000 Vincent Lim Hui Eng – – 200,000 200,000 Patrick Lim Hui Peng – – 200,000 200,000

Yorkshire Marine & Offshore (S) Pte LtdYorkshire Marine & Offshore (S) Pte Ltd

Alvin Lim Hwee Hong – – 100,000 100,000 Vincent Lim Hui Eng – – 100,000 100,000 Patrick Lim Hui Peng – – 100,000 100,000

B & C Electrical Pte LtdB & C Electrical Pte Ltd

Alvin Lim Hwee Hong – – – 2 Vincent Lim Hui Eng – – – 2 Patrick Lim Hui Peng – – – 2

(b) The directors’ interests in the shares of the Company at 21 January 2008 were the same at 31 December 2007.

4 Directors’ contractual benefits4 Directors’ contractual benefits

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than disclosed in the consolidated financial statements) 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.

5 Share options5 Share options

No option to take up unissued shares of the Company or its subsidiaries was granted during the financial year.

There were no shares issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries whether granted before or during the financial year.

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

DiRECTORS’ REPORT

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6 Audit Committee6 Audit Committee

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

David Chia Tian Bin (Chairman) Loh Weng Whye (Member) Winston Kwek Choon Lin (Member)

The Audit Committee carried out its functions specified in Section 201B of the Companies Act, the Listing Manual and the Code of Corporate Governance. The functions are detailed in the Report on Corporate Governance.

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, Baker Tilly TFWLCL, be nominated for re–appointment as auditors of the Company at the forthcoming Annual General Meeting.

7 Auditors7 Auditors

The auditors, Baker Tilly TFWLCL have expressed their willingness to accept re-appointment.

On behalf of the directors

Alvin Lim Hwee Hong Vincent Lim Hui EngDirector Director

29 February 2008

DiRECTORS’ REPORT

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In the opinion of the Directors:

(i) the financial statements set out on pages 30 to 54 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2007 and of the results, changes in equity and cash flows of the Group and of the changes in equity of the Company for the financial year ended on that date; and

(ii) 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.

On behalf of the directors

Alvin Lim Hwee Hong Vincent Lim Hui EngDirector Director

29 February 2008

STATEMENT BY DiRECTORS

29


We have audited the accompanying financial statements of BH Global Marine Limited (the “Company”) and its subsidiaries (the “Group”) as set out on pages 30 to 54, which comprise the balance sheets of the Group and the Company as at 31 December 2007, and the income statement, statement of changes in equity and cash flow statement of the Group and statement of changes in equity of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Directors’ Responsibility for the Financial StatementsDirectors’ 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, Cap 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal controls 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’ ResponsibilityAuditors’ 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 auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal controls 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 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.

OpinionOpinion

In our opinion,

(a) the accompanying balance sheet and statement of changes in equity of the Company and the consolidated financial statements of the Group are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company and the Group as at 31 December 2007 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial 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.

Baker Tilly TFWLCLCertified Public Accountants

29 February 2008

AUDiTORS’ REPORT TO THE MEMBERS OFBH Global Marine Limited

30


Group Group 2007 2006 2007 2006 Note $’000 $’000 Note $’000 $’000

Sales of goodsSales of goods 81,87081,870 58,923 Cost of salesCost of sales (48,542)(48,542) (36,281)

Gross profitGross profit 33,32833,328 22,642 Other operating income 320320 441Marketing expenses (502)(502) (517)Administrative expenses (11,628)(11,628) (8,300)Finance costs 3 (181)(181) (6)

Profit before taxProfit before tax 4 21,33721,337 14,260 Tax expenseTax expense 6 (3,821)(3,821) (3,045)

Net profit for the year attributable to equity holders of the CompanyNet profit for the year attributable to equity holders of the Company 17,51617,516 11,215

Earnings per share (EPS) Earnings per share (EPS) (expressed in cents per share)(expressed in cents per share)

- Basic 7 6.266.26 4.01

- Diluted 7 6.266.26 4.01

CONSOLiDATED iNCOME STATEMENT

For the financial year ended 31 December 2007

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

31


Group Company Group Company 2007 2006 2007 2006 2007 2006 2007 2006 Note $’000 $’000 $’000 $’000 Note $’000 $’000 $’000 $’000

Non-current assets Non-current assets Property, plant and equipment 8 6,9266,926 7,135 –– –Investment in subsidiaries 9 –– – 10,717 10,717 10,664

6,9266,926 7,135 10,71710,717 10,664

Current assets Current assets Inventories 35,24035,240 18,053 –– –Trade receivables 10 22,12922,129 21,692 –– –Other receivables 11 414414 90 22,04622,046 18,204Cash and cash equivalents 12 10,644 10,644 7,998 179179 2,117

68,42768,427 47,833 22,22522,225 20,321

Total assetsTotal assets 75,35375,353 54,968 32,94232,942 30,985

Current liabilities Current liabilities Trade payables 9,4789,478 9,840 –– –Bank borrowings 13 5,3485,348 661 –– –Other payables 14 5,2435,243 3,049 2,9232,923 1,883Tax payable 3,9733,973 3,143 55 5

Total liabilitiesTotal liabilities 24,04224,042 16,693 2,9282,928 1,888

Net assetsNet assets 51,31151,311 38,275 30,014 30,014 29,097

Share capital and reserves Share capital and reserves Share capital 15 23,06923,069 23,069 23,06923,069 23,069Accumulated profits 28,24228,242 15,206 6,9456,945 6,028

51,31151,311 38,275 30,01430,014 29,097

BALANCE SHEETSAt 31 December 2007


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Share Share Accumulated Share Share Accumulated capital premium profits Total capital premium profits Total Note $’000 $’000 $’000 $’000 Note $’000 $’000 $’000 $’000

GroupGroup

At 1 January 2007 23,06923,069 –– 15,20615,206 38,27538,275 Net profit for the year –– –– 17,51617,516 17,51617,516 Dividends 19 –– –– (4,480)(4,480) (4,480)(4,480)

At 31 December 2007 23,069 – 28,242 51,311At 31 December 2007 23,069 – 28,242 51,311

At 1 January 2006 14,000 9,069 6,791 29,860 Transfer to/(from) 15 9,069 (9,069) – – Net profit for the year –– – 11,215 11,215 Dividends 19 – – (2,800) (2,800)

At 31 December 2006 23,069 – 15,206 38,275

CompanyCompany

At 1 January 2007 23,069 – 6,02823,069 – 6,028 29,09729,097 Net profit for the year – – 5,397– – 5,397 5,3975,397 Dividends 19 – – (4,480)– – (4,480) (4,480)(4,480)

At 31 December 2007 23,069 – 6,945 30,014At 31 December 2007 23,069 – 6,945 30,014

At 1 January 2006 14,000 9,069 3,050 26,119 Transfer to/(from) 15 9,069 (9,069) – – Net profit for the year – – 5,778 5,778 Dividends 19 – – (2,800) (2,800)

At 31 December 2006 23,069 – 6,028 29,097


STATEMENTS OF CHANGES iN EQUiTY


33


2007 2006 2007 2006 Note $’000 $’000 Note $’000 $’000

Cash flows from operating activities Cash flows from operating activities Profit before tax 21,33721,337 14,260 Adjustments for: Depreciation of property, plant and equipment 8 498498 452Goodwill arising from consolidation written off 359359 –Intangible asset written off –– 700Interest income (49)(49) (129)Interest expenses 181181 6Loss/(gain) on disposal of property, plant and equipment 1616 (5)

Operating cash flows before movements in working capital 22,34222,342 15,284 Inventories (16,961)(16,961) (8,000)Receivables (200)(200) (10,541)Payables 1,0111,011 6,397

Cash from operations 6,1926,192 3,140 Interest paid (181)(181) (6)Income tax paid (3,037) (3,037) (2,132)

Net cash from operating activitiesNet cash from operating activities 2,9742,974 1,002

Cash flows from investing activities Cash flows from investing activities Proceeds from disposal of property, plant and equipment 1414 5Purchase of property, plant and equipment 8 (275)(275) (515)Interest received 49 49 129Cash flow on acquisition of subsidiary, net of cash (Note A) (323)(323) –Purchase of intangible asset –– (700)

Net cash used in investing activitiesNet cash used in investing activities (535)(535) (1,081)

Cash flows from financing activities Cash flows from financing activities Proceeds from interest bearing loans and borrowings 4,6874,687 661Dividend paid 19 (4,480)(4,480) (2,800)

Net cash from/(used in) financing activitiesNet cash from/(used in) financing activities 207207 (2,139)

Net increase/(decrease) in cash and cash equivalents Net increase/(decrease) in cash and cash equivalents 2,6462,646 (2,218)Cash and cash equivalents at beginning of financial yearCash and cash equivalents at beginning of financial year 7,9987,998 10,216

Cash and cash equivalents at end of financial yearCash and cash equivalents at end of financial year 12 10,64410,644 7,998


CONSOLiDATED CASH FLOW STATEMENTFor the financial year ended 31 December 2007

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Note ANote A

Acquisition of subsidiaryAcquisition of subsidiary

During the year, the Group acquired B & C Electrical Pte Ltd, a wholly-owned subsidiary. The fair value of assets acquired and liabilities assumed were as follows:

$’000 $’000

Cash 8989Inventories 226226Trade and other receivables 540540Property, plant and equipment 4444Goodwill 359359Taxation (25)(25)Trade and other payables (821)(821)

Total purchase price paid 412412Less: Cash of subsidiary (89)(89)

Cash flow on acquisition, net of cash 323323

CONSOLiDATED CASH FLOW STATEMENT(cont’d)



35


These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1 Corporate information1 Corporate information

The Company (Co. Reg. No. 200404900H), is incorporated and domiciled in Singapore and its registered office is at 8 Penjuru Lane, Singapore 609189.

The principal activity of the Company is that of investment holding. The principal activities of its subsidiaries are those relating to wholesalers and retailers of electrical goods, appliances and other related products and in marine supply and servicing as disclosed in note 9 to the financial statements.

2 Significant accounting policies2 Significant accounting policies

a) Basis of preparationa) Basis of preparation

The financial statements, (expressed in Singapore dollars which is the Company’s functional currency), have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with FRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management’s best knowledge of current events and actions and historical experiences and various other factors that are believed to be reasonable under the circumstances, actual results may ultimately differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. There are no critical accounting estimates and assumptions used that are significant to the financial statements, and are involving a higher degree of judgement or complexity other than the accounting policy in respect of:-

(i) the estimation of the net realisable value of inventories in note 2(g); and

(ii) the making of allowances for estimated irrecoverable amounts of receivables in note 2(h) in connection with a certain trade receivable as mentioned in note 20 on Financial Risk Management under Credit Risk.

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables and provisions approximate their respective fair values due to the relatively short-term maturity of these financial instruments.

In the current financial year, the Group has adopted all the new and revised FRS and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for the current financial year. The adoption of these new/revised FRSs and INT FRSs has no material effect on the financial statements.

At the date of the balance sheet, the following FRSs and Interpretations of FRS (“INT FRS”) were issued, revised

or amended but not effective:

FRS 23 Borrowing Costs FRS 108 Operating Segments INT FRS 111 FRS 102 – Group and Treasury Share Transactions INT FRS 112 Service Concession Arrangements

NOTES TO THE FiNANCiAL STATEMENTSFor the financial year ended 31 December 2007

36


2 Significant accounting policies (cont’d)2 Significant accounting policies (cont’d)

a) Basis of preparation (cont’d)a) Basis of preparation (cont’d) The Group anticipates that the adoption of these FRSs and INT FRSs (where applicable) in future periods will

have no material impact on the financial statements of the Company and the consolidated financial statements of the Group.

b) Revenue recognitionb) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes.

Sales of inventories are recognised when inventories are delivered and title has passed to the customer.

c) Principles of consolidationc) Principles of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the parent company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognised in assets, such as inventory and property, plant and equipment, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an acquisition is measured as 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. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and continent liabilities represents goodwill. The goodwill is accounted for in accordance with the accounting policy for goodwill stated in Note 2(d).

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and continent liabilities over the cost of business combination is recognised in the income statement on the date of acquisition.

d) Goodwilld) Goodwill

Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

NOTES TO THE FiNANCiAL STATEMENTS


37


2 Significant accounting policies (cont’d)2 Significant accounting policies (cont’d)

d) Goodwill (cont’d)d) Goodwill (cont’d) For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units

expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impair

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