Wired for Growth - Gaylin Holdings Limited - Investor...

A n n u a l R e p o r t 2 0 1 3

Wired for

GrowthGAYLIN HOLDINGS LIMITED

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Vision and Mission

Corporate Profile

Our Presence

Our Businesses

Key Corporate Milestones

Message to Shareholders

Board of Directors

Senior Management

Corporate Information

Corporate Structure

Business Highlights

Financial Highlights

Operating and Financial Review

Corporate Social Responsibility

Corporate Governance

Financial Contents

VisionA Safe And Stable Lifting & Rigging Environment

A Global Company Trusted For Providing Safe And Innovative Solutions In Lifting & Rigging For The Offshore And Marine Industry

Mission

Gaylin Holdings Limited

01

With a history that began in 1974, Gaylin Holdings Limited (the “Company” or “Gaylin” and together with its subsidiaries, the “Group”) is one of the largest Singapore-based multi-disciplinary specialist providers of rigging and lifting solutions to the global oil and gas (“O&G”) industry.

Our comprehensive range of inventory, years of experience in the business and engineering capabilities allow us to respond to the needs of our customers quickly and efficiently, making Gaylin a one-stop solutions provider. We are trusted by our customers who typically include oil rig and vessel owners and operators, shipbuilders, charterers and drilling and mooring contractors.

As part of our business, we manufacture and supply a wide range of rigging and lifting equipment such as heavy lift slings and grommets, wire rope slings, crane wire, mooring equipment and related fittings and accessories. We also provide related services including load testing, spooling services, rental services and other fabrication services to our customers globally. In addition, as part of our value-added customer service, we provide ship supplies such as ship stores and equipment to ships and oil rigs, which we source from third party suppliers all over the world.

Headquartered in Singapore, we have three warehouses and one manufacturing facility in Singapore, one manufacturing facility in Vietnam and an upcoming new facility in Malaysia, which together, occupy an aggregate of approximately 441,031 square feet. From these strategic bases, we sell and distribute our products and services to global markets spanning Asia, Oceania, Europe, the Middle East and Africa.

As testament of Gaylin’s commitment to safety, we were awarded the bizSAFE STAR by the Workplace Safety and Health Council, Ministry of Manpower as well as the SS506: Part 1:2009, OHSAS 18001:2007 certification by DAS Certification Singapore for the manufacture of wire rope slings in 2013. This is in addition to our ISO 9002 certification for the manufacture of wire rope slings, which we obtained in 1998, as well as our ISO 9001:2008 certification in 2012 in recognition of our quality management system. In addition, we were conferred the “Enterprise 50 (E50) Award” in 2009, the “2011 Singapore Brand Award” and the “Promising SME 500 Award” in the platinum category in 2012.

CORPORATE PROFILE

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A One-Stop Specialist Provider of Rigging and

Lifting Solutions to the Global Offshore O&G Industry

Vietnam

Malaysia

Singapore

OUR PRESENCE


03

Asia

Oceania

Africa

Europe

Middle East

Manufacturing FacilityGlobal Market

Gaylin supplies and manufactures a wide range of rigging and lifting equipment that comprises heavy lift slings and grommets, wire rope slings, crane wire, mooring equipment and related fittings and accessories.

We also provide a range of engineering services to our customers who require customisation or manufacturing of products specific to their requirements, that includes the design, fabrication, testing and certification of rigging and lifting equipment.

As part of our value-added customer service, we supply a wide range of ship stores and equipment to ships and oil rigs.

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A Comprehensive Range of ProductsHeavy Lift Slings and GrommetsWe are a pioneer in the manufacture of heavy lift slings and grommets, which are fabricated from synthetic or steel wire ropes. These products are typically used for lifting heavy and complex structures and procedures such as the installation of offshore jacket platforms. Some of the heavy lift slings and grommets we provide:

• Cable laid slings and grommets• Synthetic heavy lift sling: Samson (USA) and Slingmax (USA)• Gator laid slings and grommets: Slingmax (USA)

Wire RopesWe have a well-stocked inventory of wire rope products produced by established manufacturers around the world. Within our wide range, we are able to offer wire ropes measuring up to 152mm in diameter which is the largest in size (diameter) available in the market. Our wire rope products:

• Crane wire rope: Diepa (Germany) and TEUFELBERGER (Austria)• Steel wire rope: Kiswire (South Korea) and Usha Martin (India)

Mooring Equipment We supply different grades of anchor chains, mooring components and parts for use in the global offshore O&G industry, such as ASAC anchor chains, to suit the requirements of different mooring systems.

At A Glance

OURBUSINESSES

We offer a comprehensive range of rigging and lifting fittings and accessories for the global offshore O&G industry from well-known international brands:

• Shackles: Crosby (USA), GN Rope Fittings (Netherlands) and Green Pin (Netherlands)• Sockets: Crosby (USA) and GN Rope Fittings (Netherlands)• Alloy chains: Gunnebo (Sweden), pewag (Austria) and Yoke (Taiwan)• Connecting links: Gunnebo (Sweden), pewag (Austria) and Yoke (Taiwan)• Master links: GN Rope Fittings (Netherlands), Gunnebo (Sweden) and Yoke (Taiwan)• Hooks: GN Rope Fittings (Netherlands), Gunnebo (Sweden) and Yoke (Taiwan)• Lever hoist / Chain hoist: Titan (Australia) and Vital (Japan)• Snatch blocks: Crosby (USA) and Yoke (Taiwan)• Remotely operated vehicle (ROV) hooks: Crosby (USA), GN Rope Fittings (Netherlands), Triton (UK) and Yoke (Taiwan)

Related Fittings and Accessories

• LoadTestingWe are equipped with a test facility of 2,600 tonnes by 330 ft and load cells ranging from five tonnes to 1,000 tonnes and are able to carry out both in-house and on-site testing and inspection. We also provide re-certification services.

• SpoolingServicesSupported by an experienced spooling team, we have in-house and mobile spooling machines capable of handling steel and synthetic ropes with cumulative weight ranging from 15 tonnes to 250 tonnes.

• RentalServicesWe offer a wide range of rigging and lifting equipment for rental, such as spooling machines, heavy lift slings and grommets, anchors and related fittings and accessories such as lifting gears, mooring gears, load cells and water load bags.

• OtherFabricationServicesWe also offer fabrication services to produce custom-made items to meet the customers’ requirements and specifications.

Related Services

Ship Supply BusinessAs part of our commitment to value-added customer service, we also provide ship supplies such as ship stores and equipment to ships and oil rigs, which are sourced from third party suppliers around the world.


05

A Comprehensive Range of Products

1990s:Evolution of Gaylin to become a one-stop specialist provider of rigging and lifting solutions

• Gaylin Trading Company established in 1974 with 5 personnel at a 300 sq ft premise.• Acquired first splicing machine in 1978 to cater to strong customer demand.

• Acquired warehouses at Kian Teck Drive and Joo Koon Way between 1981 and 1984.• Set up ship supply department to complement product and service range in 1985.• Expanded inventory range between 1986 and 1989 to include wire ropes with up to 103mm in diameter and 1,000m in length.• Began developing offshore markets for products and services in 1989.

• Started manufacturing cable laid slings; Largest to date produced is 321mm diameter.

• Started manufacturing cable laid grommets; Largest to date produced is 270mm diameter.

• Expanded services to include load testing services, inspections and spooling services.

• Recognised with international ISO 9002 certification for the manufacture of wire rope slings in 1998.

1970s:Our early years

1980s:Significant expansion of business

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KEY CORPORATEMILESTONES


07

• Renamed Gaylin International Pte Ltd in 2000.

• Expanded capability in load-testing services between 2001 and 2005, including the purchase of a 2,600 tonne by 330 feet test machine.

• Set up representative office in Vietnam in 2001 and commenced full operations in Vietnam in 2008 with a press machine and a test machine.

• Acquired 7 Gul Avenue in 2003 to house present head office, warehouse and fabri-cation facilities.

• Began distribution of high performance synthetic ropes manufactured by Samson Rope (USA) in 2004 and subsequently Slingmax (USA) in 2007.

• Implemented online inventory database system and secured long term contracts with customers in 2005.

• Conferred the “Enterprise 50 (E50) award” in 2009.

2000s:

2011:• Conferred the “2011 Singapore Brand Award”.

Further Business Expansion

• Received the “Promising SME 500 Award” and “Circle of Excellence in Offshore & Marine Industry”.

• Commenced construction of new facilities in Malaysia.

• Listed on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX- ST” or “SGX” or “Singapore Exchange”) on 25 October 2012.

2012:

• Expanded ship chandling business with the acquisition of Allseas Marine Services Pte Ltd.

• Awarded the Certificate of Approval (SS506: Part 1:2009, OHSAS 18001:2007) by DAS Certification Singapore.

• Accorded the bizSAFE STAR by the Workplace Safety and Health Council, Ministry of Manpower.

2013:

MESSAGE TO SHAREHOLDERS

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DearShareholders,It is with great pleasure that I present to you the inaugural annual report of Gaylin Holdings Limited. The past one year has been an exciting journey for the Group with our listing debut on the Mainboard of Singapore Exchange and the inroads we have made in growing the footprint of Gaylin in the region.

Our initial public offering (“IPO”) in October last year was very warmly received by the investment community in Singapore. At S$0.35 a piece, our Offering of 110 million new shares was approximately 5.5 times subscribed. In addition, we over-allotted an additional 22 million shares, all of which were allocated to the Placement tranche. We are very heartened by this overwhelming response and would like to thank all of you for choosing to invest in Gaylin.

From our humble beginnings in 1974 as a small business operating out of a shophouse in Beach Road with just five employees, Gaylin has evolved into its status today as a one-stop specialist provider of rigging and lifting solutions to the global offshore O&G industry. Our name is recognised worldwide for reliability, quality and efficiency, thanks to over 30 years of experience in the business

as well as our comprehensive inventory of products, engineering expertise and strategically located offices.

Needless to say, our successful listing on the Singapore Exchange has not only elevated our position as a key player in the rigging and lifting solutions industry, but has provided a springboard for us to grow our business further.

FY2013FinancialPerformanceFor the 12 months ended 31 March 2013 (“FY2013”), the Group reported a 7.9% increase in revenue to S$77.1 million, underpinned by a strong fourth quarter performance. Our topline for the year was lifted by contributions from Allseas Marine Services Pte Ltd (“Allseas Marine”), a ship supply company we acquired in January 2013 for S$1.5 million, as well as stronger orders from key customers based in Malaysia, Other Asia and Europe for their projects.

Our net profit attributable to shareholders, however, slipped from S$13.0 million in the 12 months ended 31 March 2012 (“FY2012”) to S$10.5 million in FY2013. This was largely due to higher distribution costs and administrative costs associated with our expanding operations, higher IPO expenses as well as acquisition-related costs.

DesmondTeoExecutive Director and Chief Executive Officer


09

DividendPayoutof32.9%With this set of results, the Board of Directors of the Company (the “Board”) is pleased to recommend a first and final cash dividend of 0.8 Singapore cents per share for FY2013. This translates to a dividend payout of 32.9%, which is aligned to what we had stated during our IPO.

FutureOutlookandStrategiesThe demand for our products and services is closely linked to the offshore O&G sector and our business generally moves in tandem with the level of exploration, development and production activities in the upstream energy value chain.

Prices of crude oil have been proven to be resilient in the past decade and this has fuelled upstream O&G companies to increase exploration and production spending. Underlining this strong capital spending, Singapore’s top two rig builders have been awarded US$3.59 billion in newbuild drilling rig orders in 2013 while further afield, Chinese yards have secured approximately US$4.6 billion of newbuild rig orders1.

Moreover, the industry is witnessing a trend towards deepwater O&G exploration, which requires more sophisticated rigging and lifting solutions and equipment as well as more frequent maintenance services.

In addition, China and India, often dubbed the “twin-engines of growth”, are expected to lead the pack in global demand for oil in this decade. Asia, the largest consumer of petroleum, will also be in the forefront of investments in deepsea O&G exploration and production, with projected increase in investments by more than 50% over the next four years2.

All these industry trends are hugely favourable to Gaylin as we continue to expand and deepen our operations within the Asia-Pacific region, with its proliferation of active offshore O&G projects, and we are cautiously optimistic that our outlook will remain positive for the coming year.

GrowthThroughAcquisitionsandCollaborationsThe Group’s main priority going forward will be to look out for suitable merger and acquisition opportunities in Asia and other markets which are complementary to our business and where we can derive synergistic benefits across business units. Our key objective is to enhance Gaylin’s competitive edge by being in close proximity to our customers, thereby enabling us to respond faster and serve them better.

Having successfully established a strong foothold in Singapore, Malaysia and Vietnam, we are currently exploring opportunities in North Asia, South East Asia, the Middle East, Europe, Australia and South America. Underscoring our commitment to grow inorganically, we have set aside S$20 million of our IPO proceeds for this purpose.

As per our announcement in March 2013, the Group will not be proceeding with the proposed acquisition of the South Korean company that is engaged in the supply of wire ropes and related fittings to Korean customers in the offshore and marine industry, as we have not been able to come to an agreement with the proposed vendors.

We have turned our focus to China, which we believe is another exciting market given that Chinese yards have been snapping up newbuild rigs contracts of late. We entered into a framework agreement in March this year for the proposed acquisition of People’s Republic of China (“PRC”)-based Lv Yang (Tianjin) Offshore Equipment Co. Ltd （绿洋（天津）油田设备有限公司）(“Lv Yang”) for S$3.5 million. Lv Yang is involved in the supply and manufacture of rigging and lifting equipment and provision of related services. To date, clearance with the relevant PRC authorities on the transfer of shares is still in progress and we will provide further updates when appropriate.

In Malaysia, we expect full operations of our new 103,145 sq ft Tanjung Langsat facility, located in Johor, to commence in the second half of calendar year 2013. This facility is an important strategic chess piece for the Group as not only does Malaysia have a brisk offshore O&G sector with a good number of on-going upstream projects, many of our key customers are also active there. Our facility puts the Group in the right place at the right time to respond to their needs within a short lead time.

At home, we strengthened our position with the acquisition of Allseas Marine during the year which, we believe, sits well with our over-arching strategy to expand our operations in the region. Moving forward, we plan to leverage Singapore’s position as one of the busiest ports and marine hub in the world to grow our ship chandling business.

InAppreciation In summary, I would like to express my deepest appreciation to each and everyone of you for your confidence in the Group.

To our shareholders – thank you for your continued faith and support in Gaylin and I look forward to meeting some of you at our upcoming annual general meeting.

To the board of directors, management team and employees – thank you for soldiering through the ups and downs all these years with us.

To our customers, suppliers and business partners – thank you for your trust and support and we look forward to many years of strong collaboration ahead.

To all other stakeholders who played a role in making Gaylin what it is today, I appreciate your efforts and support.

1. The Business Times: “S’pore rigbuilders regain order momentum” dated 5 June 2013

2. Industry Report titled “The Offshore Oil and Gas Industry – Singapore” prepared by the Independent Market Researcher, Converging Knowledge dated 4 June 2012, Gaylin Holdings Limited IPO Prospectus

Yours sincerely,

DesmondTeoExecutive Director and Chief Executive Officer

BOARD OF DIRECTORS

AngMongSengIndependent Non-Executive Chairman

Mr Ang Mong Seng was appointed as our Independent Non-Executive Chairman on 26 September 2012. He was the Chief Operating Officer of EM Services Pte Ltd between 2002 and 2011 and has recently retired. Prior to that, he held the post of General Manager in EM Services Pte Ltd between 1988 and 1997. Mr Ang has more than 30 years of experience in estate management.

He is currently an independent director of United Fiber System Ltd, ecoWise Holdings Limited, Hoe Leong Corporation Ltd., AnnAik Limited and Chip Eng Seng Corporation Ltd.

Mr Ang was a former Member of Parliament for the Bukit Gombak single-member constituency from 1997 to 2001 and Hong Kah Group Representation Constituency from 2001 to 2011. He served as Chairman

for the Hong Kah Town Council from 1997 to 2011 and was a member of the House Committee in Parliament until 2011 when he retired from politics. Mr Ang obtained a Bachelor of Arts degree from Nanyang University, Singapore in 1973.

DesmondTeoExecutive Director and Chief Executive Officer (CEO)

Backed by more than 30 years of experience in the offshore O&G industry, Mr Desmond Teo is responsible for the overall management and strategic direction of the Group. As part of his role, he spearheads the formulation of the Group’s expansion plans, the development and maintenance of customer and supplier relationships, as well as oversees the Group’s general operations.

Mr Teo joined the Group in 1979 and was involved in various aspects of the business through the years before

sitting down

from left to right

standing behind

Ang Mong SengDesmond Teo

Teo Bee Kheng

Teo Bee Hoe

Wu Chiaw ChingNg Sey Ming

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Lau Lee Hua

being appointed the managing director of Gaylin International in the late 1990s. Since his appointment as managing director, Mr Teo has been instrumental in the regional expansion of the Group and continually sources for investment opportunities to promote the growth of the Group’s business.

He is the honorary president/president/trustee of the Singapore Ship-Chandlers Association. Also, he was awarded the Public Service Medal (Pingat Bakti Masyarakat) in 2010.

TeoBeeKhengExecutive Director and Chief Operating Officer (COO)

Mr Teo Bee Kheng joined the Group in 1974 and is responsible for managing the operations of the production department, which include key aspects such as production, fabrication, logistics and delivery as well as related services. As part of his role, he also assists the Group’s Executive Director and CEO in managing the Group’s day-to-day business operations. He brings with him more than 35 years of operational experience in the supply of rigging and lifting equipment and related services.

TeoBeeHoeExecutive Director and Deputy Chief Operating Officer

Mr Teo Bee Hoe is responsible for overseeing the technical and services aspects of the operations of the production department. He joined the Group in 1974 and has more than 35 years of operational experience in the supply of rigging and lifting equipment and related services. His role and responsibilities overlap and are complementary to Mr Teo Bee Kheng’s. Together, they lead the Group’s production department.

WuChiawChingIndependent Director

Appointed as an Independent Director of the Group on 26 September 2012, Mr Wu Chiaw Ching is the proprietor of Wu Chiaw Ching & Company, since 1987. He is a fellow member of the Institute of Certified Public Accountants of Singapore, the Association of Chartered Certified Accountants, United Kingdom and Certified Public Accountants, Australia and a member of the Singapore Institute of Directors.

Mr Wu is currently an independent director of SGX-ST Mainboard- listed Goodland Group Limited and LHT Holdings Limited, and SGX-ST Catalist-listed Natural Cool Holdings Limited and GDS Global Limited.

He obtained a Bachelor of Commerce (Accountancy), Singapore from Nanyang University, Singapore in 1980 and a Post-graduate Diploma in Business and Administration from Massey University, New Zealand in 1985. Mr Wu also obtained a Diploma in Management Consultancy from the National Productivity Board, Singapore in 1988 and a Master of Arts (Finance and Accounting) from Leeds Metropolitan University, United Kingdom in 1996.

Ng Sey MingIndependent Director

Mr Ng Sey Ming was appointed as an Independent Director of the Group on 26 September 2012. He is currently a partner in the Banking & Finance practice group in Rajah & Tann LLP (“R&T”). He commenced his legal practice in R&T in 2000 and was made a partner of R&T in 2007. He was admitted as a Solicitor of England and Wales, and an Advocate and Solicitor of the High Court of Malaya, in 2007. Currently, Mr Ng is an independent director

of SGX-ST Catalist-listed Hiap Tong Corporation Ltd., and SGX-ST Mainboard-listed XMH Holdings Ltd. Mr Ng obtained a Bachelor of Laws (Honours) from the National University of Singapore in 1999 and is a member of the Singapore Academy of Law and the Law Society of Singapore.

Lau Lee HuaIndependent Director

Ms Lau Lee Hua was appointed as an Independent Director of the Group on 26 September 2012. She has been the proprietor-auditor of Lau Lee Hua & Co., a certified public accounting firm, since 1995. She is a practising member of Institute of Certified Public Accountants of Singapore and a Fellow of the Association of Chartered Certified Accountants having been admitted in 1995 and 1997 respectively. Ms Lau was awarded the “Long Service Award” by the People’s Association in 2001 and the “MINDS Meritorious Service Award” by Movement for the Intellectually Disabled of Singapore in 2009.


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StevenTeoChief Administrative Officer (CAO)

Mr Steven Teo assists the Group’s CEO in all matters in relation to the Company’s general management and administration and, in particular, he is responsible for the inventory management and procurement functions of the Group. He was previously involved in the marketing and sales functions of the Group and was instrumental in improving its inventory management system. He joined the Group in May 1983 and has more than 25 years of experience in the business of supplying rigging and lifting equipment and related services.

PatrickTeoDeputy Chief Executive Officer

Mr Patrick Teo joined the Group in June 2012 and is in charge of its corporate affairs and business development.

Prior to joining the Group, Mr Teo was the Assistant CEO of Excalibur Resorts Pte. Ltd where he led the property development, corporate affairs and business development teams. He began his professional career in JTC Corporation in February 1982, after completing his studies on a JTC scholarship. Rising through the ranks in 11 years, Mr Teo was promoted to the position of Senior Executive Surveyor in JTC. He had also held the position of General Manager in Jurong Country Club.

Mr Teo graduated from Western Australian Institute of Technology in 1981 with a Bachelor’s Degree in Applied Science (with Distinction). He is a member of the Singapore Institute of Surveyors and Valuers and formerly a member of the Institute of Surveyors, Australia and a Registered Surveyor with the Land Surveyors Board of Singapore.

For his active contribution to community service, he was conferred the Public Service Medal (PBM) in 1997 and the Public Service Star (Bintang Bakti Masyarakat) in 2004 by the President of Singapore.

ChiaWeiHoFinance Director

Mr Chia Wei Ho joined the Group in September 2012 and is responsible for the investor relations, corporate governance, corporate regulatory compliance and reporting of the Group.

He has a finance and general management background spanning both technology and other industries. In the past twenty years, he has held senior regional appointments such as COO, CFO and Finance Director with various companies like Compaq, Dell, Maxtor, Citibank Technology, Tri-M Technologies, Chamberlain Computime Electronics (Shenzhen) and Medtecs. The experience also included four years stationed directly in China. He is a Certified Management Accountant of the Australian Institute of Certified Management Accountants since 2001 and a Senior Associate of the Australian Institute of Banking & Finance since 1999. He obtained a Bachelor of Arts (Economics Major) from the University of Singapore in 1980 and a Master of Applied Finance from the University of Western Sydney, Australia in 1999.

GohGuatBeeChief Financial Officer (CFO)

Ms Goh Guat Bee joined the Group in March 2011 and is responsible for the financial accounting and reporting function of the Group’s business. She also oversees the Group’s treasury functions as well as its day to day accounting and

all financial operations. Apart from these duties, she assists the Finance Director with the Group’s compliance with regulatory bodies.

She started her career in 1999 at Deloitte & Touche LLP in audit and was an audit supervisor prior to leaving in 2004. Subsequently in April 2004, she worked as a finance manager with Singapore Telecommunications Limited and was promoted to senior finance manager in 2007. She was further promoted in 2010 to deputy director of National Broadband Network Strategy team.

Ms Goh graduated with a degree of Bachelor of Accountancy (Banking and Finance Minor) from the Nanyang Technological University (NTU) in 1999 and has been a non-practicing member of the Institute of Certified Public Accountants of Singapore since 2002.

JessicaTeoMarketing and Sales Director

Ms Jessica Teo joined the Group in June 2003 and leads the Marketing and Sales Department of the Group where her responsibilities include assisting the CEO in formulating marketing and sales strategies, conducting marketing activities to promote the Group’s products and services to local and overseas markets, as well as sourcing sales opportunities. She began her career in November 2001 as an assistant manager responsible for marketing function in PSA Singapore. She obtained a degree of Bachelor of Social Sciences with Honours (Economics Major) from the National University of Singapore in 2001.

SENIOR MANAGEMENT

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CORPORATE INFORMATION

BOARDOFDIRECTORSAng Mong Seng (Independent Non-Executive Chairman)

Desmond Teo Bee Chiong (Executive Director and CEO)

Teo Bee Kheng (Executive Director and COO)

Teo Bee Hoe (Executive Director and Deputy COO)

Wu Chiaw Ching (Independent Director)

Ng Sey Ming(Independent Director)

Lau Lee Hua (Independent Director)

AuditCommitteeWu Chiaw Ching (Chairman)Ang Mong SengNg Sey Ming Lau Lee Hua

Remuneration Committee Ang Mong Seng (Chairman)Ng Sey MingWu Chiaw Ching Lau Lee Hua

Nominating CommitteeNg Sey Ming (Chairman)Ang Mong SengWu Chiaw ChingDesmond Teo

COMPANYSECRETARYYeoh Kar Choo Sharon, ACIS

SHAREREGISTRAR Boardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623

AUDITORSDeloitte & Touche LLPCertified Public Accountants Singapore6 Shenton Way Tower Two#32-00Singapore 068809Partner-in-charge: Ong Bee Yen Date of Appointment: 25 October 2011

REGISTEREDOFFICE7 Gul Avenue Singapore 629651Tel: +65 6861 3288Fax: +65 6861 5433

WEBSITEwww.gaylin.com

INVESTORRELATIONSPaul Chia (Finance Director)Tel: +65 6429 [email protected]

CORPORATE STRUCTURE


Gaylin International Pte Ltd100% 100%

100%

100%

100%

100%

100%

100%

90%

Gaylin Power Pte. Ltd.

Bridge Testing Centre (Pte) Ltd.

Gaylin Malaysia Sdn. Bhd.

Gaylin Korea Pte. Ltd.

GI Offshore Engineering Pte. Ltd.

Gaylin Vietnam Pte. Ltd.

Gaylin Marine Supply Pte. Ltd.

Lv Yang (Tianjin) Offshore Equipment Pte Ltd

100%Allseas Marine Services Pte Ltd

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15

BUSINESS HIGHLIGHTS

GrowthThroughAcquisitionsThe Group’s focus for much of FY2013 was to grow Gaylin’s operations in Singapore and the region through organic expansion and acquisitions.

In January 2013, the Group successfully acquired Allseas Marine, a Singapore-based ship chandling business for S$1.5 million. This acquisition, which is aligned to the Group’s plans to grow its ship supply business in Singapore, one of the busiest ports and marine hubs in the world, has contributed approximately S$2.0 million to the Group’s FY2013 revenue.

In addition, the Group has laid the groundwork to gain a foothold in the PRC market through a framework agreement for the proposed acquisition of Lv Yang for S$3.5 million in March 2013, a PRC-based company involved in the supply and manufacture of rigging and lifting equipment and provision of related services. As at to-date, clearance with the relevant PRC authorities on the transfer of shares is still in progress.

StrengthenedPresenceandCapabilitiesinMalaysia The Group began the construction of its new facilities in Tanjung Langsat in the State of Johor, Malaysia, in February 2012. Spanning approximately 103,145 sq ft, the Group’s Malaysian facilities has the largest test bed in South East Asia with a capacity of 3,000 tonnes and an effective testing length of up to 80 m. Due to the stringent on-site foundation works requirements for the test bed, the Group encountered a delay in the commencement of the facilities operations. That has been ironed out and the facility is expected to come on-line in the second half of 2013.

The Group’s Kuala Lumpur sales office, which it launched in September 2012 in a bid to expand its sales and marketing capabilities, has made good progress. Through this strategic office, the Group has successfully won new projects as well as forged stronger ties with existing customers, which has helped boost FY2013 revenue from Malaysia by 55% to S$8.7 million.

The Group’s enhanced presence in Malaysia in FY2013 has strategically positioned Gaylin to serve its Malaysia-based customers faster and better as it substantially shortens its time to market response.

MaintainedAStrongandDiversifiedCustomerBaseThe Group has a diversified pool of more than 800 customers from the global offshore O&G industry which include blue-chip names such as Acteon Group, Bourbon Group, Britoil Offshore, DOF Group, Technip Group and Sapura Acergy Sdn. Bhd. Gaylin has been servicing some of these customers for over ten years and continues to enjoy strong relationships with them.

Gaylin’s business is largely project-based and is directly linked to the activity levels of its customers. In FY2013, the Group achieved substantially higher sales from Malaysia, Other Asia and Europe due to more orders awarded to certain customers in these regions.

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(1) Net gearing calculation: Net debt divided by total equity(2) For comparative purpose only; the Company was listed on 25 October 2012(3) Closing price as at end of financial year

77,11724,88410,49132.313.6

165,02875,33789,69121,408

(11,770)(2,134)

7.9(19.1)

0.611.76.432.9

2.9520.80.8

224,640

71,44723,67412,971

33.1 18.2

119,31684,35434,9624,200

12,126(3,144)

1.9(3.1)

2.037.110.9

195.1(2)

4.3211.78.4(2)

NA

70,11924,95413,385

35.6 19.1

104,93160,60444,327

271

(6,220)(407)

2.294.80.7

30.212.8

NA

4.4614.8

NA

NA

IncomeStatement(S$’000)

Revenue Gross profitNet profit Gross profit margin (%)Net profit margin (%)

BalanceSheet(S$’000)

Total assetsTotal liabilitiesTotal shareholders’ equityCash and cash equivalents

Cashflow(S$’000)

Operating cashflowCapital expenditure

KeyRatios

Revenue growth (%)Net profit growth (%)Net gearing(1) (times)Return on shareholders’ equity (%)Return on total assets (%)Dividend payout (%)

PerShareInformation(cents)

Earnings per shareNet asset value per shareDividend per share

MarketCapitalisation(3)(S$’000)

FY2013

FY2013 FY2013

FY2012 FY2012

FY2011 FY2011

FY2012 FY2011

FINANCIAL HIGHLIGHTS

TOTALSHAREHOLDERS’EQUITYREVENUE

77,117 89,691

71,447 34,962

70,119 44,327


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OPERATING AND FINANCIAL REVIEW

For FY2013, the Group reported a net profit attributable to shareholders of S$10.5 million on the back of a 7.9% increase in revenue to S$77.1 million.

The improved topline in FY2013 was boosted by a robust fourth quarter, which saw revenue of the Group rise 33.2% year-on-year to S$24.1 million, compared to S$18.1 million in the fourth quarter of FY2012. This was mainly due to revenue contribution from Allseas Marine, as well as stronger orders from customers based in Malaysia, Other Asia and Europe for their projects.

Revenue: Mainly due to the acquisition of Allseas Marine and the project based nature of some key customers.

Grossprofit: In line with higher revenue in FY2013. Grossprofitmargin: Decreased from 33.1% in FY2012 to 32.3% in FY2013 mainly due to a higher write back of the carrying value of inventories as a result of higher net realisable value of the inventories assessed by an independent valuer in FY2012.

Otherincome: Due to gain on disposal of motor vehicles of S$0.3 million recorded in FY2012.

Distributioncosts: Mainly due to rise in advertising and marketing expenses of S$0.3 million and staff costs of S$0.5 million from higher headcount to support business expansion.

Administrativeexpenses: Mainly due to an increase in IPO expenses of S$0.7 million; an increase in donation of S$0.4 million; an increase in staff cost of S$1.3 million to support business expansion and accrual of performance bonus for executive directors and CAO of S$0.2 million; an increase in acquisition-related costs of S$0.2 million; an increase in travelling expenses of S$0.2 million and directors' fee of S$0.1 million.

Otheroperatingexpenses: Due to higher foreign exchange loss incurred.

Interestexpenses: Mainly due to higher average bank borrowings.

Profitbeforeincometax: Mainly due to higher expenses as detailed above.

(S$’000)

Revenue

Cost of sales

Grossprofit

Other income

Distribution costs

Administrative expenses

Other operating expenses

Interest expenses

Profitbeforeincometax

Income tax expense

Profitfortheyear

Attributable to:

Non-controlling interests

Shareholders of the Company

FY2013

77,117

(52,233)

24,884

207

(2,900)

(7,566)

(319)

(1,834)

12,472

(1,981)

10,491

-

10,491

FY2012

71,447

(47,773)

23,674

475

(2,142)

(4,643)

(212)

(1,518)

15,634

(2,663)

12,971

-

12,971

7.9

9.3

5.1

(56.4)

35.4

63.0

50.5

20.8

(20.2)

(25.6)

(19.1)

NM

(19.1)

Change(%)

Annual Report 2013

18

AnalysisofRevenuebySegments

Revenue Breakdown by Business Segments

The Group has two business segments comprising its Rigging and Lifting business and Ship Supply business. The main revenue contributor is its Rigging and Lifting business, which accounted for 92.6% and 96.5% of the Group’s total revenue in FY2013 and FY2012 respectively. The balance of the revenue was contributed by its Ship Supply business.

Revenue Breakdown by Location of Customers (S$’000)

Percentage Revenue Breakdown by Location of Customers (%)

Gaylin’s main geographical markets are Singapore, Malaysia, Other Asian countries (including Vietnam), Europe and Others. The Group typically experiences a fluctuation in revenue contribution from each customer in each financial year due to the project-based nature of the Group’s business and industry. In general, customers’ projects typically differ in scope and size, and their occurrence is irregular, resulting in the supply of different products to them from the Group on an irregular basis.

In FY2013, sales to the Group’s Europe-based customers increased by S$4.7 million mainly due to a major project for an existing customer based in Europe. Similarly, sales to Gaylin’s Malaysia- and Other Asia- based customers increased by S$3.1 million and S$4.7 million respectively in FY2013 as more orders were awarded to existing and new customers in these regions. At the same time, the Group’s on-site presence in Malaysia via its Kuala Lumpur sales office also played a part in boosting its revenue from this market. On the other hand, revenue contribution from Singapore and Others decreased by S$4.6 million and S$2.2 million respectively mainly due to the project based nature of some of the Group’s key customers.

FY2012FY2013

Singapore Malaysia Other Asia

Europe Others

Note: Revenue from countries in “Other Asia”, “Europe” and “Others” include revenue from customers in countries that individually account for less than 10% of the Group’s revenue.Revenue from Other Asia excludes revenue from Singapore and Malaysia.

(1)

(2)

51.9%

42.1%

13.9%19.0%

12.8%17.9%

13.5%9.7%

7.9%11.3%

FY2013

32,433

8,737

14,639

13,849

7,459

77,117

FY2012

37,080

5,635

9,935

9,170

9,627

71,447

Change (%)

(12.5)

55.0

47.3

51.0

(22.5)

7.9

Singapore

Malaysia

Other Asia(1)(2)

Europe(1)

Others(1)

TotalRevenue



19

FinancialPosition

Current assets byS$43.3milliontoS$153.7million: Mainly due to increases in cash and bank balances of S$17.2 million largely from IPO proceeds; in inventories of S$17.1 million in line with the strategy to be an inventory specialist; and higher trade receivables of S$8.6 million mainly due to higher sales in fourth quarter of FY2013 (“4Q FY2013”).

Non-currentassetsbyS$2.4milliontoS$11.3million: Mainly from higher building costs of S$1.9 million and intangible asset relating to customer relationships of S$0.2 million resulting from the acquisition of Allseas Marine.

CurrentliabilitiesbyS$3.5milliontoS$58.4million: Mainly due to a decrease in bank borrowings of S$9.4 million from bank bill payables of S$5.3 million and short term loans of S$4.1 million and a decline in income tax payable by S$1.4 million; and partially offset by an increase in trade payables of S$6.5 million mainly due to higher purchases in 4Q FY2013 and an increase in other payables of S$0.8 million mainly from accrued operating expenses for performance bonus for executive directors and CAO, employee bonus, unutilised annual leave and directors' fee.

Non-currentliabilitiesbyS$5.5milliontoS$16.9million: Mainly due to repayment of bank borrowings and finance leases.

TotalAssets

- Cash and bank balances

- Trade receivables

- Other receivables

- Inventories

- Property, plant and equipment

- Long term assets

- Intangible asset

- Subsidiaries

TotalLiabilities

- Trade payables

- Other payables

165,028

21,408

27,421

860

104,058

10,980

76

225

-

75,337

16,417

1,311

119,316

4,200

18,773

494

86,973

8,876

-

-

-

84,354

9,896

503

38.3

409.7

46.1

74.1

19.6

23.7

NM

NM

NM

(10.7)

65.9

160.6

(S$’000)Asat31

March2013Asat31

March2012Change(%)

- Current portion of bank borrowings

- Current portion of finance leases

- Income tax payable

- Bank borrowings

- Finance leases

- Deferred tax liability

TotalShareholders’Equity

37,690

1,011

1,956

15,758

928

266

89,691

47,163

937

3,405

20,693

1,628

129

34,962

(20.1)

7.9

(42.6)

(23.8)

(43.0)

106.2

156.5

Annual Report 2013

20

Cash and Cash Equivalents

With financing activities generating net cash of S$32.1 million, the Group’s cash position for the year increased by S$17.2 million to S$21.4 million as at the end of FY2013.


Net cash used in operating activities of S$11.8 million mainly resulted from working capital outflow of S$23.5 million, partially offset by net cash of S$15.9 million generated from operating activities. We paid income tax of S$3.4 million and interest of S$0.8 million on bank bills.

Net cash used in investing activities of S$3.1 million mainly due to the purchase of plant and equipment of S$1.8 million and acquisition of Allseas Marine of S$1.2 million in 4Q FY2013.

Net cash flows generated from financing activities of S$32.1 million mainly due to net proceeds from the issuance of new shares of S$44.2 million which was partially offset by the net repayment of bank borrowings and related interest of S$11.2 million; and the repayment of obligations under finance leases of S$1.0 million.

(S$’000)

Net cash (used in)/ from operating activities

Net cash (used in) investing activities

Net cash from/ (used in)financing activities

Net change in cash and cash equivalents

Cashandcashequivalents at end oftheyear

FY2013

(11,770)

(3,096)

32,071

17,205

21,408

FY2012

12,126

(1,295)

(3,140)

7,691

4,200


21

Borrowings

Shareholders’ReturnsAlthough the Group does not have a formal dividend policy, it intends to recommend and distribute dividends of not less than 30% of its net profits attributable to shareholders for each of FY2013 and the financial year ended 31 March 2014 (“FY2014”).

For FY2013, the Group declared a total dividend of 0.8 Singapore cents per share, which represented a payout ratio of 32.9%.

UpdateonUseofIPOProceedsThe Group raised net proceeds of approximately S$43.0 million from its IPO which have been utilised as follows as at 31 March 2013:

UseofNetProceeds

Expansion of operations into Asian and/or other markets

Expansion of operations into Malaysia

General working capital

Total

AllocationofNetProceeds

(S$’000)

20,000

2,000

21,042

43,042

NetProceedsutilisedasat31March2013

(S$’000)

1,628

814

21,042

23,484

BalanceofNetProceedsasat31March2013

(S$’000)

18,372

1,186

-

19,558

Certain bank borrowings are secured by a legal mortgage over the Group's leasehold land and buildings, joint and several personal guarantees of the executive directors and CAO, a floating charge over certain inventories of the Group and a corporate guarantee of a certain subsidiary.

Finance leases are secured by charges over the leased assets.

(S$’000)

Current liabilities

- Current portion of bank borrowings

- Current portion of finance leases

Non-current liabilities

- Bank borrowings

- Finance leases

TotalBorrowings

FY2013

37,690

1,011

15,758

928

55,387

FY2012

47,163

937

20,693

1,628

70,421

BreakdownofGeneralWorkingCapital

Inventories

Trade and other payables

Income tax

Total

(S$’000)

7,778

11,497

1,767

21,042

Corporate Social Responsibility (“CSR”) has become one of the most important pillars of corporate reputation in the world today. While corporate and financial performances are important aspects of an organisation, they should not be at the expense of social and environmental well-being.

At Gaylin, our focus is to achieve growth and progress responsibly and sustainably. From the management team (the “Management”) down to every single one of our employees, the Gaylin Group is committed to conducting our business in a way that best serves the interests of our stakeholders, including the Community, the Environment, our Employees, our Shareholders and Business Partners.

Underscoring our continued commitment to CSR, Gaylin was awarded the PSME 500 “Corporate Social Responsibility Achievement” award under the “Outstanding Achievement Award Category” in 2012.

CommitmenttotheCommunityThe Group is involved in many extra-curricular activities aimed at helping the elderly and the less privileged in Singapore including charitable donations toward their care and education. Our on-going efforts to help the community have seen donations from the Group increase by approximately S$0.4 million in FY2013. The Group’s adopted beneficiaries in FY2013 include:• Associated Wire Rope Fabricators Scholarship• Beyond Social Services• Kwang Eng Health Care Centre• Kwong Wai Shiu Hospital• Lions Home For The Elders• Maha Karuna Buddhist Society• Myanmar Mawbee School• National Council of Social Service• POSB Passion Kids Fund• Presbyterian Community Services

• Ren Ci Hospital• Senior Citizen Health Care Information• Shan You Counselling Centre• The Disabled People’s Association of Singapore

In FY2013, Gaylin participated in two major charitable events, namely OCBC Cycle Singapore 2012 and the SGX Bull Charge 2012. A team of four cyclists from Gaylin took part in the OCBC Cycle Singapore 2012 in support of Dover Park Hospice (“DPH”), a non-profit organisation founded in 1992 to meet the growing need in Singapore for hospice care for terminally-ill patients. Since opening its doors to the first patient, DPH has brought care and comfort to more than 7,500 terminally-ill patients and their families through a programme of active and compassionate service.

11 runners from Gaylin participated in the SGX Bull Charge 2012 to raise funds for four charities, namely the Asian Women’s Welfare Association (AWWA), Autism Association (Singapore), Fei Yue Community Services and Shared Services for Charities. The event raised some S$1.388 million towards supporting disadvantaged children, youths, elderly and families in need.

Gaylin is proud to have played a part in supporting these charitable initiatives.

CommitmenttotheEnvironmentCare for the environment is also an essential part of our responsibility. We are fully committed to reducing the amount of Green House Gas and CO2 emission for a greener and cleaner environment. As part of our on-going efforts, we have also implemented Solacoat on our buildings for improving Energy, Efficiency and Conservation.

Commitment to Employees As at 31 March 2013, Gaylin has 181 employees of which 171 are based in Singapore and the rest from the Group’s other offices in Malaysia and Vietnam. We believe that our employees are our biggest asset and we are focused on our employees’ social well-being as well as their personal safety at the work place.

Staff Development and Training

All new employees are required to undergo on-the-job training under a senior staff who trains and equips them with the necessary knowledge and practical skills to perform their tasks.

Our operations personnel are required to undergo compulsory training on safety and product handling, as

Annual Report 2013

22

CORPORATE SOCIALRESPONSIBILITY

Community

EnvironmentShareholders

Employees

our products are used in areas where safety standards are stringent. All operations personnel are also required to undergo compulsory in-house basic training to operate splicing and testing machines.

Selected operations personnel are sent for external training to operate splicing and testing machines for certain products. When we acquire new products, the supplier of these products will also send trainers to train our warehouse and operations personnel on the operation of these new products.

On-the-job training is also provided for our non-operational personnel in the area of general management, finance, communications and any other relevant areas. This allows them to improve their work performance in their respective business units.

Occupational Health & Safety

We have a strong and on-going commitment to Occupational Health & Safety (“OHS”) at our workplace and integrate OHS policies into our daily business operations. We are committed to prevent ill health and injury in and around the workplace and are dedicated to maintain the OHS of all employees, suppliers / contractors, customers, neighbours and other stakeholders.

As part of our OHS programme, we are committed to:• Conduct on-going identification of hazards, the

assessment of risk, and the implementation of necessary control measures

• Minimise incidents and manage hazards through conducting OHS inspection and appropriate training regularly

• Comply with local OHS legislations and other requirements

• Continual review and improvement in OHS management and performance

This commitment is supported by the Group’s top management and is the individual and collective responsibility of all employees.

To help provide a safe and healthy workplace for all our employees, contractors and visitors, we have implemented a Workplace Safety and Health Policy. Safety measures include ensuring that our staff are properly and adequately equipped with personal protective equipment such as helmets and boots at all times, fire safety equipment are well-maintained and fire

safety procedures are made known to all staff. We believe that work accidents are preventable, therefore employees are constantly reminded to identify potential hazards and to maintain and ensure compliance with all regulatory requirements.

In recognition of our strong pursuit in achieving OHS excellence, we were awarded the Certificate of Approval (SS506: Part 1:2009, OHSAS 18001:2007) by DAS Certification Singapore for the manufacture of wire rope slings in January 2013. Furthermore, the Group was also accorded the bizSAFE STAR by the Workplace Safety and Health Council, Ministry of Manpower in April 2013.

Whistle-Blowing Policy

Good corporate governance is an integral element of a sound corporation and enables a company to be more transparent and forward-looking, and also acts as an effective safeguard against fraud and dubious financial engineering. With this in mind, we expect honesty, integrity and accountability at every level of the Company. The Board and the Management believe that an effective whistle-blowing arrangement will act as a deterrent to malpractice and wrongdoing, encourage openness, promote transparency, underpin our risk management systems and enhance business practice, thereby increasing the reputation of Gaylin and its management.

The purpose of this whistle-blowing policy is to put in place an arrangement providing guidance on suspicion, reporting and investigation of fraudulent practices within the Group.

The objectives of the policy are: • To maintain a high standard of corporate governance• To provide a channel of communication to the

employees of the Group to report fraudulent practices and to guide employees on actions to address their concerns on suspicious fraudulent activities

• To provide a process for investigations and management reporting

This policy deals with concerns on improprieties and wrongdoings:• Affecting the financial position of the Company; • Relating to the honesty and integrity of the Company’s

dealings; • Relating to the honesty and integrity of any employee


23

or director in the course of his or her employment or dealings with or on behalf of the Company, including: • Conflicts of interest: An employee or officer should

always act in the best interest of the Company. A “conflict of interest” occurs when an individual’s personal interests interferes or appears to interfere with the interests of the Company.

• Taking advantage of corporate opportunities: Employees and directors are prohibited from taking advantage of corporate property, information, or position, or opportunities arising from these, for personal gain or to compete with the Company.

• Confidentiality: Employees and directors must maintain the confidentiality of information entrusted to them by the Company or its customers, except when disclosure is authorised or legally mandated.

• Fair dealing: Each employee and director should endeavour to deal fairly with the Company’s customers, suppliers, competitors and employees. None should take unfair advantage of anyone through dishonesty, misrepresentation of material facts or any other unfair practice.

• Protection and proper use of company assets: All employees and officers should protect the Company’s assets and ensure their efficient use for legitimate business purposes.

• Compliance with laws, rules and regulations (including insider trading laws): We actively promote compliance with laws, rules and regulations, including insider trading laws. Insider trading is both unethical and illegal.

• Unethical behaviour: We actively promote ethical behaviour and encourage employees to report any misconduct in this regard.

This policy applies to any of the above actions involving employees, vendors/contractors, consultants, and/or any other parties whom the Group has a business relationship with. Employees of the Group are responsible to highlight any suspicion of fraudulent practices and inappropriate activities within the Group and bring them immediately to the attention of the Chairman of Audit Committee.

CommitmenttoShareholdersThe Group is committed to providing the investment community with transparent, timely and accurate information. Our aim as a public-listed company is to keep our existing and potential investors updated on the Group’s performance and strategic initiatives, in order to help them evaluate the Group and make informed investment decisions.

As part of our Investor Relations initiatives, our corporate announcements, press releases and presentation slides are released on the Singapore Exchange’s SGXNET and on our corporate website (www.gaylin.com) simultaneously. We maintain a dedicated investor relations section within our corporate website, where investors can easily access up-to-date information relating to the Group. We have disclosed the name and contact information of our dedicated IR contact person on our website, and in addition, investors can also sign up for an e-mail alert service which informs them whenever an announcement is posted on the website.

Annual Report 2013

24

CORPORATE SOCIALRESPONSIBILITY


25

CORPORATE GOVERNANCE

Gaylin is committed to maintaining good corporate governance to enhance and protect the interests of the Company’s shareholders. After being listed on 25 October 2012 on the Mainboard of SGX-ST, the Company has complied with certain corporate practices recommended by the Code of Corporate Governance 2012 which was issued on 2 May 2012 by the Ministry of Finance (the “2012 Code”). This report describes the Company’s corporate governance processes and structures for FY2013 with specifi c reference to the principles of the 2012 Code. Specifi c reference is also made to the Code of Corporate Governance 2005 (the “Code”) where relevant. The 2012 Code is effective for annual reports from fi nancial year commencing on or after 1 November 2012 (the “2012 Code Effective Date”). In its spirit to uphold and maintain good corporate practices in the interest of the Group and the shareholders, the Company endeavors to have an early compliance of the 2012 Code whenever practicable and possible.

The Board is pleased to report on the compliance of the Company with the Code and the 2012 Code except where otherwise stated. Such compliance is regularly reviewed to ensure transparency and accountability.

Principle 1: The Board’s Conduct of its Affairs

The Board is collectively responsible for the long-term success of the Group and is accountable to its shareholders. The functions of the Board include:

deciding on strategic objectives, key business initiatives, major investments and funding matters;

monitoring the performance of management and reviewing the fi nancial performance of the Group;

implementing effective risk management systems including safeguarding of shareholders’ interest and the Company’s assets;

ensuring the adequacy of the internal controls;

considering sustainable issues;

ensuring compliance with the Code, the Companies Act (Cap 50) of Singapore, the Company’s Articles of Association, the Listing Manual of the SGX-ST (“Listing Manual”), accounting standards and other relevant statutes and regulations.

The Board meets quarterly in a year to approve, among others, announcements of the Group’s quarterly and full year fi nancial results. The Board may have informal discussions on matters requiring urgent attention, which would then be formally confi rmed and approved by circulating resolutions in writing. Ad-hoc meetings are also convened as and when they are deemed necessary. As provided in the Company’s Articles of Association, the Board may convene telephonic and videoconferencing meetings.

Matters specifi cally reserved for the Board’s approval are those involving material acquisitions and disposal of assets, corporate or fi nancial restructuring, share issuances, dividends to shareholders and interested person transactions. Clear directions have been imposed on Management that such matters must be approved by the Board.

To facilitate effective management, the Board delegates certain functions to the various Board committees. The Board delegates such functions and authority to the Board committees without abdicating its responsibility. These committees which include the Audit Committee (“AC”), the Nominating Committee (“NC”) and the Remuneration Committee (“RC”) (“Board Committee”), operate within clearly defi ned terms of reference and functional procedures. Each of these committees reports its activities regularly to the Board.

The Board ensures that incoming new Directors are familiarised with the Group’s businesses and corporate governance practices upon their appointment, to facilitate the effective discharge of their duties. Newly appointed Directors will be provided a formal letter setting out their duties and obligations. Directors are constantly kept abreast of developments in regulatory, legal and accounting frameworks that are of relevance to the Group through participation in the relevant training courses, seminars and workshops.

Please also refer to Principle 4 regarding the NC’s plan for the Directors’ training and professional development programmes.

Annual Report 2013

26


The number of Board and Board Committee meetings held during FY2013 and the attendance of each Director are set out as follows:

BoardAudit

CommitteeNominating Committee

Remuneration Committee

No. of Meetings

Held(1)

No. of Meetings Attended

No. of Meetings

Held(1)


No. of Meetings

Held(1)


No. of Meetings

Held(1)


Mr Ang Mong Seng 3 3 2 2 1 1 2 2

Mr Desmond Teo 3 3 2 2(2) 1 1 2 2(2)

Mr Teo Bee Kheng 3 3 2 2(2) 1 1(2) 1 1(2)

Mr Teo Bee Hoe 3 3 2 2(2) 1 1(2) 1 1(2)

Mr Wu Chiaw Ching 3 3 2 2 1 1 2 2

Mr Ng Sey Ming 3 3 2 2 1 1 2 2

Ms Lau Lee Hua 3 3 2 2 1 1(2) 2 2

(1) Represents the number of meetings held as applicable to each individual Director.(2) Attendance at meetings that were held on a “By Invitation” basis.

Principle 2: Board Composition and Guidance

The Board currently comprises seven (7) Directors, four (4) of whom are Independent Non-Executive Directors (the “Independent Non-Executive Directors” or the “Independent Directors” or each the “Independent Non-Executive Director” or the “Independent Director”), and three (3) are Executive Directors (the “Executive Directors” or each the “Executive Director”)

Directors Board MembershipAudit

CommitteeNominating Committee

Remuneration Committee

1 Mr Ang Mong SengIndependent Non-Executive

ChairmanMember Member Chairman

2 Mr Desmond Teo Executive Director and CEO – Member –

3 Mr Teo Bee Kheng Executive Director and COO – – –

4 Mr Teo Bee HoeExecutive Director and

Deputy COO– – –

5 Mr Wu Chiaw ChingIndependent

Non-Executive DirectorChairman Member Member

6 Mr Ng Sey MingIndependent

Non-Executive DirectorMember Chairman Member

7 Ms Lau Lee HuaIndependent

Non-Executive DirectorMember – Member

The NC has reviewed and is satisfi ed that the current composition and board size is appropriate for effective decision making, having taken into consideration the nature and scope of the Group’s operations. The four (4) Independent Directors who made up more than half of the board composition, provide the Board with independent and objective judgement on corporate affairs of the Company.


27


Each of the Independent Directors has confi rmed that he/she does not have any relationship with the Company or its related corporations, its 10% shareholders or its offi cers including confi rming not having any relationships and circumstances provided in Guideline 2.3 of the 2012 Code, that could interfere, or be reasonably perceived to interfere, with the exercise of independent judgement in carrying out the functions as an independent director with a view to the best interests of the Company. The NC has reviewed, determined and confi rmed the independence of the Independent Directors.

The Board comprises Directors who are qualified and experienced in various fields including business and management, accounting and fi nance, investor relations and legal practices. The NC is of the view that the current Board comprises persons who as a group, have core competencies necessary to lead and manage the Company effectively.

Principle 3: Chairman and Chief Executive Offi cer

The 2012 Code advocates that there should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the Company’s business and no one individual should represent a considerable concentration of power.

The Chairman of the Board and the Chief Executive Offi cer (the “CEO”) are two separate persons to ensure an appropriate balance of power, increased accountability and greater capacity for independent decision making.

Mr Ang Mong Seng is an Independent and Non-Executive Director and also the Chairman of the Board. He assumes responsibility for the smooth functioning of the Board and ensures timely fl ow of information between the Management and the Board; sets agenda and ensures that adequate time is available for discussion of all agenda items, in particular strategic issues; promotes a culture of openness and debate at the Board and promotes high standards of corporate governance. Day-to-day operations of the Group are entrusted to the CEO, Mr Desmond Teo, Executive Director who assumes full executive responsibility over the mapping of business plans and operational decisions of the Group.

Mr Ang Mong Seng and Mr Desmond Teo are not related to each other. There is a clear division of responsibilities of the Chairman of the Board and the CEO.

All the Board Committees are chaired by Independent Directors and more than half of the Board consists of Independent Directors.

Principle 4: Board Membership

The NC consists of three (3) Independent Directors and one (1) Executive Director, the majority of whom, including the Chairman, are independent.

Mr Ng Sey Ming - ChairmanMr Ang Mong Seng - MemberMr Wu Chiaw Ching - MemberMr Desmond Teo - Member

The NC makes recommendations to the Board on relevant matters relating to board including succession planning; all board appointments/re-appointments of directors, taking into consideration composition of the Board and progressive renewal of the Board; how the director fi ts into the overall competency matrix of the Board as well as the director’s contribution and performance at Board meetings, including attendance, preparedness and participation; training and professional development programmes for the Board.

Currently, there is an informal succession plan put in place by the CEO. Going forward and at the relevant time, the NC will look into such plan in close consultation with the CEO and the Chairman.

Management has an open policy for professional training for all the Board members, including Executive Directors and Independent Directors. The Company endorses the Singapore Institute of Directors (“SID”) training programmes and sets a budget for such training and professional development programmes. All Board members are encouraged to attend any relevant training organised by the SID or any other organisation which provides relevant training courses for directors. The cost of such training will be borne by the Company.

Annual Report 2013

28


The NC has in place formal, written procedures for making recommendations to the Board on the selection and appointment of Directors. Such procedures would be activated when a vacancy on the Board arises or when the Board is considering making a new Board appointment either to enhance the core competency of the Board or for purpose of progressive renewal of the Board. Notwithstanding that the Chairman of the Board is an Independent Non-Executive Director, the Company maintains a very strong and independent element on the Board with Independent Directors making up more than half of the Board.

In identifying suitable candidates, the NC may: 1. advertise or use services of external advisers to facilitate a search

2. approach alternative sources such as the SID

3. consider candidates from a wide range of backgrounds from internal or external sources

4. After short listing the candidates, the NC shall:

(a) consider and interview all candidates on merit against objective criteria, taking into consideration that appointees have enough time available to devote to the position; and

(b) evaluate and agree to a preferred candidate for recommendation to and appointment by the Board.

As mentioned under Principle 2 above, the NC also reviews the independence of the Directors annually based on Guideline 2.3 of the 2012 Code’s defi nition of what constitutes the independence of the Independent Directors. The NC has affi rmed that Mr Ang Mong Seng, Mr Wu Chiaw Ching, Mr Ng Sey Ming and Ms Lau Lee Hua are independent. None of the Independent Directors have served on the Board beyond nine years from their respective date of appointment. Guideline 2.4 of the 2012 Code is therefore not applicable to the Board.

Pursuant to Article 114 of the Articles of Association of the Company, at least one-third of the Directors shall retire from offi ce at the annual general meetings of the Company (the “AGM”). Accordingly, Mr Teo Bee Hoe and Mr Teo Bee Kheng will retire at the forthcoming AGM. The NC has recommended to the Board that the retiring Directors be nominated for re-election. In making the recommendation, the NC considers the Directors’ overall contribution and performance.

All Directors are required to declare their board appointments. The NC has reviewed and is satisfied that notwithstanding their multiple board appointments, Mr Ang Mong Seng, Mr Wu Chiaw Ching and Mr Ng Sey Ming who sit on multiple boards, have been able to devote suffi cient time and attention to the affairs of the Company to adequately discharge their duties as Director of the Company. To address the competing time commitments that are faced when Directors serve on multiple boards, the NC has reviewed and made recommendation to the Board accordingly on the maximum number of listed company board appointments which any Director may hold. Based on the recommendation, the Board has determined and set the maximum number of listed company board appointments at not more than fi ve (5) listed companies of the same fi nancial year end. Currently, none of the Directors hold more than fi ve directorships in listed companies of the same fi nancial year end.

Principle 5: Board Performance

A review of the Board’s performance is conducted by the NC annually. On the recommendation of the NC, the Board has adopted an internal process for evaluating the effectiveness of the Board as a whole. Each board member will be required to complete an appraisal form to be returned to the NC Chairman for evaluation. Based on the evaluation results, the NC Chairman will present his recommendations to the Board. The key objective of the evaluation exercise is to obtain constructive feedback from each Director to continually improve the Board’s performance.

The NC will at the relevant time look into adopting guidelines for annual assessment of the contribution of each individual Director to the effectiveness of the Board and also the assessment of Board committees. The NC is of the view that despite multiple board representations in certain instances, each Director has been adequately carrying out his or her duties as a Director of the Company.


29


The Board has not engaged any external facilitator in conducting the assessment of Board performance. Where relevant, the NC will consider such engagement.

Principle 6: Access to Information

The Board is provided with adequate information by the Management prior to Board meetings on matters to be deliberated. This facilitates an informed decision-making process to enable the Directors to discharge their duties and responsibilities. Directors are also updated on initiatives and developments on the Group’s business whenever possible on an on-going basis. All Directors are entitled to be provided with any additional information as needed to make informed decisions. In this connection, the Directors have separate and unrestricted access to the Management who shall provide such information in a timely manner. Where necessary, Directors, whether as a group or individually, can seek independent professional advice at the Company’s expense for the discharge of their duties.

The Directors also have separate and independent access to the Company Secretary. The Company Secretary is required to attend all Board and Board Committee meetings and ensures that Board procedures are followed and the applicable rules and regulations are complied with.

Under the direction of the Chairman, the Company Secretary’s responsibilities include ensuring good information fl ows with the Board and its board committees and between Management and Non-Executive Directors, advising the Board on all governance matters as well as facilitating orientation and assisting with professional development as required.

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

The RC consists of four (4) members, all of whom including the Chairman, are independent:

Mr Ang Mong Seng - ChairmanMr Wu Chiaw Ching - MemberMr Ng Sey Ming - MemberMs Lau Lee Hua - Member

According to its terms of reference, the responsibilities of the RC include the following:-

– review and recommend to the Board a framework of remuneration that will attract, retain and motivate directors and key management personnel;

– review the specifi c remuneration packages for each director;

– review the Company’s obligations arising in the event of termination of the executive directors and key management personnel’s contract to ensure reasonable termination clauses are not overly generous;

– consider whether directors, the CEO and key management personnel should be eligible for benefi ts under share schemes and such other long-term incentive schemes as may from time to time be implemented.

As part of its review, the RC ensures that the Directors and key management personnel are adequately but not excessively remunerated as compared to industry benchmarks and other comparable companies. The RC also takes into consideration the Company’s relative performance and the performance of individual Directors and key management personnel. Executive Directors are paid a basic salary and a performance-related bonus that are linked to the performance of the Company. Key management personnel are paid basic salary and performance bonus. The RC does consider long-term incentive schemes for the Executive Directors and key management personnel. In this connection, the RC shall at the relevant time look into granting of options under the Gaylin Employee Share Option Scheme which was approved by the shareholders of the Company on 24 September 2012.

The performance-related element of the Executive Directors’ remuneration is designed to align their interests with the interests of shareholders and promote the long-term success of the Company.

Annual Report 2013

30


The RC also ensures that the remuneration of the Independent Non-Executive Directors are appropriate to their level of contribution taking into account factors such as effort and time spent, and their responsibilities. Independent Non-Executive Directors receive a basic fee for their services. The RC ensures that the Independent Non-Executive Directors should not be over-compensated to the extent that their independence may be compromised. No Director is involved in deciding his or her own remuneration package.

All revisions to the remuneration packages for the Directors and key management personnel are subjected to the review by and approval of the Board. Directors’ fees are further subjected to the approval of shareholders at annual general meetings. Where necessary, the RC will consult external professionals on remuneration matters of Directors and key management personnel.

The remuneration band of the Directors for FY2013 and the various components of their remuneration in percentage terms are set out below in compliance with the recommendation of the Code. The RC may consider making full disclosure of the remuneration of each individual Director and the CEO on a named basis after the 2012 Code Effective Date.

Remuneration Band and Name of Director

SalaryBonus / Profi t Sharing

FeesBenefi ts in

KindTotal

% % % % %

Up to S$250,000

Mr Ang Mong Seng (1) – – 100 – 100

Mr Wu Chiaw Ching (1) – – 100 – 100

Mr Ng Sey Ming (1) – – 100 – 100

Ms Lau Lee Hua (1) – – 100 – 100

S$250,001 to S$500,000

Mr Teo Bee Kheng 81 16 – 3 100

Mr Teo Bee Hoe 83 13 – 4 100

S$500,001 to S$750,000

Mr Desmond Teo 77 19 – 4 100

(1) Appointed on 26 September 2012.

The remuneration received by the top fi ve (5) key management personnel for FY2013 is below S$250,000 in each case, other than Mr Steven Teo whose remuneration is in the band S$250,001 to S$500,000.

There is no employee who is an immediate family member of a Director or CEO whose remuneration exceeded S$150,000 during the year.

Further information on Directors and the key management personnel is on page 10 to 12 of this Annual Report.

The Company has not yet granted any options under the Gaylin Employee Share Option Scheme.

Accountability and AuditPrinciple 10: AccountabilityPrinciple 11: Risk Management and Internal Controls

The Board is accountable to shareholders and ensures that all material information is fully disclosed in a timely manner to shareholders in compliance with statutory and regulatory requirements. The Board strives to provide its shareholders a balanced and understandable assessment of the Group’s performance, position and prospects.


31


The Board takes steps to ensure compliance with legislative and regulatory requirements, including requirements under the Listing Manual, where appropriate, the Independent Directors in consultation with the Management, will request for Management’s consideration for the establishment of written policies for any particular matter that is deemed to be essential to form part of management control.

The Management provides appropriately detailed management accounts of the Group’s performance on a quarterly basis to the Board to enable the Board to make a balanced and informed assessment of the Company’s performance, position and prospects. As and when circumstances arise, the Board can request Management to provide any necessary explanation and information on the management accounts of the Company.

The Board is responsible for the governance of risk. It should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the Company’s assets and should determine the nature and extent of the signifi cant risks which the Board is willing to take in achieving its strategic objectives.

Management is responsible to the Board for the design, implementation and monitoring of the Group’s risk management and internal control systems and to provide the Board with a basis to determine the Company’s level of risk tolerance and risk policies.

The Board acknowledges that it is responsible for reviewing the adequacy and effectiveness of the Group’s risk management and internal control systems including fi nancial, operational and compliance and information technology controls. The Board also recognises its responsibilities in ensuring a sound system of internal controls to safeguard shareholders’ investments and the Company’s assets.

The Company has engaged KPMG Services Pte. Ltd. (“KPMG”) as the internal auditors who have presented their Enterprise Risk Management (“ERM”) proposal to the AC and the Board to assist the Board and the AC in their review of the Group’s risk management and internal control systems focusing on fi nancial, operational, compliance and information technology controls.

Management regularly reviews the Group’s business and operational activities in respect of the key risk control areas including fi nancial, operational and compliance and information technology controls and continue to apply appropriate measures to control and mitigate these risks. All signifi cant matters are highlighted to the Board and the AC for further discussion. The Board and the AC also work with the internal auditors, external auditors and the Management on their recommendations to institute and execute relevant controls with a view to managing such risks.

With assistance from the internal auditors, key risk areas which have been identifi ed are analysed, monitored and reported. In this connection, the Group has conducted the enterprise risk assessment and has established the risk reporting dashboard with a view to develop a detailed risk register and to develop a structured ERM to ensure that the Group’s risk management and internal control systems are adequate and effective.

The Board notes that no cost effective system of internal controls could provide absolute assurance against the occurrence of material errors, losses, fraud or other irregularities.

In view of the above and based on the internal controls established and maintained by the Group, work performed by the internal auditors, external auditors, and reviews performed by Management, various Board Committees and the Board so far, the AC and the Board are of the opinion that the Group’s internal controls and risk management systems, addressing fi nancial, operational and compliance risks, put in place during the fi nancial year were adequate to provide a reasonable but not absolute assurance against the occurrence of errors, losses, fraud or other irregularities and the containment of business risk. In view of the above, the Board believes its responsibility of overseeing the Company’s risk management framework and policies are well supported. The Board will look into the need for establishment of a separate board risk committee at the relevant time.

The AC may consider receiving assurance from the CEO and CFO pursuant to the recommendation of Guideline 11.3 of the 2012 Code after the 2012 Code Effective Date.

Annual Report 2013

32


Audit Committee Principle 12: Audit Committee

The AC comprises four (4) members, all of whom including the Chairman, are independent:

Mr Wu Chiaw Ching - ChairmanMr Ang Mong Seng - MemberMr Ng Sey Ming - MemberMs Lau Lee Hua - Member

The duties of the AC include:

a) review the audit plans of the Company’s external auditors and the internal auditors, including the results of the auditors’ review and evaluation of the system of internal controls;

b) review the external auditors’ reports;

c) review with independent internal auditors the fi ndings of their review report, internal control process and procedures, and make recommendations on the internal control process and procedures to be adopted by the Company;

d) review the recommendations of the external auditors and monitor the implementation of an automated inventory and information system;

e) review the co-operation given by the Directors and Executive Offi cers to the external auditors;

f) review the fi nancial statements of the Company and the Group, and discuss any signifi cant adjustments, major risk areas, changes in accounting policies, compliance with Singapore Financial Reporting Standards, concerns and issues arising from the audits including any matters which the external auditors may wish to discuss in the absence of management, where necessary, before their submission to the Board for approval;

g) review and discuss with auditors any suspected fraud, irregularity or infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Group’s operating results or fi nancial position and the Management’s response;

h) making recommendations to the Board on the appointment, re-appointment and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors;

i) review the key fi nancial risk areas, with a view to providing independent oversight on the Group’s fi nancial reporting, with the outcome of such review to be disclosed in the annual reports or, if the fi ndings are material, to be immediately announced via SGXNET;

j) review interested person transactions, falling within the scope of Chapter 9 of the Listing Manual, if any, and connected person transactions;

k) review transactions falling within the scope of Chapter 10 of the Listing Manual, if any;

l) review any potential confl icts of interest and set framework to resolve or mitigate any potential confl ict of interest;

m) review and approve foreign exchange hedging policies implemented by the Group and conduct periodic review of foreign exchange transaction and hedging policies and procedures;

n) undertake such other reviews and projects as may be requested by the Board and report to the Board its fi ndings from time to time on matters arising and requiring the attention of the AC;


33


o) review arrangements by which the Group’s staff may, in confi dence, raise concerns about improprieties in matters of fi nancial reporting and to ensure those arrangements are in place for independent investigations of such matter and for appropriate follow-up; and

p) undertake generally such other functions and duties as may be required by law or the Listing Manual, and by such amendments made thereto from time to time.

The AC meets on a quarterly basis and plays a key role in assisting the Board to review signifi cant fi nancial reporting issues and judgements to ensure the quality and integrity of the accounting reports, the audit procedures, internal controls, fi nancial statements and any announcements relating to the Company’s fi nancial performance.

The AC reviews the adequacy and effectiveness of the internal control systems including fi nancial, operational, compliance and information technology controls annually and reports to the Board accordingly.

The AC reviews the audit plan and scope of examination of the external auditors and the assistance given by the Group’s offi cers to the auditors. The AC also discusses with the external auditors the results of their examinations and their evaluation of the Group’s system of internal controls; and at least once a year holds separate sessions with them without the presence of the Company’s management to discuss any matters deemed appropriate to be discussed privately. In addition, the AC reviews announcements relating to the Group’s quarterly and full year fi nancial results, the fi nancial statements of the Company and the consolidated fi nancial statements of the Group prior to its recommendations to the Board for approval.

The AC also reviews the independence and objectivity of the external auditors and having reviewed the scope and value of non-audit services provided to the Group by the external auditors, Deloitte & Touche LLP, is satisfi ed that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors. The AC has recommended to the Board the nomination of Deloitte & Touche LLP for re-appointment as auditors of the Company at the forthcoming AGM.

The AC has explicit authority to investigate any matter within its terms of reference. It has full access to the Management and full discretion to invite any Director or key management personnel or any executive offi cer to attend its meetings. The AC is reasonably resourced to enable it to discharge its functions properly. During FY2013, the AC has received full co-operation from the Management and the Group’s offi cers in the course of it carrying out its duties. It is also satisfi ed with the adequacy of the scope and quality of the external audits being conducted by Deloitte & Touche LLP.

The Board and AC have reviewed the appointment of different auditing fi rms for its foreign-incorporated subsidiaries and are satisfi ed that the appointment of different auditing fi rms would not compromise the standard and effectiveness of the audit of the Company. The Company is in compliance with Rules 712 and 715 (1) of the Listing Manual on the appointment of a same auditing fi rm in Singapore to audit its accounts and its Singapore-incorporated subsidiaries and Rule 716 (1) on the appointment of different auditing fi rms for its foreign-incorporated subsidiaries.

Mr Wu Chiaw Ching, the AC Chairman is a practicing Certifi ed Public Accountant and is able to lead the AC and its members to be kept abreast of changes to accounting standards and issues which have a direct impact on fi nancial statements. In addition, the AC also relies on the external auditors, Deloitte & Touch LLP and internal auditors, KPMG, for updates on any changes to the accounting standards. Furthermore, as mentioned under Principle 4, the NC intends to send all the Directors including the Independent Directors for training with SID on courses which are relevant to them in order to discharge their duties and responsibilities.

The Company has adopted a Whistle-Blowing Policy to provide a channel for employees of the Group to report in good faith and in confi dence their concerns about possible improprieties in the matter of fi nancial reporting or in other matters. The AC exercises the overseeing function over the administration of the Whistle-Blowing Policy. The Whistle-Blowing Policy provides for procedures to validate concerns and for investigation to be carried out independently. The Whistle-Blowing Policy has been circulated to all employees.

The aggregate amount of audit and non-audit fees paid or payable to the Company’s auditors for FY2013 are S$130,000 and S$123,000 respectively.

Annual Report 2013

34


Principle 13: Internal Audit

During FY2013, the AC has engaged KPMG as the internal auditors. The internal auditors’ primary line of reporting is the AC Chairman. Administratively, the internal auditors reports to the CEO. The shortlisting for the appointment of the internal auditors was conducted by the AC with assistance from the Management. The selection of KPMG as the internal auditors, its fee proposal and the internal audit proposal were reviewed and approved by the AC. The internal auditors’ carrying out of their function is in accordance to the standards set by the Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors.

The AC ensures that Management provides good support to the internal auditors and provide them with access to documents, records, properties and personnel when requested in order for the internal auditors to carry out their function accordingly.

The AC will review the adequacy and effectiveness of the internal audit function at least annually.

Principle 14: Shareholders’ RightsPrinciple 15: Communication with Shareholders

The Company treats all shareholders fairly and equitably and respects shareholders’ rights. The Company continually reviews and update governance arrangements with regard to shareholders’ rights.

Relevant information pertaining to the Group, such as changes in the Company or its business which would affect the share price of the Company is disseminated in a timely manner to shareholders through public announcements via SGXNET or through circulars to shareholders and the annual reports.

Shareholders are encouraged to participate effectively in and vote at general meetings. At general meetings, shareholders will be informed of the rules, voting procedures relating to the general meetings.

The Company does not practice selective disclosure. The Company intends to actively engage its shareholders by putting in place an investor relations policy to promote regular, effective and fair communication with shareholders. The Company avoids boilerplate disclosures and provides detailed and forthcoming disclosure in its announcements to the SGX-ST. Such announcements are also available on the Company’s website.

In its IPO Prospectus dated 17 October 2012 (the “IPO Prospectus”), the Company has stated that it does not have a formal dividend policy. The declarations and payment of dividends will be determined at the sole discretion of the Board subject to approval of the shareholders. The Board states in the IPO Prospectus the Company’s intention to recommend and distribute dividends of not less that 30% out of the Group net profi ts attributable to the shareholders for FY2013 and FY2014. Please refer to page 43 of the IPO Prospectus for more details of the dividend policy.

The Company’s Articles of Association allow shareholders of the Company to appoint proxies to attend and vote on their behalf at all general meetings.

Separate resolutions on each distinct issue are tabled at general meetings and explanatory notes are set out in the notices of general meetings where appropriate. All Directors including Chairman of the Board and the respective Chairman of the AC, NC and RC, the Management, and the external auditors are in attendance at general meetings to address any queries of the shareholders.

The Company intends to record the minutes of general meetings that include relevant and substantial comments from shareholders relating to the agenda of the meeting and responses from Management. Such minutes will be available to shareholders upon their request.

While acknowledging that voting by poll is integral in the enhancement of corporate governance and lead to greater transparency of the level of support for each resolution, the Company is concerned over the cost effectiveness and effi ciency of the polling procedures which may be logistically and administratively burdensome. Electronic polling may be effi cient in terms of speed but may not be cost effective. The Board will monitor shareholders’ attendance and participation at its forthcoming AGM and assess the possibility of implementing voting by poll in the future AGMs.


35


Dealing in Securities

The Group has adopted an internal compliance code to provide guidance to its Directors and all employees of the Group with regard to dealings in the Company’s securities. The code prohibits dealing in the Company’s securities by the Directors and employees of the Group while in possession of unpublished price-sensitive information. Directors and employees are not allowed to deal in the Company’s securities on short-term considerations and during the two weeks before the announcement of the Company’s fi nancial statement for the fi rst three quarters of its fi nancial year and the one month before the announcement of the Company’s full year fi nancial results. The Directors and employees are also required to adhere to the provisions of the Securities and Futures Act, Companies Act, the Listing Manual and any other relevant regulations with regard to their securities transactions. They are also expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period.

Material Contracts

Save for the following material contracts previously disclosed in the IPO Prospectus, there are no other material contracts of the Company or its subsidiaries involving the interest of the CEO, any Director or controlling shareholder either still subsisting as at 31 March 2013 or if not then subsisting, entered into since the end of the previous fi nancial year.

a) The Call Option Agreement dated 26 September 2012 entered into between the Company and the controlling shareholder, Keh Swee Investment Pte. Ltd. (“Keh Swee”) pursuant to which the Company was granted the Call Option.

b) The Service Agreements of Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe and Mr Steven Teo, each dated 26 September 2012.

c) The Covenantors Non-Competition Deed dated 26 September 2012 entered into between the Company and Mr Teo Bee Yen, Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe, Mr Steven Teo and Keh Swee.

d) The Halo Non-Competition Deed dated 26 September 2012 entered into between the Company and Halo Wire Rope, L.L.C..

e) The letter of undertaking dated 26 September 2012 from Keh Swee to the Company.

Interested Person Transactions

The Company confi rms that there were no interested person transactions of more than S$100,000 during the fi nancial year under review.

Non-Audit Fees

The nature of the non-audit services that were rendered by the Company’s auditors, Deloitte & Touche LLP, to the Group and their related fees for FY2013 were as follows:

Fees for Reporting Accountants service rendered to the Group – S$80,000Fees for due diligence services rendered to the Group – S$30,000Fees for tax advisory services rendered to the Group – S$13,000

Financial Contents

37 Report of the Directors 46 Statements of Changes in Equity

42 Statement of Directors 48 Consolidated Statement of Cash Flows

43 Independent Auditors’ Report 50 Notes to Financial Statements

44 Statements of Financial Position 90 Statistics of Shareholdings

45 Consolidated Statement of Comprehensive Income 92 Notice of Annual General Meeting

Proxy Form


37

REPORT OF THE DIRECTORS

The directors present their report together with the audited consolidated fi nancial statements of the Group and statement of fi nancial position and statement of changes in equity of the Company for the fi nancial year ended 31 March 2013.

1 DIRECTORS

The directors of the Company in offi ce at the date of this report are:

Mr Ang Mong Seng (Independent Non-Executive Chairman) (Appointed on September 26, 2012) Mr Teo Bee Chiong (Executive Director and Chief Executive Offi cer) Mr Teo Bee Kheng (Executive Director and Chief Operating Offi cer) Mr Teo Bee Hoe (Executive Director and Deputy Chief Operating Offi cer) Mr Wu Chiaw Ching (Independent Non-Executive Director) (Appointed on September 26, 2012) Mr Ng Sey Ming (Independent Non-Executive Director) (Appointed on September 26, 2012) Ms Lau Lee Hua (Independent Non-Executive Director) (Appointed on September 26, 2012)

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the fi nancial year nor at any time during the fi nancial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefi ts by means of the acquisition of shares or debentures in the Company or any other body corporate.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the Company holding offi ce at the end of the fi nancial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the register of directors’ shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows:

Shareholdings registeredin name of directors

Shareholdings in which directors are deemed

to have an interest

Name of directors and companies in which interests are held

At beginning of year At end of year

At beginning of year At end of year

The immediate holding company- Keh Swee Investment Pte. Ltd.(Ordinary shares)

Mr Teo Bee Chiong 1,000,001 1,000,001 3,000,000 264,410,000

Mr Teo Bee Kheng 1,000,001 1,000,001 3,000,000 264,410,000

Mr Teo Bee Hoe 1,000,001 1,000,001 3,000,000 264,410,000

By virtue of Section 7 of the Singapore Companies Act, the above directors are deemed to have an interest in all the related corporations of the Company.

The directors’ interests in the shares of the Company at 21 April 2013 were the same as at 31 March 2013.

Annual Report 2013

38


4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the fi nancial year, no director has received or become entitled to receive a benefi t which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation with the director or with a fi rm of which he is a member, or with a company in which he has a substantial fi nancial interest except for salaries, bonuses and other benefi ts as disclosed in the fi nancial statements. Certain directors received remuneration from related corporations in their capacity as directors and/or executives of those related corporations.

5 SHARE OPTIONS

(a) Options to take up unissued shares

During the fi nancial year, no options to take up unissued shares of the Company or any corporation in the Group were granted.

(b) Options exercised

During the fi nancial year, there were no shares of the Company or any corporation in the Group issued by virtue of the exercise of options to take up unissued shares.

(c) Unissued shares under options

At the end of the fi nancial year, there were no unissued shares of the Company or any corporation in the Group under options.

6 SHARE PLAN

The Gaylin Employee Share Option Scheme (“ESOS”) was approved by the shareholder on 24 September 2012 prior to the Company’s listing on the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 25 October 2012. The ESOS is administered by the Remuneration Committee comprising of Mr Ang Mong Seng (Chairman), Mr Wu Chiaw Ching, Mr Ng Sey Ming and Ms Lau Lee Hua.

(a) Participants

Executive directors, non-executive directors and confi rmed full-time employees of the Group are eligible to participate in the ESOS.

(b) Size of the ESOS

The aggregate number of shares in respect of which the Remuneration Committee may grant options on any date, when added to the nominal amount of shares issued and issuable in respect of all options granted under the ESOS shall not exceed 15.0% of the issued share capital of the Company on the day immediately preceding the date of the relevant grant.

(c) Maximum entitlements

The aggregate number of shares comprised in any option to be offered to a participant under the ESOS shall be determined at the absolute discretion of the Remuneration Committee, which shall take into account (where applicable) criteria such as rank, past performance, years of service, potential for future development of that participant.


39


6 SHARE PLAN (cont’d)

(d) Options, exercise period and exercise price

The options that are granted under the ESOS may have exercise prices that are, at the Remuneration Committee’s discretion, set at a price (the “Market Price”) equal to the average of the last dealt prices for the shares on the Offi cial List of the SGX-ST for the fi ve consecutive market days immediately preceding the relevant date of grant of the relevant option; or at a discount to the market price (subject to a maximum discount of 20.0%). Options which are fi xed at the market price may be exercised after the fi rst anniversary of the date of grant of that option while options exercisable at a discount to the Market Price may only be exercised after the second anniversary from the date of grant of the option. Options granted under the ESOS will have a life span of ten years.

(e) Duration of the ESOS

The ESOS shall continue in operation for a maximum duration of ten years and may be continued for any further period thereafter with the approval of shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required.

(f) At the end of the fi nancial period, no awards have been granted under the ESOS.

7 AUDIT COMMITTEE

The Audit Committee comprises four independent members:

Mr Wu Chiaw Ching - Chairman Mr Ang Mong Seng - Member Mr Ng Sey Ming - Member Ms Lau Lee Hua - Member

The duties of the Audit Committee include:

a) review the audit plans of the Company’s external auditors and the internal auditors, including the results of the auditors’ review and evaluation of the system of internal controls;

b) review the external auditors’ reports;

c) review with independent internal auditors the fi ndings of their review report, internal control process and procedures, and make recommendations on the internal control process and procedures to be adopted by the Company;

d) review the recommendations of the external auditors and monitor the implementation of an automated inventory and information system;

e) review the co-operation given by the directors and executive offi cers to the external auditors;

f) review the financial statements of the Company and the Group, and discuss any significant adjustments, major risk areas, changes in accounting policies, compliance with Singapore Financial Reporting Standards, concerns and issues arising from the audits including any matters which the external auditors may wish to discuss in the absence of management, where necessary, before their submission to the Board of Directors (“Board”) for approval;

g) review and discuss with external auditors any suspected fraud, irregularity or infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Group’s operating results or fi nancial position and the management’s response;

h) making recommendations to the Board on the appointment, re-appointment and removal of the external auditors, and approving the remuneration and terms of engagement of the external auditors;

Annual Report 2013

40


7 AUDIT COMMITTEE (cont’d)

i) review the key fi nancial risk areas, with a view to providing independent oversight on the Group’s fi nancial reporting, with the outcome of such review to be disclosed in the annual reports or, if the fi ndings are material, to be immediately announced via SGXNET;

j) review interested person transactions, falling within the scope of Chapter 9 of the Listing Manual, if any, and connected person transactions;

k) review transactions falling within the scope of Chapter 10 of the Listing Manual, if any;

l) review any potential confl icts of interest and set framework to resolve or mitigate any potential confl ict of interest;

m) review and approve foreign exchange hedging policies implemented by the Group and conduct periodic review of foreign exchange transaction and hedging policies and procedures;

n) undertake such other reviews and projects as may be requested by the Board and report to the Board its fi ndings from time to time on matters arising and requiring the attention of the Audit Committee;

o) review arrangements by which the Group’s staff may, in confi dence, raise concerns about improprieties in matters of fi nancial reporting and to ensure those arrangements are in place for independent investigations of such matter and for appropriate follow-up; and

p) undertake generally such other functions and duties as may be required by law or the Listing Manual, and by such amendments made thereto from time to time.

The Audit Committee meets on a quarterly basis and plays a key role in assisting the Board to review signifi cant fi nancial reporting issues and judgements to ensure the quality and integrity of the accounting reports, the audit procedures, internal controls, fi nancial statements and any announcements relating to the Company’s fi nancial performance.

The Audit Committee reviews the adequacy and effectiveness of the internal control systems including fi nancial, operational, compliance and information technology controls annually and reports to the Board accordingly.

The Audit Committee holds separate sessions with the external auditors at least once a year without the presence of the Company’s management to discuss any matters deemed appropriate to be discussed privately. In addition, the Audit Committee reviews announcements relating to the Group’s quarterly and full year fi nancial results, the fi nancial statements of the Company and the consolidated fi nancial statements of the Group prior to its recommendations to the Board for approval.

The Audit Committee also reviews the independence and objectivity of the external auditors. The Audit Committee has recommended to the Board the nomination of Deloitte & Touche LLP for re-appointment as auditors of the Company at the forthcoming Annual General Meeting.


41


8 AUDITORS

The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.

ON BEHALF OF THE DIRECTORS

Teo Bee Chiong

Teo Bee Kheng

17 June 2013

Annual Report 2013

42

STATEMENT OF DIRECTORS

In the opinion of the directors, the consolidated fi nancial statements of the Group and the statement of fi nancial position and statement of changes in equity of the Company as set out on pages 44 to 89 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 March 2013, and of the results, changes in equity and cash fl ows of the Group and changes in equity of the Company for the fi nancial year then ended and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

ON BEHALF OF THE DIRECTORS

Teo Bee Chiong

Teo Bee Kheng

17 June 2013


43

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF GAYLIN HOLDINGS LIMITED AND ITS SUBSIDIARIES

Report on the Financial Statements

We have audited the accompanying fi nancial statements of Gaylin Holdings Limited (the “Company”) and its subsidiaries (the “Group”) which comprise the statements of fi nancial position of the Group and the Company as at 31 March 2013, and the statement of comprehensive income, statement of changes in equity and statement of cash fl ows of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 44 to 89.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of fi nancial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards and for devising and maintaining a system of internal accounting controls suffi cient to provide reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profi t and loss accounts and balance sheets and to maintain accountability of assets.

Auditors’ Responsibility

Our responsibility is to express an opinion on these fi nancial 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 about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of fi nancial statements that give a true and fair view 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 management, as well as evaluating the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated fi nancial statements of the Group and the statement of fi nancial position and statement of changes in equity of the Company 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 Group and of the Company as at 31 March 2013 and of the results, changes in equity and cash fl ows of the Group and changes in equity of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, 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.

Deloitte & Touche LLPPublic Accountants andCertifi ed Public Accountants Singapore17 June 2013

Annual Report 2013

44

STATEMENTS OF FINANCIAL POSITION31 March 2013

See accompanying notes to fi nancial statements.

Group Company

Note 2013 2012 2013 2012

$ $ $ $

ASSETS

Current assets

Cash and cash equivalents 6 21,408,049 4,199,715 20,056,226 31,108

Trade receivables 7 27,421,485 18,772,803 851,690 –

Other receivables and prepayments 8 859,975 494,478 26,774,135 54,704

Inventories 9 104,057,798 86,973,582 – –

Total current assets 153,747,307 110,440,578 47,682,051 85,812

Non-current assets

Property, plant and equipment 10 10,979,902 8,875,846 – –

Club memberships 11 75,500 – – –

Intangible asset 12 225,000 – – –

Subsidiaries 13 – – 5,499,643 5,490,641

Total non-current assets 11,280,402 8,875,846 5,499,643 5,490,641

Total assets 165,027,709 119,316,424 53,181,694 5,576,453

LIABILITIES AND EQUITY

Current liabilities

Trade payables 14 16,416,917 9,895,703 – –

Other payables 15 1,311,097 502,901 706,507 412,000

Current portion of bank borrowings 16 37,689,632 47,163,495 – –

Current portion of fi nance leases 17 1,011,161 936,787 – –

Income tax payable 1,956,198 3,405,570 105,241 –

Total current liabilities 58,385,005 61,904,456 811,748 412,000

Non-current liabilities

Bank borrowings 16 15,758,436 20,692,975 – –

Finance leases 17 927,461 1,627,582 – –

Deferred tax liabilities 18 265,472 129,167 – –

Total non-current liabilities 16,951,369 22,449,724 – –

Capital, reserves and non-controlling interests

Share capital 19 47,223,533 3,000,000 47,223,533 3,000,000

Retained earnings 42,542,188 32,050,982 5,146,413 2,164,453

Translation reserve (74,387) (88,738) – –

Equity attributable to shareholders of the Company 89,691,334 34,962,244 52,369,946 5,164,453

Non-controlling interests 1 – – –

Total equity 89,691,335 34,962,244 52,369,946 5,164,453

Total liabilities and equity 165,027,709 119,316,424 53,181,694 5,576,453


45

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEYear Ended 31 March 2013


Group

Note 2013 2012

$ $

Revenue 20 77,117,143 71,447,107

Cost of sales (52,232,981) (47,773,484)

Gross profi t 24,884,162 23,673,623

Other income 21 207,326 475,015

Distribution costs (2,900,497) (2,142,166)

Administrative expenses (7,565,909) (4,643,019)

Other operating expenses 22 (318,821) (211,548)

Interest expense (1,833,953) (1,518,489)

Profi t before income tax 12,472,308 15,633,416

Income tax expense 23 (1,981,102) (2,662,898)

Profi t for the year 24 10,491,206 12,970,518

Other comprehensive income (loss):

Translation gain (loss) arising on consolidation 14,351 (35,704)

Other comprehensive income (loss) for the year, net of tax 14,351 (35,704)

Total comprehensive income for the year attributable to shareholders of the Company 10,505,557 12,934,814

Basic and diluted earnings per share 25 2.95 cents 4.32 cents

Annual Report 2013

46

STATEMENTS OF CHANGES IN EQUITYYear Ended 31 March 2013


Sharecapital

Retained earnings

Translation reserve

Attributable to

shareholdersof the

Company

Non-controlling interests

Totalequity

$ $ $ $ $ $

Group

At 1 April 2011 1 44,380,464 (53,034) 44,327,431 – 44,327,431

Issuance of shares (Note 19) 2,999,999 – – 2,999,999 – 2,999,999

Dividends paid (Note 26) – (25,300,000) – (25,300,000) – (25,300,000)

Total comprehensive income for the year – 12,970,518 (35,704) 12,934,814 – 12,934,814

At 31 March 2012 3,000,000 32,050,982 (88,738) 34,962,244 – 34,962,244

Contribution from non-controlling interests – – – – 1 1

Issuance of shares (Note 19) 44,223,533 – – 44,223,533 – 44,223,533

Total comprehensive income for the year – 10,491,206 14,351 10,505,557 – 10,505,557

At 31 March 2013 47,223,533 42,542,188 (74,387) 89,691,334 1 89,691,335


47

STATEMENTS OF CHANGES IN EQUITYYear Ended 31 March 2013


Sharecapital

Retainedearnings

Totalequity

$ $ $

Company

At 1 April 2011 1 (12,591) (12,590)

Issuance of shares (Note 19) 2,999,999 – 2,999,999

Dividends paid (Note 26) – (25,300,000) (25,300,000)

Total comprehensive income for the year – 27,477,044 27,477,044

At 31 March 2012 3,000,000 2,164,453 5,164,453

Issuance of shares (Note 19) 44,223,533 – 44,223,533

Total comprehensive income for the year – 2,981,960 2,981,960

At 31 March 2013 47,223,533 5,146,413 52,369,946

Annual Report 2013

48

CONSOLIDATED STATEMENT OF CASH FLOWSYear Ended 31 March 2013


Group

2013 2012

$ $

Restated

Operating activities


Adjustments for:

Interest expense 1,833,953 1,518,489

Interest income (24,258) (1,472)

Depreciation 1,848,842 1,819,601

Amortisation of intangible assets 15,000 –

Allowance for doubtful trade receivables 42,954 –

Doubtful trade receivables recovered (52,301) (18,810)

Trade receivables written off 16,478 11,540

Other receivables written off – 919

Gain on disposal of property, plant and equipment (8,445) (350,146)

Excess of fair value of net identifi able assets over consideration paid for a subsidiary (Note 27) (66,099) –

Net foreign exchange (gain) loss - unrealised (2,260) 217,295

Inventories written back to net realisable value (169,567) (1,050,603)

Trade payables written back – (43,149)

Operating cash fl ows before movements in working capital 15,906,605 17,737,080

Trade receivables (7,369,431) 2,094,739

Other receivables and prepayments (293,092) (167,356)

Inventories (16,869,135) (10,106,568)

Trade payables 5,588,071 (4,272,744)

Other payables 782,449 (14,209)

Bank bills payable (5,347,997) 9,773,836

Cash (used in) generated from operations (7,602,530) 15,044,778

Interest paid for bank bills (783,798) (759,438)

Interest received 24,258 1,472

Income tax paid (3,408,070) (2,161,284)

Net cash (used in) from operating activities (11,770,140) 12,125,528


49

CONSOLIDATED STATEMENT OF CASH FLOWSYear Ended 31 March 2013


Group

2013 2012

$ $

Restated

Investing activities

Proceeds on disposal of property, plant and equipment 22,500 501,899

Purchases of property, plant and equipment (Note A) (1,806,914) (1,721,545)

Acquisition of subsidiaries (Note 27) (1,236,000) (74,872)

Purchase of club memberships (75,500) –

Net cash used in investing activities (3,095,914) (1,294,518)

Financing activities

Repayment of loan to immediate holding company – (10,750,000)

Proceeds from issuance of shares of the Company 46,200,000 2,999,999

Payment of share issue expenses (1,976,467) –

Interest paid for other borrowings (1,050,155) (759,051)

Dividends paid – (25,300,000)

Repayment of obligations under fi nance leases (952,632) (1,262,562)

New bank loans obtained 1,000,000 34,000,000

Repayment of bank loans (11,149,750) (2,068,443)

Contribution from non-controlling interests 1 –

Net cash from (used in) fi nancing activities 32,070,997 (3,140,057)

Net increase in cash and cash equivalents 17,204,943 7,690,953

Effect of exchange rate changes on cash and cash equivalents 3,391 5,359

Cash and cash equivalents (overdrawn) at beginning of the year 4,199,715 (3,496,597)

Cash and cash equivalents at end of the year 21,408,049 4,199,715

Note A

During the year, the Group purchased property, plant and equipment with an aggregate cost of $2,133,799 (2012 : $3,143,543) of which $326,885 (2012 : $1,421,998) was acquired under fi nance lease arrangements.

Annual Report 2013

50

NOTES TO FINANCIAL STATEMENTS31 March 2013

1 GENERAL

The Company (Registration No. 201004068M) is incorporated in the Republic of Singapore on 25 February 2010 with its principal place of business and registered office at 7 Gul Avenue, Singapore 629651. The fi nancial statements are expressed in Singapore dollars, which is also the Company’s functional currency.

The Company is engaged in investment holding and the provision of management services to its subsidiaries.

The principal activities of the subsidiaries are described in Note 13 to the fi nancial statements.

The consolidated fi nancial statements of the Group and statement of fi nancial position and statement of changes in equity of the Company for the year ended 31 March 2013 were authorised for issue by the Board of Directors on 17 June 2013.

Restructuring Exercise

The Group was formed through the Restructuring Exercise which involved acquisition and the rationalisation of the corporate and shareholding structure in preparation for the proposed listing of the Company on the Singapore Exchange Securities Trading Limited. Pursuant to the Restructuring Exercise, the Company became the holding company of the Group.

The Restructuring Exercise involved the following:

1. Incorporation of Gaylin Holdings Pte. Ltd. (“GHPL”)

GHPL was incorporated on 25 February 2010 in the Republic of Singapore with an issued and paid-up share capital of $1.00 comprising one share. On 14 September 2011, GHPL allotted and issued 2,999,999 shares for the consideration of $2,999,999 to its existing shareholder, Keh Swee Investment Pte. Ltd. (“Keh Swee”), for cash.

Keh Swee has issued and paid-up share capital of $5 comprising 5 shares held by Mr Teo Bee Chiong (referred hereafter as “Mr Desmond Teo”), Mr Teo Bee Kheng, Mr Teo Bee Hoe, Mr Teo Bee Yen and Mr Teo Bee Hua (referred hereafter as “Mr Steven Teo”).

2. Incorporation of Gaylin Malaysia Sdn. Bhd. (“Gaylin Malaysia”)

On 22 January 2010, Gaylin Malaysia was incorporated in Malaysia with Mr Teo Bee Hoe and Gaylin International Pte Ltd as subscribers with each holding one ordinary share in Gaylin Malaysia. The subscribers transferred the two ordinary shares in Gaylin Malaysia to the Company on 15 April 2011. 999,998 ordinary shares in the issued and paid-up share capital of Gaylin Malaysia have been issued and allotted to the Company on 19 August 2011.

3. Acquisition of Gaylin International Pte Ltd (“GIPL”) and its subsidiary Gaylin Vietnam Pte Ltd (“Gaylin Vietnam”)

Pursuant to a sale and purchase agreement dated 28 February 2011, the Company acquired from Mr Desmond Teo, Mr Teo Bee Kheng and Mr Teo Bee Hoe, directors of the Company, and Mr Steven Teo (brother of the directors) and Ms Lew Siew Poh (the wife of Mr Teo Bee Yen, brother of the directors), the entire issued and paid-up capital of 5,000,000 ordinary shares of GIPL at an aggregate consideration of $5,000,000 (the “Purchase Consideration”) which was determined based on the issued and paid-up shares capital of GIPL. GIPL owns 100% of the equity interest in Gaylin Vietnam at the date of the sale and purchase agreement.


51

31 March 2013NOTES TO FINANCIAL STATEMENTS

1 GENERAL (cont’d)

3. Acquisition of Gaylin International Pte Ltd (“GIPL”) and its subsidiary Gaylin Vietnam Pte Ltd (“Gaylin Vietnam”) (cont’d)

The consideration was payable to the vendors based on their respective shareholdings in GIPL as follows:

Number of shares(as a percentage of total

number of shares)

Aggregateconsideration in respect

of such share sale

Mr Desmond Teo 1,000,000 $1,000,000

(20.0%)

Mr Teo Bee Kheng 1,000,000 $1,000,000

(20.0%)

Mr Teo Bee Hoe 750,000 $750,000

(15.0%)

Mr Steven Teo 750,000 $750,000

(15.0%)

Ms Lew Siew Poh 1,500,000 $1,500,000

(30.0%)

Total 5,000,000

(100.0%) $5,000,000 Upon completion of the acquisition, GIPL became a wholly-owned subsidiary of the Company.

A portion of the Purchase Consideration amounting to an aggregate of $1,500,000 was paid by the Company to Ms Lew Siew Poh by way of cash payment. The balance of $3,500,000 payable by the Company to Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe and Mr Steven Teo, amounting to an aggregate of $3,500,000 (the “Acquisition Debt”) was not satisfi ed in cash.

Pursuant to a novation agreement dated 28 February 2011, Keh Swee assumed the obligations in respect of the Acquisition Debt. Keh Swee effected full settlement of the Acquisition Debt by way of the allotment and issuance of an aggregate of 3,500,000 new ordinary shares at $1 per share, credited as fully paid, to Mr Desmond Teo (1,000,000 Shares), Mr Teo Bee Kheng (1,000,000 Shares), Mr Teo Bee Hoe (750,000 Shares) and Mr Steven Teo (750,000 Shares).

Further, on 28 February 2011, each of Mr Teo Bee Hoe, Mr Steven Teo and Mr Teo Bee Yen subscribed for 250,000 shares, 250,000 shares and 1,000,000 shares respectively in Keh Swee.

As a result, each of Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe, Mr Teo Bee Yen and Mr Steven Teo owns 1,000,001 ordinary shares representing 20.0% of the issued share capital of Keh Swee.

4. Incorporation of Gaylin Power Pte. Ltd. (“Gaylin Power”)

Following the acquisition of GIPL by the Company, Gaylin Power was incorporated as a wholly owned subsidiary of GIPL on 25 July 2011.

Annual Report 2013

52


1 GENERAL (cont’d)

5. Acquisition of Bridge Testing Centre (Pte) Ltd. (“Bridge Testing”)

Pursuant to a sale and purchase agreement dated 30 September 2011, the Company acquired from Mr Teo Bee Kheng and Mr Teo Bee Hoe, the entire issued and paid-up share capital of two ordinary shares of Bridge Testing at an aggregate consideration of $81,841, which was determined based on the unaudited net asset value of Bridge Testing as at 30 September 2011. Management has estimated that the net asset value approximates the fair value as the net assets and liabilities assumed mainly relate to fi nancial assets and liabilities with relatively short-term maturity as disclosed in Note 27 to the fi nancial statements. The consideration was paid to Mr Teo Bee Kheng and Mr Teo Bee Hoe in equal proportions.

Upon completion, Bridge Testing became a wholly-owned subsidiary of the Company.

The Company was listed on the Singapore Exchange Securities Trading Limited on 25 October 2012. Subsequent to the listing, the Company incorporated Gaylin Korea Pte. Ltd., Gaylin Marine Supply Pte. Ltd. and Lv Yang (Tianjin) Offshore Pte Ltd on 29 November 2012, 11 December 2012 and 18 March 2013 respectively.

On 1 January 2013, the Group acquired 100% of the issued share capital of Allseas Marine Services Pte Ltd (“Allseas Marine”) for a cash consideration of $1,470,000. This transaction has been accounted for by the acquisition method of accounting and fair values of assets and liabilities have been disclosed in Note 27.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING - The fi nancial statements have been prepared in accordance with the historical cost basis, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

ADOPTION OF NEW AND REVISED STANDARDS - In the current fi nancial year, the Group has adopted all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after 1 April 2012. The adoption of these new/revised FRS does not result in changes to the Group’s and Company’s accounting policies and has no material impact on the amounts reported for the current or prior years.

At the date of authorisation of these fi nancial statements, the following FRSs, INT FRSs and amendments to FRS that are relevant to the Group and the Company were issued but not effective:

Amendments to FRS 1 Presentation of Financial Statements - Amendments relating to Presentation of Items of Other Comprehensive Income

FRS 27 (Revised) Separate Financial Statements

FRS 110 Consolidated Financial Statements

FRS 112 Disclosure of Interests in Other Entities

FRS 113 Fair Value Measurement

Amendments to FRS 32 Financial Instruments: Presentation and FRS 107 Financial Instruments: Disclosure - Offsetting Financial Assets and Financial Liabilities

Annual Improvements to FRS 2012


53


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Consequential amendments were also made to various standards as a result of these new/revised standards.

The management anticipates that the adoption of the above FRSs and amendments to FRS in future periods will not have a material impact on the fi nancial statements of the Group in the period of their initial application except for the following:

Amendments to FRS 1 Presentation of Financial Statements - Amendments relating to Presentation of Items of Other Comprehensive Income (“OCI”)

The amendment on Other Comprehensive Income (“OCI”) presentation will require the Group to present in separate groupings, OCI items that might be recycled i.e., reclassifi ed to profi t or loss (e.g., those arising from cash fl ow hedging, foreign currency translation) and those items that would not be recycled (e.g. revaluation gains on property, plant and equipment under the revaluation model). The tax effects recognised for the OCI items would also be captured in the respective grouping, although there is a choice to present OCI items before tax or net of tax.

Changes arising from these amendments to FRS 1 will take effect from fi nancial years beginning on or after 1 July 2012, with full retrospective application.

Management anticipates that the application of amendments to FRS 1 will not have a material impact on the presentation of its fi nancial statements.

FRS 110 Consolidated Financial Statements and FRS 27 (Revised) Separate Financial Statements

FRS 110 replaces the control assessment criteria and consolidation requirements currently in FRS 27 and INT FRS 12 Consolidation - Special Purpose Entities.

FRS 110 defi nes the principle of control and establishes control as the basis for determining which entities are consolidated in the consolidated fi nancial statements. It also provides more extensive application guidance on assessing control based on voting rights or other contractual rights. Under FRS 110, control assessment will be based on whether an investor has (i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect the amount of the returns. FRS 27 remains as a standard applicable only to separate fi nancial statements.

FRS 110 will take effect from fi nancial years beginning on or after 1 January 2014, with retrospective application subject to transitional provisions.

After taking into account the new defi nition of control and the additional guidance on control set out in FRS

110, management anticipates that the application of FRS 110 will not have a material impact on the accounting for the Group’s ownership interest in its subsidiaries.

FRS 112 Disclosure of Interests in Other Entities

FRS 112 requires an entity to provide more extensive disclosures regarding the nature of and risks associated with its interest in subsidiaries.

FRS 112 will take effect from fi nancial years beginning on or after 1 January 2014, and the Group is currently estimating extent of additional disclosures needed.

Annual Report 2013

54



FRS 113 Fair Value Measurement

FRS 113 is a single new Standard that applies to both fi nancial and non-fi nancial items. It replaces the guidance on fair value measurement and related disclosures in other Standards, with the exception of measurement dealt with under FRS 102 Share-based Payment, FRS 17 Leases, net realisable value in FRS 2 Inventories and value-in-use in FRS 36 Impairment of Assets.

FRS 113 provides a common fair value defi nition and hierarchy applicable to the fair value measurement of assets, liabilities, and an entity’s own equity instruments within its scope, but does not change the requirements in other Standards regarding which items should be measured or disclosed at fair value.

The disclosure requirements in FRS 113 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for fi nancial instruments only under FRS 107 Financial Instruments: Disclosures will be extended by FRS 113 to cover all assets and liabilities within its scope.

FRS 113 will be effective prospectively from annual periods beginning on or after 1 January 2013. Comparative information is not required for periods before initial application.

The management anticipates that the application of FRS 113 may affect certain amounts reported in the fi nancial statements and result in more extensive disclosure in the fi nancial statements.

Amendments to FRS 32 Financial Instruments: Presentation and FRS 107 Financial Instruments: Disclosure - Offsetting Financial Assets and Financial Liabilities

The amendments to FRS 32 clarify existing application issues relating to the offsetting requirements. Specifi cally, the amendments clarify the meaning of ‘currently has a legal enforceable right of set-off’ and ‘simultaneous realisation and settlement’.

The amendments to FRS 107 require entities to disclose information about the rights of set-off and related arrangements (such as collateral posting requirements) for fi nancial instruments under an enforceable master netting agreement or similar agreement.

The amendments to FRS 107 are required for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods. The disclosures should be provided retrospectively for all comparative periods. However, the amendments to FRS 32 are effective for annual periods beginning on or after 1 January 2014 with retrospective application required.

The management anticipates that the application of amendments to FRS 107 will result in more extensive disclosures on offsetting fi nancial assets and fi nancial liabilities. However, the management is still evaluating the impact of the amendments to FRS 32 on the fi nancial assets and liabilities that have been set-off on the statement of fi nancial position.


55



Annual Improvements to FRS 2012

The Annual Improvements include a number of amendments to various FRSs. The amendments are effective for annual periods beginning on or after 1 January 2013. The amendments include:

Amendments to FRS 16 Property, Plant and Equipment; and

Amendments to FRS 32 Financial Instruments: Presentation

Amendments to FRS 16 clarify that spare parts, stand-by equipment and servicing equipment should be classifi ed as property, plant and equipment when they meet the defi nition of property, plant and equipment in FRS 16 and as inventory if otherwise. The management does not anticipate that the amendments to FRS 16 will have a signifi cant effect on the fi nancial statements.

Amendments to FRS 32 clarify that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction should be accounted for in accordance with FRS 12 Income Taxes. The management does not anticipate that the amendments to FRS 32 will have a signifi cant effect on the fi nancial statements.

BASIS OF CONSOLIDATION - The consolidated fi nancial statements incorporate the fi nancial statements of the Company and its subsidiaries. Control is achieved where the Company has the power to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the fi nancial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-company transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in subsidiaries are identifi ed separately from the Group’s equity therein. The interest of non-controlling shareholders that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured (at date of original business combination) either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifi able net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specifi ed in another FRS. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a defi cit balance.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to refl ect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to shareholders of the Company.

Annual Report 2013

56



When the Group loses control of a subsidiary, the profi t or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassifi ed to profi t or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

In the Company’s fi nancial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable value that has been recognised in profi t or loss.

BUSINESS COMBINATIONS - Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the acquisition date fair values of assets given, liabilities incurred by the Group to the former owners of the acquiree, and equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profi t or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classifi ed. Contingent consideration that is classifi ed as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classifi ed as an asset or a liability is remeasured at subsequent reporting dates in accordance with FRS 39 Financial Instruments: Recognition and Measurement, or FRS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profi t or loss.

Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profi t or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassifi ed to profi t or loss, where such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifi able assets, liabilities and contingent liabilities that meet the conditions for recognition under the FRS are recognised at their fair value at the acquisition date, except that:

deferred tax assets or liabilities and liabilities or assets related to employee benefi t arrangements are recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefi ts respectively;

liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement of an acquiree’s share-based payment awards transactions with share-based payment awards transactions of the acquirer in accordance with the method in FRS 102 Share-based Payment at the acquisition date; and

assets (or disposal groups) that are classifi ed as held for sale in accordance with FRS 105 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.


57



If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to refl ect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date - and is subject to a maximum of one year from acquisition date.

The accounting policy for initial measurement of non-controlling interests is described above.

The Group resulting from the Restructuring Exercise as disclosed in Note 1 above, is one involving entities under common control. Accordingly, the consolidation of GIPL in the fi nancial statements prepared prior to the incorporation of the Company was accounted for using the principles of merger accounting where fi nancial statement items of the merged entities for the reporting periods in which the common control combination occurs are included in the fi nancial statements of the Group as if the combination had occurred from the date when the merged entities fi rst came under the control of the same shareholders.

FINANCIAL INSTRUMENTS - Financial assets and fi nancial liabilities are recognised on the Group’s statements of fi nancial position when the Group becomes a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a fi nancial instrument and of allocating interest income or expense over the reporting period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the fi nancial instrument, or where appropriate, a shorter period. Income and expense are recognised on an effective interest basis for debt instruments.

Financial assets

All fi nancial assets are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those fi nancial assets classifi ed as at fair value through profi t or loss which are initially measured at fair value.

Financial assets are classifi ed into the following specifi ed categories: “available-for-sale” fi nancial assets and “loan and receivables”. The classifi cation depends on the nature and purpose of fi nancial assets and is determined at the time of initial recognition.

Loans and receivables

Trade receivables, loans and other receivables that have fi xed or determinable payments that are not quoted in an active market are classifi ed as “loans and receivables”. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

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Impairment of fi nancial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the fi nancial asset, the estimated future cash fl ows of the fi nancial asset have been impacted.

For all fi nancial assets, objective evidence of impairment could include:

signifi cant fi nancial diffi culty of the issuer or counterparty; or

default or delinquency in interest or principal payments; or

it becoming probable that the borrower will enter bankruptcy or fi nancial re-organisation.

For certain categories of fi nancial asset, such as trade and other receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 30 to 90 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For fi nancial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash fl ows, discounted at the original effective interest rate.

The carrying amount of the fi nancial asset is reduced by the impairment loss directly for all fi nancial assets with the exception of trade and other receivables where the carrying amount is reduced through the use of an allowance account. When a trade and other receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profi t or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through the profi t or loss to the extent the carrying amount of the fi nancial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Derecognition of fi nancial assets

The Group derecognises a fi nancial asset only when the contractual rights to the cash fl ows from the asset expire, or it transfers the fi nancial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred fi nancial asset, the Group continues to recognise the fi nancial asset and also recognises a collateralised borrowing for the proceeds received.

Financial liabilities and equity instruments

Classifi cation as debt or equity

Financial liabilities and equity instruments issued by the Group are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability and an equity instrument.


59



Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Trade and other payables are initially measured at fair value net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis.

Interest-bearing bank loans are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).

Derecognition of fi nancial liabilities

The Group derecognises fi nancial liabilities when, and only when, the Group’s obligations are discharged, cancelled or expired.

LEASES - Leases are classifi ed as fi nance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classifi ed as operating leases.

Assets held under fi nance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of fi nancial position as a fi nance lease obligation. Lease payments are apportioned between fi nance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profi t or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see below).

Rental payable under operating leases are charged to profi t or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefi ts from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefi t of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefi ts from the leased asset are consumed.

INVENTORIES - Inventories comprise of wire ropes, accessories and ship supplies. Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable, direct labour costs and overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the fi rst-in, fi rst-out method for accessories and ship supplies and specifi c identifi cation method for wire ropes. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost, less accumulated depreciation and any accumulated impairment losses.

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Depreciation is charged so as to write off the cost of assets, other than construction-in-progress, over their estimated useful lives, using the straight-line method, on the following bases:

Leasehold land and buildings - 24 to 30 years (additions over the remaining life of the lease) Plant, machinery and equipment - 3 to 10 years Cranes - 5 years Motor vehicles - 5 to 9 years Furniture and fi ttings - 3 to 10 years Offi ce equipment - 3 to 10 years

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under fi nance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life.

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profi t or loss.

Fully depreciated assets still in use are retained in the consolidated fi nancial statements.

Construction-in-progress are not depreciated until they are ready for effective use.

CLUB MEMBERSHIPS - Club memberships are stated at cost, less any accumulated impairment losses.

INTANGIBLE ASSETS - Intangible assets acquired in a business combination are identifi ed and recognised separately from goodwill if the assets and their fair values can be measured reliably. The cost of such intangible assets is their fair value as at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated impairment losses, on the same basis as intangible assets acquired separately.

Intangible assets of the Group relate to customer relationships acquired in a business combination and have fi nite useful lives and are measured at cost less accumulated amortisation and impairment losses. These are amortised to profi t or loss on a straight-line basis over their estimated useful lives of 4 years.

IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL - At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identifi ed, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identifi ed.

Intangible assets with indefi nite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset for which the estimates of future cash fl ows have not been adjusted.


61



If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profi t or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profi t or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

PROVISIONS - Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash fl ows estimated to settle the present obligation, its carrying amount is the present value of those cash fl ows.

When some or all of the economic benefi ts required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

GOVERNMENT GRANTS - Government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis.

REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfi ed:

the Group has transferred to the buyer the signifi cant risks and rewards of ownership of the goods;

the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

the amount of revenue can be measured reliably;

it is probable that the economic benefi ts associated with the transaction will fl ow to the Group; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from the rendering of services is recognised upon the completion of the services rendered and acceptance by customers.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

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62



BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profi t or loss in the period in which they are incurred.

RETIREMENT BENEFIT COSTS - Payments to defi ned contribution retirement benefi t plans are charged as an expense when employees have rendered the services entitling them to the contributions. Payments made to state-managed retirement benefi t schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defi ned contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defi ned contribution retirement benefi t plan.

EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profi t for the year. Taxable profi t differs from profi t as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the end of the reporting period.

Deferred tax is recognised on the differences between the carrying amounts of assets and liabilities in the consolidated fi nancial statements and the corresponding tax bases used in the computation of taxable profi t, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profi ts will be available against which deductible temporary differences can be utilised.

Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interest are only recognised to the extent that it is probable that there will be suffi cient taxable profi ts against which to utilise the benefi ts of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that suffi cient taxable profi ts will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets refl ects the tax consequences that would follow from the manner in which the Group expects at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profi t or loss.


63



FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - The individual fi nancial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated fi nancial statements of the Group and the statement of fi nancial position of the Company are presented in Singapore dollars, which is the functional currency of the Company.

In preparing the fi nancial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profi t or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profi t or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

For the purpose of presenting consolidated fi nancial statements, the assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing on the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fl uctuated signifi cantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity under the header of translation reserve. On the disposal of a foreign operation, all of the accumulated exchange differences in respect of that foreign operation accumulated in the Group’s translation reserve are reclassifi ed to profi t or loss. Any exchange differences that have been previously attributed to non-controlling interests are derecognised, but they are not reclassifi ed to profi t or loss.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated in a separate component of equity under the header of translation reserve.

CASH AND CASH EQUIVALENTS - Cash and cash equivalents in the statement of cash fl ows comprise cash on hand, bank balances and other short-term highly liquid assets and are subject to an insignifi cant risk of changes in value and are readily convertible to a known amount of cash.

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these 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.

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3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (cont’d)

Critical judgements in applying the Group’s accounting policies

The following are the critical judgements, apart from those involving estimations (see below), that management has made in the process of applying the Group’s accounting policies that have the most signifi cant effect on the amounts recognised in the fi nancial statements.

Valuation of inventories

Management reviews the inventory listing on a periodic basis. This review involves a comparison of the carrying value of the inventory items with the respective net realisable value as well as assessing factors such as the shelf lives of the inventory and customer preferences and purchasing trends. The purpose is to ascertain whether a write-down is required to be made in the consolidated fi nancial statements taking into consideration selling prices, condition of items and available demand.

In making its judgement, management considered the carrying value of inventory items with reference to prices of similar inventory items transacted around the year end date, infl ation rates, foreign exchange rates and age and condition of inventory items. Management also engages an independent valuation specialist to perform a valuation on the open market value of the inventories to assess their carrying value.

In determining the open market value of inventories, the Depreciated Replacement Cost approach was used and fair values of inventories were estimated taking into consideration depreciation and estimated current cost to replace inventories. Factors affecting depreciation include physical deterioration, functional obsolescence and economic obsolescence and trending method were used to estimate current costs. Based on the assessment and valuation performed, management is satisfi ed that adequate write down for inventories has been made in the fi nancial statements. Management had reversed the write-down made in prior years in respect of inventories that had an increase in carrying value when compared with purchases of similar inventory items. Management ensures that the reversals do not cause the carrying value of these inventories to exceed their original costs of purchase. The carrying amounts of the Group’s inventories are disclosed in Note 9 to the fi nancial statements.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year, are discussed below:

Allowances for receivables

The Group makes allowances for bad and doubtful debts based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identifi cation of bad and doubtful debts requires the use of judgement and estimates. Judgement is required in assessing the ultimate realisation of these receivables, including the current creditworthiness, past collection history of each customer and on-going dealings with them. Where the expectation is different from the original estimate, such difference will impact the carrying value of trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed. The carrying amounts of the Group’s trade and other receivables are disclosed in Notes 7 and 8 respectively.

Useful lives of property, plant and equipment

As described in Note 2, the Group reviews the estimated useful lives of property, plant and equipment at the end of each reporting period. Changes in the expected level and future usage can impact the economic useful lives of these assets with consequential impact on the future depreciation charge. The carrying amounts of property, plant and equipment are disclosed in Note 10 to the fi nancial statements.

Impairment of property, plant and equipment

The Group assesses annually whether property, plant and equipment exhibit any indication of impairment. In instances where there are indications of impairment, the recoverable amounts of property, plant and equipment will be based on value-in-use calculations. These calculations require the use of management’s judgement and estimates. The carrying amounts of the Group’s property, plant and equipment are disclosed in Note 10 to the fi nancial statements.


65


4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a) Categories of fi nancial instruments

The following table sets out the fi nancial instruments as at the end of the reporting period:

Group Company

2013 2012 2013 2012

$ $ $ $

Financial assets

Loans and receivables (including cash and cash equivalents) 49,176,070 23,071,348 47,657,314 34,769

Financial liabilities

Borrowings and payables at amortised cost 73,114,704 80,819,443 706,507 412,000

(b) Financial risk management policies and objectives

The Group’s overall fi nancial risk management policies and objectives seek to minimise potential adverse effects on the fi nancial performance of the Group. Risk management is carried out by the Board of Directors and periodic reviews are undertaken to ensure that the Group’s policy guidelines are complied with. There has been no change to the Group’s exposure to these fi nancial risks or the manner in which it manages and measures the risk.

(i) Foreign exchange risk management

The Group transacts business in other foreign currencies including the United States dollar and Euro and therefore is exposed to foreign exchange risk. The Group does not hedge against foreign exchange exposure as the currency risk is not expected to be signifi cant.

At the end of the reporting period, the carrying amounts of signifi cant monetary assets and monetary liabilities denominated in currencies other than the respective Group entities’ functional currencies are as follows:

Group

Liabilities Assets

2013 2012 2013 2012

$ $ $ $

United States dollar 10,083,673 9,995,834 4,641,866 4,215,299

Euro 4,273,811 846,196 919,091 66,095

The Company has a number of investments in foreign subsidiaries, whose net assets are exposed to currency translation risk. The Group does not currently designate its foreign currency denominated balances as a hedging instrument for the purpose of hedging the translation of its foreign operations.

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4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)

(b) Financial risk management policies and objectives (cont’d)

(i) Foreign exchange risk management (cont’d)

Foreign currency sensitivity

The following table details the sensitivity to a 5% increase and decrease in United States dollar and Euro against the respective functional currencies of the entities in the Group. The sensitivity analysis below includes only outstanding United States dollar and Euro denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. The sensitivity analysis includes external balances as well as balances to foreign operations within the Group where they give rise to an impact on the Group’s profi t before tax.

If the relevant foreign currencies weaken by 5% against the functional currency of each Group entity, the Group’s profi t before tax will increase by:

Group

2013 2012

$ $

United States dollar 272,090 289,027

Euro 167,736 39,005 If the relevant foreign currencies strengthen by 5%, there would be an equal and opposite impact

on the Group’s profi t before tax.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not refl ect the exposure during the year. The foreign currency denominated sales and purchases are seasonal and can vary over time subject to the demands of the market.

No sensitivity analysis is prepared for the Company as its monetary assets and liabilities are denominated in its functional currency.

(ii) Interest rate risk management

The primary source of the Group’s interest rate risk relates to interest bearing bank deposits and its borrowings from banks and fi nancial institutions. The interest bearing bank borrowings of the Group are disclosed in Note 16 to the fi nancial statements. As the rate of interest for certain bank deposits and borrowings are based on interbank offer rates, the Group is exposed to risks arising from changes in interest rate. This risk is not hedged.

Summary quantitative data of the Group’s interest bearing fi nancial instruments can be found in Note 16 to the fi nancial statements.

The Group has borrowings at variable rates totalling $53,448,068 (2012 : $67,617,426) and is therefore exposed to interest rate risks arising from the variability of cash fl ows.


67




(ii) Interest rate risk management (cont’d)

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates for bank borrowings at the end of the reporting period and the stipulated change taking place at the beginning of the fi nancial year and held constant throughout the reporting period in the case of instruments that have fl oating rates. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.

If interest rates had been 100 basis points higher or lower and all other variables were held constant, the profi t before tax for the year ended 31 March 2013 of the Group would decrease/increase by $434,000 (2012 : $669,000).

(iii) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a fi nancial loss to the Group. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by the counterparty limits that are reviewed and approved by the management periodically.

The Group’s bank balances are held with creditworthy fi nancial institutions.

Concentration of credit risk exists when economic, industry or geographical factors similarly affect the Group’s counterparties whose aggregate credit exposure is signifi cant in relation to the Group’s total credit exposure. There is no concentration of credit risk as the Group does not have any signifi cant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. The Group defi nes counterparties as having similar characteristics if they are related entities.

The Company is exposed to a concentration of credit risk as trade receivables and loans to subsidiaries amounting to about 97.5% and 93.5% of the respective balances are due from one subsidiary. This subsidiary has been assessed to be creditworthy and management has assessed that no allowance for doubtful receivables is required.

The carrying amount of fi nancial assets recorded in the fi nancial statements, grossed up for any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

Further details of credit risks on trade and other receivables are disclosed in Notes 7 and 8 to the fi nancial statements respectively.

(iv) Liquidity risk management

Management is of the view that there is minimal liquidity risk as the Group maintains suffi cient cash and cash equivalents and internally generated cash fl ows to fi nance their activities. If required, fi nancing can be obtained from its existing lines of banking facilities. As at the end of the reporting period, the Group’s maximum available credit from its banking facilities excluding term loans is $81,070,000 (2012 : $60,570,000). The Group’s unutilised available credit from its banking facilities excluding term loans is $49,425,708 (2012 : $24,583,056).

Annual Report 2013

68




(iv) Liquidity risk management (cont’d)

Liquidity and interest risk analyses

Non-derivative fi nancial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash fl ows of fi nancial liabilities based on the earliest date on which the Group and Company can be required to pay. The adjustment column represents future cash fl ow attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the fi nancial liability on the statement of fi nancial position.

Weighted average

interest rate

On demand or within

year Within 2

to 5 years Over 5

years Adjustment Total

% $ $ $ $ $

Group

2013

Trade and other payables – 17,728,014 – – – 17,728,014

Finance leases 4.8 1,085,302 984,877 – (131,557) 1,938,622

Bank borrowings 2.7 38,542,373 9,597,587 7,802,431 (2,494,323) 53,448,068

57,355,689 10,582,464 7,802,431 (2,625,880) 73,114,704

2012

Trade and other payables – 10,398,604 – – – 10,398,604

Finance leases 5.8 1,037,923 1,724,783 – (198,337) 2,564,369

Bank borrowings 2.7 48,376,144 14,633,728 7,869,518 (3,022,920) 67,856,470

59,812,671 16,358,511 7,869,518 (3,221,257) 80,819,443

Company

2013

Trade and other payables – 706,507 – – – 706,507

2012

Trade and other payables – 412,000 – – – 412,000

Non-derivative fi nancial assets

All fi nancial assets in 2013 and 2012 are repayable on demand or due within 1 year from the end of the reporting period.

Other than the fi xed deposits disclosed in Note 6, all fi nancial assets in 2013 and 2012 are interest-free.


69




(v) Fair value of fi nancial assets and fi nancial liabilities

The carrying amounts of cash and bank balances, trade and other current receivables and payables approximate their respective fair values due to the relatively short-term maturity of these fi nancial instruments. The fair values of other classes of fi nancial assets and liabilities are disclosed in the respective notes to the fi nancial statements.

The fair values of fi nancial assets and fi nancial liabilities are determined as follows:

(i) the fair value of fi nancial assets and fi nancial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and

(ii) the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash fl ow analysis.

(c) Capital risk management policies and objectives

The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group is required to maintain compliance with covenants under loan agreements with banks and the covenants include a maximum gearing ratio and a minimum tangible net worth amount. The Group reviews the capital structure on a regular basis to ensure the covenants are complied with.

The capital structure of the Group consists of debt, which includes bank loans, fi nance leases and equity, comprising share capital, reserves and retained earnings. The Group’s overall strategy remains unchanged from 2012.

5 HOLDING COMPANY AND RELATED PARTY TRANSACTIONS

The Company’s immediate holding company is Keh Swee Investment Pte. Ltd., a company incorporated in Singapore. Related companies in these fi nancial statements refer to members of the immediate holding company’s group of companies.

Some of the Group’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is refl ected in these fi nancial statements. The balances are unsecured, interest-free and repayable on demand.

Details of transactions between the Group and related parties are disclosed below:

2013 2012

$ $

Purchase from a company which the directors have interest in – 113,254

Services rendered by a company which the directors have interest in – 47,155

Sales to a company in which the directors have interest in – (372,081)

Purchase of shares of a subsidiary from directors – 81,841

Sundry income earned from a company in which the directors have interest in – (3,600)

As disclosed in Notes 16 and 17, the directors and a shareholder of the immediate holding company issued personal guarantees for certain borrowings and fi nance leases of the Group.

Annual Report 2013

70


5 HOLDING COMPANY AND RELATED PARTY TRANSACTIONS (cont’d)

Compensation of directors and key management personnel

The remuneration of directors and other members of key management are as follows:

2013 2012

$ $

Short-term benefi ts 2,765,022 1,717,014

6 CASH AND CASH EQUIVALENTS

Group Company

2013 2012 2013 2012

$ $ $ $

Cash on hand 24,610 9,708 1 1

Fixed deposits 10,014,215 700,000 10,014,215 –

Bank balances 11,369,224 3,490,007 10,042,010 31,107

21,408,049 4,199,715 20,056,226 31,108

Fixed deposits bear an average effective interest rate of 0.4% (2012 : 0.2%) per annum and for a tenure of approximately 2 months (2012 : 3 months).

7 TRADE RECEIVABLES

Group Company

2013 2012 2013 2012

$ $ $ $

Outside parties 27,365,539 19,099,378 – –

Less: Allowance for doubtful trade receivables (389,466) (398,813) – –

26,976,073 18,700,565 – –

Subsidiaries (Note 5) – – 851,690 –

Goods and Service Tax receivable 445,412 72,238 – –

27,421,485 18,772,803 851,690 –

The average credit period on sales of goods is 30 to 90 days (2012 : 30 to 90 days). No interest is charged on the outstanding balances.

As at the end of the reporting period, an allowance has been made for estimated irrecoverable amounts from the sales of goods to outside parties of $389,466 (2012 : $398,813). This allowance has been determined based on management’s evaluation of the collectability of specifi c customer accounts.

Included in the Group’s trade receivables balance are debtors with a carrying amount of $16,915,590 (2012 : $11,594,732) which are past due at the reporting date for which the Group has not provided as there has not been a signifi cant change in credit quality and the amounts are still considered recoverable.


71


7 TRADE RECEIVABLES (cont’d)

The Group does not hold any collateral over these balances. In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the management believes that there is no further provision required in excess of the allowance for doubtful trade receivables.

The table below is an analysis of the Group’s trade receivables as at the end of the reporting period:

Group

2013 2012

$ $

Not past due and not impaired 10,505,895 7,178,071

Past due but not impaired 16,915,590 11,594,732

Trade receivables not impaired 27,421,485 18,772,803

Impaired receivables 389,466 398,813

Less: Allowance for doubtful trade receivables (389,466) (398,813)

Total trade receivables, net 27,421,485 18,772,803

Aging profi le of receivables that are past due but not impaired:

2013 2012

$ $

Past due for:

< 1 month 8,156,222 5,828,908

1 months to 2 months 2,394,258 1,112,636

2 months to 3 months 1,653,082 1,338,748

3 months to 6 months 2,121,978 1,742,391

6 months to 12 months 2,278,627 1,250,387

12 months to 24 months 287,848 277,327

> 24 months 23,575 44,335

16,915,590 11,594,732

There are no past due receivables in the Company’s trade receivables as at the end of the reporting period. The Company has not made any allowance for doubtful debts as management is of the view that these receivables are recoverable.

Movement in the allowance for doubtful trade receivables:

Group

2013 2012

$ $

At beginning of year 398,813 474,625

Charged to profi t or loss 42,954 –

Written off against allowance – (57,002)

Doubtful debts recovered (52,301) (18,810)

At end of year 389,466 398,813

Annual Report 2013

72


8 OTHER RECEIVABLES AND PREPAYMENTS

Group Company

2013 2012 2013 2012

$ $ $ $

Dividend receivable from

a subsidiary (Note 5) – – 3,500,000 –

Advances to subsidiaries (Note 5) – – 722,146 –

Loans to subsidiaries (Note 5) – – 22,527,252

Advance payments to suppliers 247,200 12,938 – –

Deposits 239,076 94,154 – –

Prepayments 266,239 382,710 24,737 51,043

Others 107,460 4,676 – 3,661

859,975 494,478 26,774,135 54,704

In 2012, the prepayments for the Group included expenses capitalised for the Group’s proposed listing of $77,000.

The advances to subsidiaries are interest free, unsecured, and repayable on demand. The loan to subsidiaries of $22,527,252 (2012 : $Nil) bears an interest of 3% (2012 : Nil%) per annum, is unsecured and repayable on demand.

The Group and Company have not made any allowance for doubtful debts as management is of the view that these receivables are recoverable.

9 INVENTORIES

Group Company

2013 2012 2013 2012

$ $ $ $

Raw materials and products 96,457,933 85,520,119 – –

Goods-in-transit 7,599,865 1,453,463 – –

104,057,798 86,973,582 – –

The cost of inventories recognised included a credit of $169,567 (2012 : $1,050,603) in respect of reversal of prior write-downs of inventory to lower of cost or net realisable value. Previous write-downs have been reversed in 2013 and 2012 as a result of an increase in carrying values of certain inventories as determined in the paragraph below.

The carrying values of the Group’s inventories as at 31 March 2013 and 2012 are based on management’s estimations, which are made with reference to a valuation on the open market value of the inventories as of 31 March 2013 and 31 March 2012 respectively carried out by an independent valuation specialist.

The Group has pledged inventories with carrying amount of $50,294,686 (2012 : $36,000,431) to secure banking facilities available to the Group (Note 16).


73


10

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26,

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63,

607,

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2,26

5,82

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217,

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417,

921

20,7

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Add

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s–

637,

601

82,6

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137,

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399,

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876,

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2,13

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At

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38,

170,

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6,41

9,55

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2,33

6,16

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383,

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dep

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At

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2,69

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960,

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– 11

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39–

121

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22,

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– (3

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At

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33,

162,

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610,

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9,99

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– 13

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Car

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:

At

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35,

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2,97

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6

Annual Report 2013

74


10 PROPERTY, PLANT AND EQUIPMENT (cont’d)

The Group’s leasehold land and buildings comprise of the following:

Location Tenure Description

7 Gul AvenueSingapore 629651(Lot MK7-215W)

Leasehold(60 years commencing1 November 1972) (1)

Offi ce, principalwarehouse and fabrication facilities

7 Gul AvenueSingapore 629651(Lot MK7-307T)

Leasehold(57 yearscommencing1 November 1975) (2)

Offi ce, principalwarehouse and fabrication facilities

17 Joo Koon WaySingapore 628948

Leasehold(30 years commencing18 June 1984) (3)

Warehouse

27B Benoi RoadPioneer LotSingapore 629917

Leasehold(30 years commencing1 April 2006) (4)

Offi ce and warehouse

(1) The Group took over the lease from 10 March 2003 with remaining lease period of 30 years. (2) The Group took over the lease from 10 March 2003 with remaining lease period of 30 years. (3) The Group took over the lease from 18 June 1984 with remaining lease period of 30 years, for which an extension has

been granted for 18 years from 18 June 2014. (4) The Group took over the lease from 5 July 2012 with remaining lease period of 24 years.

The leasehold land and buildings are carried at cost less accumulated depreciation in the consolidated statements of fi nancial position in accordance with the Group’s accounting policy.

Certain of the Group’s plant and equipment with total carrying amount of $1,914,454 (2012 : $2,703,850) are under fi nance lease obligations (Note 17).

The Group has pledged leasehold land and buildings with carrying amount of $5,007,523(2012 : $3,520,616) to secure banking facilities granted to the Group (Note 16).

11 CLUB MEMBERSHIPS

Group Company

2013 2012 2013 2012

$ $ $ $

Club memberships, at cost 75,500 – – –

Management has assessed that the fair value of the club memberships approximates its cost and no impairment is required.


75


12 INTANGIBLE ASSET

Group

$

Cost:

At 1 April 2011 and 31 March 2012 –

Acquired on acquisition of a subsidiary (Note 27) 240,000

At 31 March 2013 240,000

Amortisation:

At 1 April 2011 and 31 March 2012 –

Amortisation for the year 15,000

At 31 March 2013 15,000

Carrying amount:

At 31 March 2013 225,000

At 31 March 2012 –

The amortisation expense has been included in the line item “Administrative Expenses” in the consolidated statement of comprehensive income.

13 SUBSIDIARIES

Company

2013 2012

$ $

Unquoted equity shares - at cost 5,499,643 5,490,641

Details of subsidiaries are as follows:

Name of subsidiary Country ofincorporationand operation

Proportion ofownership interest

and voting power held

Principal activities

2013 2012

% %

Gaylin International Pte Ltd (1)

(“GIPL”)Singapore 100 100 Supply and manufacture

of rigging and lifting equipment and provision of related services, and ship supply.

Gaylin Vietnam Pte Ltd (3)

(subsidiary of GIPL)Vietnam 100 100 Supply and manufacture

of rigging and liftingequipment and provision of related services.

Gaylin Malaysia Sdn. Bhd. (3) Malaysia 100 100 Supply and manufacture of rigging and liftingequipment and provision of related services.

Annual Report 2013

76


13 SUBSIDIARIES (cont’d)

Name of subsidiary Country ofincorporationand operation

Proportion ofownership interest

and voting power held

Principal activities

2013 2012% %

Bridge Testing Centre (Pte) Ltd. (1) Singapore 100 100 Provision of testing, inspection and certifi cationservices for rigging and lifting equipment

Gaylin Power Pte. Ltd. (1)

(subsidiary of GIPL)Singapore 100 100 Supply of rigging and

lifting equipment

Gaylin Korea Pte. Ltd. (2),(4) Singapore 100 – Investment holding

Gaylin Marine Supply Pte. Ltd. (2) Singapore 100 – Investment holding

Lv Yang (Tianjin) OffshoreEquipment Pte Ltd (2),(4),(5)

Singapore 90 – Supply of rigging andlifting equipment

Allseas Marine Services Pte Ltd (1)

(subsidiary of Gaylin MarineSupply Pte Ltd)

Singapore 100 – Provision of ship chandler’s supplies and services and general merchandise

(1) Audited by Deloitte & Touche LLP, Singapore. (2) Not required to be audited for the current year. For the purposes of consolidation, unaudited management accounts

were used as the results of these subsidiaries were not considered to be signifi cant. (3) Audited by other auditors. (4) These companies were dormant in the current year. (5) On 19 March 2013, the Company’s subsidiary, Lv Yang (Tianjin) Offshore Equipment Pte Ltd entered into a framework

agreement with Lenn Inc (the “Vendor”) and Loi Peng Soon (the “Covenantor”) for the acquisition from the Vendor of the entire equity interest and registered capital in Lv Yang (Tianjin) Offshore Equipment Co. Ltd, a company incorporated in the People’s Republic of China (the “Proposed Acquisition”). As at the date of this fi nancial statements, the details of the Proposed Acquisition is being fi nalised and no amounts have been recorded in the fi nancial statements.

14 TRADE PAYABLES

Group Company2013 2012 2013 2012

$ $ $ $

Outside parties 16,416,917 9,895,703 – –

The average credit period of trade payables is 30 days to 90 days (2012 : 30 days to 90 days). No interest is charged on the outstanding balances.

15 OTHER PAYABLES

Group Company2013 2012 2013 2012

$ $ $ $

Outside parties 301,414 349,187 113,051 –Accrued operating expenses 1,009,683 153,714 593,456 12,000Amount owing to subsidiary (Note 5) – – – 400,000

1,311,097 502,901 706,507 412,000


77


16 BANK BORROWINGS

Group

2013 2012

$ $

Term loan I 1,266,943 1,426,055

Term loan II 1,065,667 –

Term loan III – 239,044

Term loan IV 332,862 537,357

Term loan V 9,138,304 9,667,070

Term loan VI 10,000,000 20,000,000

Money market loan 3,000,000 3,000,000

Time loans 5,000,000 4,000,000

Bank bills payable 23,644,292 28,986,944

53,448,068 67,856,470

Due within 12 months (37,689,632) (47,163,495)

Due after 12 months 15,758,436 20,692,975 The average effective interest rates paid were as follows:

Group

2013 2012

$ $

Term loans 2.6% 2.4%

Money market loan 2.6% 2.8%

Time loans 3.2% 2.1%

Bank bills payable 2.7% 2.8%

Term loans

For term loan I, interest is levied at 2.6% per annum and 2.1% per annum in the fi rst and second year respectively below the bank’s commercial fi nancing rate (2012 : 4.0% per annum for the fi rst two years) and thereafter at 0.8% per annum over the bank’s commercial fi nancing rate (2012 : at the bank’s prime rate per annum with monthly resets). The 15-year term loan is repayable by equal monthly instalments and is expected to mature in November 2019.

For term loan II, interest is fi xed at 1.5% per annum and 1.9% per annum for the fi rst and second year respectively. For the third year, interest rate is 2.0% per annum over the 3-month Singapore Interbank Offered Rate (“SIBOR”) and thereafter 3.2% per annum over the 3-month SIBOR.

Term loan II is secured by a legal mortgage over the Group’s leasehold land and buildings (Note 10) at 27B Benoi Road, Pioneer Lot, Singapore 629917. It is also guaranteed by a corporate guarantee by the Company.

For term loan III, interest was levied at 5.0% (2012 : 5.0%) fi xed per annum. The 3 year Bridging Loan was fully repaid in May 2012.

For term loan IV, interest is levied at 2.6% (2012 : 1.7%) per annum and 2.1% (2012 : 1.5%) per annum in the fi rst and second year respectively below the bank’s commercial fi nancing rate and thereafter at 0.8% (2012 : 0.8%) per annum over the bank’s commercial fi nancing rate. The 5 year term loan is repayable by equal monthly instalments and is expected to mature in October 2014.

Annual Report 2013

78


16 BANK BORROWINGS (cont’d)

For term loan V, interest is levied at 1.8% (2012 : 1.8%) per annum over the 3-month SWAP offer rate (“SOR”) or the bank’s 3-month cost of fund (“COF”), whichever is the higher. The 15 year term loan is repayable by equal monthly instalments and is expected to mature in September 2026.

The term loans I, IV and V of the Group are secured by a legal mortgage over the Group’s leasehold land and buildings (Note 10) at 17 Joo Koon Way, Singapore 628948 and 7 Gul Avenue, Singapore 629651. They are also guaranteed by a corporate guarantee by the Company.

For term loan VI, interest is levied at 2% (2012 : 2%) per annum over the 3-month SOR or COF, whichever is the higher. The term loan is to be repaid by yearly principal instalments beginning from $10,000,000 in October 2012, $5,000,000 in November 2013 and in October 2014.

Term loan VI is secured by a fl oating charge over certain inventories of the Group and a corporate guarantee by GIPL. It is also guaranteed by the joint and several personal guarantees of Mr Desmond Teo, Mr Teo Bee Kheng and Mr Teo Bee Hoe.

Money market loan

The money market loan is secured by a legal mortgage over the Group’s leasehold land and buildings (Note 10) at 17 Joo Koon Way, Singapore 628948 and 7 Gul Avenue, Singapore 629651. It is also guaranteed by a corporate guarantee by the Company.

The money market loan bears interest at 2.3% (2012 : 2.3%) per annum above the bank’s COF or SOR whichever is higher. It is expected to mature within the next 12 months.

Time loans

The time loans are guaranteed by the joint and several personal guarantees of Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe and Mr Steven Teo, a shareholder of the immediate holding company.

The time loans bear interest at average rate of 3.2% (2012 : 2.1%) per annum and are expected to mature within the next 12 months.

The estimated fair values of the term loans, money market loan and time loans approximate their carrying values as the loans are expected to be repriced on a timely basis depending on movements in the market lending rates.

Bank bills payable

The bank bills payable of the Group, with maturity ranging from approximately 1 to 6 months (2012 : 1 to 6 months) from the end of the fi nancial year, are secured in the following manner:

Group

2013 2012

$ $

Category 1(1) 6,284,932 10,552,473

Category 2(2) 5,058,770 15,389,661

Category 3(3) 4,886,561 3,044,810

Category 4(4) 2,827,280 –

Category 5(5) 4,586,749 –

Total bank bills payable 23,644,292 28,986,944


79


16 BANK BORROWINGS (cont’d)

(1) Secured by a legal mortgage over the Group’s leasehold land and buildings (Note 10) at 17 Joo Koon Way, Singapore 628948 and 7 Gul Avenue, Singapore 629651 and guaranteed by a corporate guarantee by the Company.

(2) Guaranteed by the joint and several personal guarantees of Mr Desmond Teo, Mr Teo Bee Kheng and Mr Teo Bee Hoe.

(3) Guaranteed by the joint and several personal guarantees of Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe and Mr Steven Teo.

(4) Guaranteed by a corporate guarantee by the Company and the joint and several personal guarantees of Mr Desmond Teo, Mr Teo Bee Kheng and Mr Teo Bee Hoe.

(5) Guaranteed by a corporate guarantee by the Company.

Interest is levied at the bank’s cost of funds at 2.3% to 3.5% (2012 : 1.9% to 6%) per annum for local currency bills and Nil% (2012 : 3.5%) per annum for foreign currency bills.

17 FINANCE LEASES

Group

Minimum lease payments

Present value of minimum

lease payments

2013 2012 2013 2012

$ $ $ $

Amounts payable under fi nance leases:

Within one year 1,085,302 1,037,923 1,011,161 936,787

In the second to fi fth years inclusive 984,877 1,724,783 927,461 1,627,582

2,070,179 2,762,706 1,938,622 2,564,369

Less: Future fi nance charges (131,557) (198,337) N/A N/A

Present value of lease obligations 1,938,622 2,564,369 1,938,622 2,564,369

Less: Amount due for settlement within 12 months (shown under current liabilities) (1,011,161) (936,787)

Amount due for settlement after 12 months 927,461 1,627,582

The effective interest rate ranged from 3.7% to 7.4% (2012 : 3.7% to 13.1%) per annum, with a remaining lease term of approximately 9 months to 46 months (2012 : 2 months to 60 months). Interest rates are fi xed at the contract date, and thus expose the Group to fair value interest rate risk.

The carrying amount of the fi nance lease obligations approximates their fair values which are determined using discounted cash fl ows analysis based on average incremental market lending rates.

The Group’s obligations under fi nance leases are secured by the lessor’s title to the leased assets (Note 10). Certain leases are guaranteed by either a joint and several personal guarantees of one or more directors of the Company, or guarantees by a director of the Company and a shareholder of the immediate holding company or a corporate guarantee from the Company.

Annual Report 2013

80


18 DEFERRED TAX LIABILITIES

The following is the deferred tax liabilities recognised by the Group, and the movements thereon, during the reporting period:

Group

Accelerated tax

depreciation

$

At 1 April 2011 122,014

Charged to profi t or loss (Note 23) 7,153

At 31 March 2012 129,167

Charged to profi t or loss (Note 23) 40,305

Acquired on acquisition of a subsidiary (Note 27) 96,000

At 31 March 2013 265,472

19 SHARE CAPITAL

Group and Company

Number of ordinary shares

Issued and

paid-up

$

Issued and paid-up:

At 1 April 2011 1 1

Issue of new shares to the immediate holding company 2,999,999 2,999,999

At 31 March 2012 3,000,000 3,000,000

Sub-division of shares(1) 300,000,000 –

Issue of shares pursuant to IPO(2) 110,000,000 38,500,000

Exercise of the over-allotment option(2) 22,000,000 7,700,000

Share issue expenses(3) – (1,976,467)

At 31 March 2013 432,000,000 47,223,533

Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the Company.

The new shares issued during the year rank pari passu in all respects with the existing shares.

(1) At an Extraordinary General Meeting held on 24 September 2012, the shareholder approved the sub-division of each share in the existing issued share capital of the Company into 100 shares.

(2) During the fi nancial period, a total of 132,000,000 shares were offered to the public at $0.35 per share. 110,000,000 share were issued on 25 October 2012 under the normal allotment amounting to $38.5 million. The remaining 22,000,000 shares were issued on 23 November 2012 under the over-allotment option amounting to $7.7 million.

(3) Out of the share issue expenses of $1,976,467, $58,000 arose from listing fees paid to the auditors of the Company.


81


20 REVENUE

Revenue comprises income earned from the following, excluding applicable goods and services tax.

Group

2013 2012

$ $

Supply and manufacture of rigging & lifting equipment and provision of related services 71,376,368 68,923,704

Ship supplies 5,740,775 2,523,403

77,117,143 71,447,107

21 OTHER INCOME

Group

2013 2012

$ $

Interest income 24,258 1,472

Doubtful debts recovered (trade) 52,301 18,810

Trade receivables recovered 2,562 –

Trade payables written back – 43,149

Sundry income 53,661 61,438

Gain on disposal of property, plant and equipment 8,445 350,146

Excess of fair value of net identifi able assets over consideration paid for a subsidiary (Note 27) 66,099 –

207,326 475,015

22 OTHER OPERATING EXPENSES

Group

2013 2012

$ $



Allowance for doubtful trade receivables 42,954 –

Foreign exchange losses, net 259,389 199,089

318,821 211,548

Annual Report 2013

82


23 INCOME TAX EXPENSE

Group

2013 2012

$ $

Current year 2,206,949 2,518,377

(Over) Under provision in prior years (266,152) 137,368

Deferred tax (Note 18) 40,305 7,153

1,981,102 2,662,898

Domestic income tax is calculated at 17% (2012 : 17%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

A reconciliation of the domestic statutory tax rate to the Group’s effective tax rate applicable to the results from operations for the year is as follows:

Group

2013 2012

$ $


Tax at the domestic income tax rate of 17% 2,120,292 2,657,681

Non deductible (taxable) items 282,749 (81,275)

Effect of exemption and incentives (360,354) (40,889)

Effect of different tax rate of overseas operations 19,257 11,711

Deferred tax benefi ts not recognised 247,076 61,887

Utilised tax losses carryforwards (55,789) (37,550)

(Over) Under provision in prior years (266,152) 137,368

Others (5,977) (46,035)

1,981,102 2,662,898

The tax loss carryforwards arise from a local subsidiary (2012: a foreign subsidiary) of the Group which has $1,453,387 (2012 : $223,155) tax losses available for offsetting against future taxable income.

The total tax loss carryforwards for the year can be reconciled as follows:

Tax losscarryforwards

not recognised

$

At 1 April 2011 373,993

Arising during the year (150,838)

At 31 March 2012 223,155

Arising during the year 1,453,387

Utilised during the year (223,155)

At 31 March 2013 1,453,387


83


23 INCOME TAX EXPENSE (cont’d)

The realisation of the future income tax benefi ts from the tax loss carryforwards for the local subsidiary is available for an unlimited future period subject to conditions imposed by law including the retention of majority shareholders as defi ned.

In 2012, the realisation of the future income tax benefi ts from the tax loss carryforwards was available for a maximum of fi ve years subject to agreement with the Inland Revenue Board of the country in which the foreign subsidiary operates.

Future tax benefi ts arising from these tax loss carryforwards have not been recognised in the fi nancial statements as there is no reasonable certainty of their recovery in future periods.

24 PROFIT FOR THE YEAR

Group

2013 2012

$ $

Directors’ remuneration 1,590,581 1,327,275

Employee benefi ts expense

(including directors’ remuneration)

Salaries and related benefi ts 9,145,615 7,209,580

Costs of defi ned contribution plan 540,407 383,238

Total employee benefi ts expenses 9,686,022 7,592,818

Allowance for doubtful trade receivables (Note 7) 42,954 –

Recovery of doubtful trade receivables (Note 7) (52,301) (18,810)



Trade payables written back – (43,149)

Cost of inventories recognised as expense 52,232,981 47,773,484

Inventory written back to net realisable value included in cost of inventories (169,567) (1,050,603)

IPO expenses 955,149 226,123

Foreign exchange losses 259,389 199,089

Audit fees:

- paid to auditors of the Company 130,000 80,000

- paid to other auditors 2,738 2,627

Total audit fees 132,738 82,627

Non-audit fees:

-paid to auditors of the Company 42,041 101,500

-paid to other auditors 30,000 –

Total non-audit fees 72,041 101,500

Aggregate amount of fees paid to auditors 204,779 184,127

Annual Report 2013

84


25 EARNINGS PER SHARE

The calculation of the earnings per share attributable to the ordinary equity holders of the Group is based on the following data:

Group

2013 2012

$ $

Net profi t attributable to shareholders of the Company 10,491,206 12,970,518

2013 2012

Number of shares (‘000)

Weighted average number of ordinary shares for purpose of earnings per share 355,633 300,000

There are no dilutive equity instruments for 2013 and 2012.

26 DIVIDENDS

During the fi nancial year ended 31 March 2012, the Company declared and paid a fi rst interim tax-exempt dividend of $1.10 per share (total dividend $3,300,000), a second interim tax-exempt dividend of $6.67 per share (total dividend $20,000,000) and a third interim tax-exempt dividend of $0.67 per share (total dividend $2,000,000) to the shareholders of the Company.

Subsequent to 31 March 2013, the directors of the company recommended that a fi nal tax-exempt dividend be paid at $0.008 per share totalling $3,456,000 for the fi nancial year ended 31 March 2013. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these fi nancial statements.

27 ACQUISITION OF SUBSIDIARIES

2013

On 1 January 2013, the Group acquired 100% of the issued share capital of Allseas Marine for a cash consideration of $1,470,000. This transaction has been accounted for by the acquisition method of accounting and fair values of assets and liabilities have been disclosed below.

Allseas Marine was incorporated in Singapore on 17 April 2009 with its principal activities being provision of ship chandlers’ supplies and services and general merchandise. The Group has acquired Allseas Marine to expand the ship supplies’ operations.

Acquisition-related costs amounting to $13,599 have been excluded from the consideration transferred and have been recognised as an expense in the period, within the ‘Administrative Expenses’ line item in the consolidated statement of comprehensive income.


85


27 ACQUISITION OF SUBSIDIARIES (cont’d)

2013 (cont’d) The results of Allseas Marine acquired during the year are included in the consolidated statement of

comprehensive income from the effective date of acquisition.

Identifi able assets and liabilities at the date of acquisition1 January

2013

$

Cash and cash equivalents 234,000

Trade receivables 1,237,000

Other receivables and prepayments 34,000

Inventories 45,514

Property, plant and equipment 1,841,891

Intangible asset 240,000

Trade payables (881,000)

Other payables (17,405)

Income tax payable (17,901)

Bank borrowings (1,084,000)

Deferred tax liabilities (96,000)

Net assets 1,536,099

The receivables acquired (which principally comprised trade receivables) in these transactions with a fair value of $1,271,000. The best estimate at acquisition date of the contractual cash fl ows not expected to be collected is Nil.

Excess of fair value of net identifi able assets over consideration arising on acquisition

1 January2013

$

Consideration transferred 1,470,000

Less: Fair value of identifi able net assets acquired (1,536,099)

Excess of fair value of net identifi able assets over consideration (66,099) The excess of fair value of net identifi able assets over consideration of $66,099 is primarily due to the

estimated fair value of the customer relationships acquired.

Net cash fl ow on acquisition of subsidiaries

1 January2013

$

Total consideration, satisfi ed by cash 1,470,000

Less: Cash and cash equivalents acquired (234,000)

Net cash outfl ow on acquisition of subsidiary 1,236,000

Annual Report 2013

86


27 ACQUISITION OF SUBSIDIARIES (cont’d)

2013 (cont’d) Impact of acquisitions on the results of the Group

Included in the profi t for the year is an amount of $220,388 attributable to the subsidiary acquired. Revenue for the period from the subsidiary amounted to $1,971,467 after eliminating for intercompany sales.

Had the business combination during the year been effected at 1 April 2012, the revenue of the Group and the profi t for the year would have been $82,259,758 and $10,789,733 respectively.

2012

On 30 September 2011, the Group acquired 100% of the issued share capital of Bridge Testing for a cash consideration of $81,841. This transaction has been accounted for by the acquisition method of accounting and fair values of assets and liabilities have been disclosed below.

The results of Bridge Testing acquired during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition.

30 September 2011

$

Cash and cash equivalents 6,969

Trade receivables 79,960

Other receivables 180

Trade and other payables (3,852)

Income tax payable (1,416)

81,841

Consideration transferred 81,841

Less: Cash and cash equivalents acquired (6,969)

Net cash outfl ow on acquisition of subsidiary 74,872 Included in the profi t for 2012 are expenses amounting to $12,580 attributable to the subsidiary acquired.

Revenue for the period from the subsidiary amounted to $Nil after eliminating for intercompany sales.

Had the business combination during the year been effected at 1 April 2011, the revenue of the Group would have been unchanged and the profi t for 2012 would have been $12,963,356.

28 SEGMENT INFORMATION

The Group operates and manages its business primarily as a single operating segment in the supply and manufacture of rigging and lifting equipment and provision of related services. The Group’s chief operating decision maker reviews the consolidated results prepared based on Group’s accounting policy when making decisions, including the allocation of resources and assessment of performance of the Group.

The accounting policies of the reportable segments are the same as the Group’s accounting policies.


87


28 SEGMENT INFORMATION (cont’d)

Geographical information

The Group operates mainly in the geographical areas of Singapore, Malaysia, Other Asia (including Vietnam), Europe and Others. The Group’s revenue from external customers and information about its segment assets (non-current assets) by geographical location are detailed below:

Group

2013 2012

$ $

Revenue from external customers

(based on location of customer)

Singapore 32,433,132 37,079,550

Malaysia 8,737,104 5,634,884

Other Asia (1) (2) 14,638,570 9,935,374

Europe (1) 13,849,357 9,170,491

Others (1) 7,458,980 9,626,808

77,117,143 71,447,107

Non-current assets

(based on location of assets)

Singapore 9,575,957 8,456,610

Other Asia 1,704,445 419,236

11,280,402 8,875,846

(1) Revenue from countries in “Other Asia”, “Europe” and “Others” include revenue from customers in countries that individually account for less than 10% of the Group’s revenue.

(2) Revenue from Other Asia excludes revenue from Singapore and Malaysia.

Information about major customers

There are no revenues from transactions with any single external customer that amounts to 10 per cent or more of the Group’s revenue.

29 COMMITMENTS

(a) Capital commitments

Group

2013 2012

$ $

Commitment for the development of factory – 372,813

Commitment for plant and equipment 1,210,486 –

Commitment for motor vehicle 550,000 –

Commitment for purchase of an overseas company (Note 13) 3,500,000 –

5,260,486 372,813

Annual Report 2013

88


29 COMMITMENTS (cont’d)

(b) Operating lease commitments

Group

2013 2012

$ $

Minimum lease payments under non-cancellable operating leases recognised as an expense in the year 740,132 659,383

At the end of the reporting period, the Group has outstanding commitments under non-cancellable

operating leases which fall due as follows:

Group

2013 2012

$ $

Within 1 year 642,847 691,803

Within 2 to 5 years 1,898,404 1,735,429

After 5 years 5,635,481 5,715,785

8,176,732 8,143,017 The lease of land is subject to annual adjustment to market rate with any increase capped at a

percentage of the immediate preceding year’s rental.

Operating lease payments represent rentals payable by the Group for rental of land, offi ce space, warehouse and dormitory. These leases have varying terms and are subject to revisions to refl ect current market rental and value. The operating lease commitments estimated above were determined assuming the same rental expense fi xed as at end of the reporting period till the end of the lease.

(c) Other commitments

As at 31 March 2013, the Group had commitments amounting to $Nil (2012 : $1,004,666) in respect of letters of credit. These commitments were secured in the manner similar to bank borrowings (Note 16).

The corporate guarantees have not been recognised by the Group and the Company as management has assessed the fair value of the corporate guarantees to be immaterial.

30 SUBSEQUENT EVENTS

On 1 April 2013, a wholly-owned subsidiary was incorporated known as GI Offshore Engineering Pte. Ltd., with an initial issued and paid up share capital of $1.00.

On 5 April 2013, GIPL has transferred its shareholdings in Gaylin Power Pte. Ltd., a wholly-owned subsidiary of GIPL, to the Company.

On 24 April 2013, the Company increased its investment in a wholly-owned subsidiary of the Company, Gaylin Malaysia Sdn. Bhd. by subscribing for additional shares for a cash consideration of $202,500 (equivalent to RM500,000).


89


31 RECLASSIFICATION AND COMPARATIVE FIGURES

Certain reclassifi cations have been made to the prior year’s fi nancial statements to enhance comparability with the current year’s fi nancial statements.

As a result, certain line items have been amended in the consolidated statement of cash fl ows. Comparative fi gures have been adjusted to conform to the current year’s presentation.

The bank bills payable and related interest paid were reclassifi ed from fi nancing activities to operating activities and the impact was as below:

Consolidated statement of cash fl ows

Group

Previously reported

Afterreclassifi cation

2012 2012

$ $

Net cash from (used in) fi nancing activities 5,874,341 (3,140,057)

Net cash from operating activities 3,111,130 12,125,528

Annual Report 2013

90

STATISTICS OF SHAREHOLDINGS As at 17 June 2013

SHARE CAPITAL

Issued and Fully Paid Up Capital : S$49,200,000**Class of Shares : Ordinary shares Number of Shares : 432,000,000Voting Rights : 1 vote per share Treasury Shares : Nil

** This is based on records kept with the Accounting & Corporate Regulatory Authority (“ACRA”) and differs from the accounting records of the Company which is S$47,223,533 due to certain share issue expenses.

Based on the information provided, to the best knowledge of the Directors and the substantial shareholders of the Company, 38.79% of the issued ordinary shares of the Company is held in the hands of the public as at 17 June 2013. Accordingly, Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited has been complied with.

Analysis of Shareholders

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings No. of Shareholders % No. of Shares %

1 - 999 0 0.00 0 0.00

1,000 - 10,000 627 59.10 2,339,000 0.54

10,001 - 1,000,000 417 39.30 44,305,000 10.26

1,000,001 and above 17 1.60 385,356,000 89.20

Total 1,061 100.00 432,000,000 100.00

TWENTY LARGEST SHAREHOLDERS

No. Name No. of Shares %

1 Keh Swee Investment Pte. Ltd. 264,410,000 61.21

2 UOB Kay Hian Pte Ltd 53,897,000 12.48

3 Rhodus Capital Limited 12,300,000 2.85

4 Amhoist Holding Pte. Ltd. 8,400,000 1.94

5 Comfort Shipping Pte. Ltd. 8,400,000 1.94

6 Citibank Nominees Singapore Pte Ltd 7,394,000 1.71

7 Wee Seng Investments Pte. Ltd. 6,490,000 1.50

8 ABN AMRO Nominees Singapore Pte Ltd 5,650,000 1.31

9 Le Pin Pte Ltd 5,500,000 1.27

10 Lim Kuan Kang 2,500,000 0.58

11 Tan Ah Lam 2,000,000 0.46

12 Poh Seng Kui 1,988,000 0.46

13 Loy Chiat Jiam 1,875,000 0.43

14 United Overseas Bank Nominees Private Limited 1,252,000 0.29

15 OCBC Securities Private Ltd 1,190,000 0.28

16 CIMB Securities (Singapore) Pte Ltd 1,092,000 0.25

17 Bank Of Singapore Nominees Pte Ltd 1,018,000 0.24

18 Lim Ming Jee 1,000,000 0.23

19 Teo Kim Lian Lena 1,000,000 0.23

20 Toh Cheow Lin 1,000,000 0.23

Total 388,356,000 89.89


91

As at 17 June 2013STATISTICS OF SHAREHOLDINGS

SUBSTANTIAL SHAREHOLDERS

Name of Substantial ShareholderShareholdings registered in the name of substantial shareholder

Shareholdings in which the substantial shareholders are

deemed to be interested

No. of Shares % No. of Shares %

Keh Swee Investment Pte. Ltd. 264,410,000 61.21 – –

Mr Desmond Teo(1) – – 264,410,000 61.21

Mr Teo Bee Kheng(1) – – 264,410,000 61.21

Mr Teo Bee Hoe(1) – – 264,410,000 61.21

Mr Teo Bee Yen(1) – – 264,410,000 61.21

Mr Teo Bee Hua(1) – – 264,410,000 61.21

Notes :

(1) Each of Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe, Mr Teo Bee Yen, and Mr Teo Bee Hua owns 1,000,001 ordinary shares representing 20.0% of the issued share capital of Keh Swee Investment Pte. Ltd. Mr Desmond Teo, Mr Teo Bee Kheng, Mr Teo Bee Hoe, Mr Teo Bee Yen and Mr Teo Bee Hua are deemed to be interested in all the Shares held by Keh Swee Investment Pte. Ltd.

Annual Report 2013

92

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at Raffl es Country Club, Albatross Room, 450 Jalan Ahmad Ibrahim, Singapore 639932 on Tuesday, 23 July 2013 at 10.00 a.m. to transact the following business: -

Ordinary Business

1. To receive and adopt the Directors’ Report and Audited Accounts for the fi nancial year ended 31 March 2013 and the Auditors’ Report thereon. [Resolution 1]

2. To declare a First and Final Dividend of 0.8 cent per ordinary share one-tier tax exempt for the fi nancial year ended 31 March 2013. [Resolution 2]

3. To re-elect Mr Teo Bee Kheng, who is retiring by rotation in accordance with Article 114 of the Company’s Articles of Association, as Director of the Company. [Resolution 3]

4. To re-elect Mr Teo Bee Hoe, who is retiring by rotation in accordance with Article 114 of the Company’s Articles of Association, as Director of the Company. [Resolution 4]

5. To approve the sum of S$131,250/- as Directors’ fees for the fi nancial year ended 31 March 2013. [Resolution 5]

6. To approve the sum of S$225,000/- as Directors’ fees for the fi nancial year ending 31 March 2014. [Resolution 6]

7. To re-appoint Messrs Deloitte & Touche LLP as Auditors of the Company and to authorise the Directors to fi x their remuneration. [Resolution 7]

8. To transact any other business that may be transacted at an Annual General Meeting.

Special Business

To consider and, if thought fi t, to pass the following as Ordinary Resolution, with or without modifi cations: -

9. Authority to allot and issue shares in the capital of the Company

That pursuant to Section 161 of the Companies Act, Chapter 50 (the “Act”), the Articles of Association and the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the Directors of the Company to:-

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

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

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

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force):

(i) issue additional instruments as adjustments in accordance with the terms and conditions of the Instruments made or granted by the Directors while this Resolution was in force; and

(ii) issue shares in pursuance of any Instruments made or granted by the Directors while this Resolution was in force or such additional Instruments in (b)(i) above,


93


provided that:

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50% of the total number of issued shares (excluding treasury shares, if any) at the time of the passing of this Resolution (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares issued other than on a pro rata basis to existing shareholders (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 20% of the Company’s total number of issued shares (excluding treasury shares, if any) (as calculated in accordance with sub-paragraph (2) below); and

(2) (subject to such manner of 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 total number of issued shares (excluding treasury shares, if any) shall be calculated based on the total number of issued shares (excluding treasury shares, if any) at the time of the passing of this Resolution, after adjusting for:-

(a) new shares arising from the conversion or exercise of convertible securities;

(b) new shares arising from the exercise of share options or vesting of share awards outstanding or subsisting at the time this Resolution is passed, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the SGX-ST Listing Manual; 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 listing rules of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(4) (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier.

[See Explanatory Note 1] [Resolution 8]

10. Authority to Issue Shares under the Gaylin Employee Share Option Scheme

That pursuant to Section 161 of the Companies Act, Chapter 50, authority be and is hereby given to the Directors to:

(a) offer and grant options from time to time in accordance with the rules of the Gaylin Employee Share Option Scheme (“ESOS”); and

(b) allot and issue from time to time such number of shares (“shares”) in the capital of the Company as may be required to be issued pursuant to the exercise of options granted under the ESOS,

provided that the aggregate number of shares to be issued pursuant to the ESOS shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the share capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, 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 9]

Annual Report 2013

94


By Order of the Board

Sharon YeohCompany Secretary

5 July 2013Singapore

Explanatory Notes:

1) The ordinary resolution 8 in item 9 above, if passed, will empower the Directors from the date of this Annual General Meeting until the date of the next Annual General Meeting or the date by which the next Annual General Meeting is required by law to be held or such authority is revoked or varied by the Company in general meeting, whichever is 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 50% of the total number of issued shares (excluding treasury shares, if any) in the capital of the Company, with a sub-limit of 20% for issues other than on a pro rata basis to shareholders.

For the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares shall

be calculated based on the total number of issued shares (excluding treasury shares, if any) in the capital of the Company, at the time when this ordinary resolution is passed, after adjusting for new shares arising from the conversion or exercise of convertible securities, share options or vesting of share awards outstanding or subsisting at the time this ordinary resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares.

2) The ordinary resolution 9 in item 10 above, if passed, will empower the Directors, from the date of this Annual General Meeting until the date of the next Annual General Meeting or the date by which the next Annual General Meeting is required by law to be held or such authority is revoked or varied by the Company in general meeting, whichever is earlier, to offer and grant options and to issue shares in the capital of the Company pursuant to the ESOS, provided that the aggregate number of shares to be issued under the ESOS shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company for the time being.

Note:

A member entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to attend and vote on his behalf and where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy. A proxy need not be a member of the Company. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of the Company at 7 Gul Avenue, Singapore 629651 not less than 48 hours before the time set for the Annual General Meeting.

IMPORTANT FOR CPF INVESTORS ONLY:

1. This Annual Report is forwarded to you at the request of your CPF Approved Nominee and is sent SOLELY FOR INFORMATION ONLY.

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

3. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests through their respective Agent Banks so that their Agent Banks may register with the Company Secretary of Gaylin Holdings Limited.

GAYLIN HOLDINGS LIMITED (Incorporated in the Republic of Singapore)Company Registration No: 201004068M

PROXY FORM

I/We NRIC/Passport/Co. Registration No.

of

being a member/members of GAYLIN HOLDINGS LIMITED hereby appoint

Name AddressNRIC/Passport

No.Proportion of

Shareholdings (%)

and/or (delete as appropriate)

Name AddressNRIC/Passport

No.Proportion of

Shareholdings (%)

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 “AGM”) of the Company to be held at Raffl es Country Club, Albatross Room, 450 Jalan Ahmad Ibrahim, Singapore 639932 on Tuesday, 23 July 2013 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 AGM as indicated hereunder. If no specifi c direction as to voting is given or in the event of any other matter arising at the AGM 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 [] within the box provided.)

No. Resolutions Relating To: For Against

AS ORDINARY BUSINESS

1 Directors’ Report and Audited Accounts for the fi nancial year ended 31 March 2013

2 Declaration of First and Final Dividend

3 Re-election of Mr Teo Bee Kheng as a Director

4 Re-election of Mr Teo Bee Hoe as a Director

5 Approval of Directors’ fees FY 2013

6 Approval of Directors’ fees FY 2014

7 Re-appointment of Deloitte & Touche LLP as Auditors

AS SPECIAL BUSINESS

8 Authority to issue new shares

9 Authority to issue shares under the Gaylin Employee Share Option Scheme

Dated this day of 2013

Signature(s) of Member(s) orCommon Seal of Corporate Member

IMPORTANTPLEASE READ NOTES OVERLEAF

Total Number of Shares Held

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 defi ned in Section 130A of the Companies Act, Cap. 50), you should insert that number. If you have shares registered in your name in the Register of Members of the Company, you should insert that number. 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. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you.

2 A member entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3 The instrument appointing a proxy or proxies must be deposited at the Company’s registered offi ce 7 Gul Avenue, Singapore 629651 not less than 48 hours before the time set for the AGM.

4 Where a member appoints more than one proxy, the proportion of his shareholding to be represented by each proxy shall be specifi ed. If no proportion is specifi ed, the Company shall be entitled to treat the fi rst named proxy as representing the entire number of shares entered against his name in the Depository Register and any second named proxy as an alternate to the fi rst named or at the Company’s option to treat the instrument of proxy as invalid.

5 The instrument appointing a proxy or proxies shall be in writing and signed by the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or signed on its behalf by an attorney or a duly authorised offi cer of the corporation.

6 Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the power of attorney or other authority or a notarially certifi ed copy thereof shall be deposited at the Company’s registered offi ce at 7 Gul Avenue, Singapore 629651 not less than 48 hours before the time for holding the AGM or adjourned meeting. Otherwise, the person so named in the instrument of proxy shall not be entitled to vote in respect thereof.

7 A corporation which is a member may by resolution of its directors or other governing body authorise any person to act as its representative at the AGM.

The Company shall be entitled to reject this instrument of proxy if it is incomplete, improperly completed, illegible or where the true intentions of the appointer are not ascertainable from the instructions of the appointer specifi ed in this instrument of proxy. In addition, in the case of members whose shares are entered in the Depository Register, the Company may reject an instrument of proxy lodged if the member, being the appointer, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time set for holding the AGM, as certifi ed by The Central Depository (Pte) Limited to the Company.

GAYLIN INTERNATIONAL PTE LTD7 Gul Avenue, Singapore 629651Tel +65 6861 3288Fax +65 6861 5433Email : offshore@gayl in.com

GAYLIN MALAYSIA SDN. BHD.PLO 475C, Jalan Ipi lP.O. Box 91Kawasan Perindustr ian Tanjung Langsat81707 Pasir Gudang, Johor

Level 23, Premier Suites, 1 Mont KiaraNo 1, Jalan Kiara50480 Kuala LumpurTel +603 2785 6814Fax +603 2785 6914Email : offshore-malaysia@gayl in.com

GAYLIN VIETNAM PTE LTD973 30/4 Road, Ward 11, Vung Tau City, S.RVietnamTel +84 64 3 530988 / 530449Fax +84 64 3 530688Email : offshore-vietnam@gayl in.com

ALLSEAS MARINE SERVICES PTE LTD27B Benoi Road, Pioneer LotSingapore 629917Tel +65 6265 2655Fax +65 6265 7622Email : [email protected]: www.al lseasmarineservices.com

GAYLIN HOLDINGS LIMITED7 Gul Avenue, Singapore 629651Tel +65 6861 3288Fax +65 6861 5433(Reg No. 201004068M)

www.gayl in.com

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