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Mencast holdings ltd annual report 2009

Going GlobalGoing Global

contents

Corporate Profile 01 • Year In Review 04 • Chairman’s Message 08 • Group Structure 11 • Financial Highlights 12Operations Review 14 • Board Of Directors 16 • Key Management 18 • Corporate Governance Statement 21Financial Contents 28 • Corporate Information iBc

This document and its contents have been reviewed by the Company’s sponsor, CIMB Bank Berhad, Singapore Branch (the “sponsor”), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the “sgX-st”), this being the SGX-ST Listing Manual Section B: Rules of Catalist. The Sponsor has not independently verified the contents of this document. This document has not been examined or approved by the SGX-ST and the Sponsor and the SGX-ST assume no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this document.

The contact person for the Sponsor is Mr Mah Kah Loon, Head, Corporate Finance, CIMB Bank Berhad, Singapore Branch, 50 Raffles Place, #09-01 Singapore Land Tower, Singapore 048623, telephone (65) 6337 5115.

the 5c proMise Mencast’s business ethic is defined by its five pillars for success, pillars that every employee works to achieve in every aspect of our operations.

• control • commitment • cooperation • coordination • customer service

rationale

Mencast’s sterngear products and services are making waves across the globe. Embracing a tradition of quality and excellence from its rudders to its service standards, the Mencast Group stands poised to make its mark in the global shipping and offshore marine industry.

Mencast holdings ltd annual RePoRt 2009 • 01

delivering propulsion solutionsestablished in 1981, Mencast Holdings ltd. and its subsidiaries (the “Group”) is a Singapore-based sterngear equipment manufacturer and supplier, and sterngear services provider for a wide range of commercial vessel applications catering to customers in the marine and offshore oil and gas industries in the asia Pacific.

First set up in a rented workshop located on Choa Chu Kang Road, the Group’s main business activities were centered on the repair, refurbishment and manufacture of marine propellers, shaftings and bushings for fishing and bum boats from Singapore and West Malaysia. In 1993, the Group expanded its operations into the manufacture, repair and refurbishment of sterngear equipment for tugboats, ferries and standby vessels. In 2001, the Group extended its vertically integrated capabilities to provide a full range of sterngear equipment and services for local and regional shipyards and ship owners.

Riding on the buoyant growth in the shipbuilding, repair and maintenance industries, the Group further expanded its production capacity in 2002, and moved its operations to its present premises.

Successfully listed on 25 June 2008 as the first sponsor-approved listing on Singapore’s SGX Catalist, the Group is one of the first sterngear equipment manufacturers in Singapore to obtain the ISo 9001:2000 Quality Management System. It has also received the Singapore SME 500 award for two years running from 2005 and 2006.

Led by a dedicated and experienced management team, and well equipped with advanced machinery and strong technical expertise, the Group is committed to providing timely and reliable delivery of quality products and services to its customers.

products and servicesThe Group manufactures and supplies an extensive range of sterngear equipment which meets all the prevailing international standards and regulations for quality and safety. Its product range includes:

• propellers • propeller shafts • stern rollers • rudders and rudder stock • kort nozzles • marine bearings and bronze sleeves

The Group also provides expert and professional repair and restoration services for worn out or damaged sterngear equipment and also refurbishes them to maximize efficiency. Its services include:

• routine and emergency repair services• refurbishment and reconditioning • grinding, pitching, casting of replacement tips, inspection, measurement, bending, welding, and general machining services

Corporate Profile

Building on our core competencies, we are single-minded in committing the necessary resources to build on our global standing, leveraging technology, technical expertise and talent, to raising our market competitiveness. This defines who we are and emphasizes our drive to make Mencast the choice partner for companies in the marine and offshore sectors.

Moving Ahead

04 • Mencast holdings ltd annual RePoRt 2009

Year In Review

growth drivers

acquisition of recon propeller & engineering pte ltd (“recon”) and the Business of denfon engineering

• to capture new market opportunities • to leverage on the growth potential of sterngear

services globally, especially in the asia Pacifi c region • Recon is engaged in the repairing of ships, tankers and

other oceangoing vessels such as propeller repair and modifi cation services to the worldwide offshore oil and gas and marine industry

strategic alliance with Becker Marine systems

• to capture new customers from Korea, Japan and China • Mencast is the preferred manufacturer of heavy rudder

assemblies and high-end sterngear equipment in Asia


newly leased land at tanjung penjuru road • 30 years lease approximately two hectares with 150 metres of waterfront • to establish facilities to manufacture heavy rudder assemblies and high-end sterngear

equipment for the marine and offshore industries in the asia Pacifi c region • expected to be fully operational in 2011

worldwide Mobile propeller services

• mobile teams of experienced engineers and technicians• ready to serve our customers at short notice for all their sterngear inspection and repair needs

Gaining MomentumIn setting the pace for innovation and service excellence, Mencast has redefined the parameters to becoming a globally recognised and trusted brand. in doing so, we are continuously honing our business edge to capitalise on industry opportunities as and when they occur. this puts us in good stead to strengthen our product and service offerings.

Chairman’s Message

Dear Shareholders,

On behalf of the Board of Directors of Mencast Holdings Ltd. and its subsidiaries (“Mencast” or the “Group”), I am pleased to present to you the annual report of our Group for the year ended 31 December (“FY”) 2009. this marks our first full year in review since our listing on the SGX Catalist in June 2008.

overviewIn a year when many companies were badly hit by the financial crisis, our strong market niche and order book have allowed us to weather the economic storm with increased revenue, higher gross profits and a strengthened competitive position.

our full year net profit grew 21.2% from the prior year to S$7.0 million in FY2009, our fifth consecutive year of record profits. turnover also hit a record high, growing 4.8% to S$26.3 million in FY2009, while gross profit expanded 10.2% to S$12.4 million in FY2009.

Since 2005, our turnover and net profit has increased at a compounded annual growth rate of 23% p.a. and 78% p.a. respectively. economies of scale from the

expansion of our revenue base allowed our net profit to grow faster than our turnover over this period.

Earnings per share for the year in review, on a fully diluted basis, rose from 4.25 cents in FY2008 to 4.71 cents in FY2009, while net assets backing per ordinary share also rose from 14.1 cents as at 31 December 2008 to 18.1 cents as at 31 December 2009.

our Group delivered solid return on equity of 25.0% in FY2009, and our prudence in capital management is demonstrated in our cash position strengthening from S$8.1 million as at 31 December 2008 to S$12.7 million as at 31 December 2009.

perforMance reviewThe global economic downturn crisis and tight credit conditions resulted in a significant slowdown in the marine industry in 2009.

Our Group entered the economic crisis with a robust orderbook, with the steady delivery of our orders mitigating the impact of the downturn in the industry.

Our Sterngear Services Division enjoyed higher revenues in FY2009 with the inclusion of contributions from our newly acquired subsidiary, Recon Propeller & Engineering Pte. Ltd. (“Recon”) and the business of Denfon Engineering (“Denfon”).

Our orderbook stood at approximately S$8.4 million as at 31 December 2009.

preparing for the upturnA saying comes to mind in relation to our recent acquisition of Recon and the business of Denfon. This saying is: “In prosperity, our friends know us. In adversity, we know our friends”.

Recon have been friends and business partners of Mencast in prosperity and adversity for more than a decade. We could not be more pleased to have the opportunity to join forces with them in 2009. these companies bring complementary and synergistic skills to our Group. With their strong management team, excellent client relationships and rapid response capabilities, together we take a step closer to becoming the premier sterngear company in Asia.


During the year, we continued to build our capacity and capabilities by entering into the lease of a 19,266 sqm parcel of prime waterfront land at Tanjong Penjuru Road in Jurong, Singapore. When construction is completed, this will be one of the finest facilities for heavy rudder assemblies and high-end sterngear equipment in the entire Asia Pacific region.

In light of the uncertain outlook for shipbuilding in Europe, we have deferred our joint venture plans with Becker Marine Systems and Machinefabriek Amersfoort. We continue to work closely together, and are the core service agent for their sterngear equipment in Asia.

strengthening our revenue Base and quality of earningsLooking ahead, we will continue to execute the strategy that has delivered consistent growth for our Group. We will build our capabilities, capacity and market reach, harness synergies within our Group and with our business partners and enhance the productivity of our human capital.

Our long-term industry fundamentals are sound and we will continue to explore synergistic acquisitions, joint-ventures and strategic alliances to build the value of our business. Given the strong prospects for growth in China, and the Middle East, we expect to establish a presence in these markets within the next two years.

Disciplined financial management and prudent capital allocation have been hallmarks of Mencast during our 29-year history. We will continue to manage our capital and resources prudently, positioning our businesses to ride the downturn and capitalise on opportunities as they arise.

outlookThe signs in the global economy point to a more positive year ahead for our Group, and new orders for shipbuilding by regional shipyards are also on the upturn.

The activity in deep sea exploration also appears to be increasing, boding well for future demand for larger and high end vessels in the region. The demand for ship repair services generally rise in

tandem and our strategic acquisition of Recon and the business of Denfon put us in good stead to meet this demand.

Mencast has been built on the core values of integrity, passion and prudence. The strong execution capabilities, depth and strength that our Group has built over the last three decades meant that we have never been in better shape to meet the challenges of the industry.

dividend To reward our shareholders in view of our creditable results, our Board has recommended a first and final dividend of 1.0 cent per ordinary share.

acknowledgeMents On behalf of our Board, I would like to express our deepest appreciation to our former Chairman, Mr Sim Gok Hian, who has decided to retire with effect from 9 october 2009.

Mr Sim laid the foundations of growth for Mencast, and we are grateful that we will continue to benefit from his invaluable expertise and guidance as Senior Advisor of our Group.

I also welcome Mr Ng Chee Keong as our Independent Director with effect from 9 october 2009. Mr ng brings with him vast experience in the marine and logistics industries, and serves as a director of PSA International Pte Ltd and several listed companies in the offshore oil and gas and marine industry.

Finally, I would like to thank the Board for their invaluable counsel and together with them, would like to express our gratitude to all our customers, business associates and shareholders for their continued support. I would also like to thank our management team and all staff for their commitment to the Group this last year. We look forward to all your continued support in the year ahead.

sim soon ngee glenndle executive Chairman and Chief executive officer


董事长致词

各位股东，你们好：

本人谨代表董事会向各位呈上明铸造控股有限公司(Mencast Holdings Ltd.，以下简称“明铸造”或“本集团”) 截至 2009 年 12 月 31 日的年度报告。这是本集团自 2008 年 6 月在新交所凯利板上市以来所做的第一次全年回顾。

业绩简介在多数公司遭受金融危机重创的这一年里，本集团极具优势的市场利基和稳健的订单, 让我们得以安然地度过这次金融风暴并创造营业额和毛利润双增长，同时也增强了竞争优势。

2009 财政年的全年净利润增长了 21.2%，达到 700 万新元，连续第五年创下利润增长的记录。营业额在2009 财政年也创下新高，增长了 4.8%，达到 2,630 万新元，毛利润也同时增长了 10.2%，达到 1,240 万新元。

自 2005 年以来，本集团的营业额和净利润年复合增长率分别达到 23% 与 78%。营业额增长带来的规模经济效应，让我们在同时期内的净利润增长速度超越了营业额的增长速度。

截至 2009 年 12 月 31 日，本集团的全面摊薄的每股盈利从新币 4.25 分增长至 4.71 分，每股净资产值也从新币 14.1 分增长至 18.1 分。

本集团 2009 财政年的股本回报率为 25.0%，现金数额也从 2008 年的 810 万新元增长至 2009 年的 1,270 万新元, 体现了本集团的谨慎资本管理战略。

绩效评估全球经济衰退危机及紧缩的信贷条件使到 2009 年的海事工业面临严重衰退。

由于在进入金融危机之前，本集团已拥有稳健的订单并能够维持稳定的交货，所以能减轻市场衰退所造成的冲击。

本集团的船尾齿轮维修部在本年度享有营业额的增长，旗下分公司 Recon Propeller & Engineering Pte. Ltd. (以下简称“Recon”) 和 Denfon Engineering 的业务(以下简称“Denfon”) 都为本集团的营业额做出贡献。

截至 2009 年 12 月 31 日，本集团的订单金额达到 840 万新元。

为复苏做好准备在近期收购 Recon 和 Denfon 的业务的过程中，有一句话经常盘旋在我的脑海。这句话就是：“得意时，朋友识我；失意时，我识朋友。”

十多年来，Recon 和 Denfon 在明铸造得意和失意时一直都维持友好的关系，也是我们很好的商业伙伴。我们很荣幸在 2009 年能有机会让这两家公司加入我们。他们的加入将为本集团带来补充和协力优势。有了这两家公司坚强的管理团队、卓越的客户关系以及快速的反应能力，我们又朝向成为亚洲顶尖船尾齿轮公司的理想迈进一大步。

在 2009 年内, 我们持续扩张本集团的产能，并租下位于新加坡裕廊区丹戎本茱鲁路 19,266 平方米的主要水岸地带。完工后，此设施将成为整个亚太区的重型船舵组装设施与高端船尾齿轮设备最顶级的厂区之一。

与此同时, 由于欧洲造船业的前景还不明朗，我们已延缓与 Becker Marine Systems 和 Machinefabriek Amersfoort 的合资计划。我们将维持与他们的密切合作关系，并继续担任他们亚洲船尾齿轮设备的主要维修厂商。

增强营收基础与盈利质量展望未来，本集团将延续原有的增长战略。我们将继续扩张产能并拓展市场，加强本集团内部以及与商业伙伴的整合，以及提升人力资本生产效率。

我们长远的市场基本面依然强健，并将继续进行收购、合资与战略联盟计划，以便为我们的业务创造更多价值。有鉴于中国与中东市场的强劲增长潜力，我们计划在未来两年内积极拓展这两地的市场。

明铸造成立 29 年以来，一直秉持着严谨的财务管理与资产配置战略。我们将继续维持如此严谨的资本与资源管理战略，以度过衰退的难关并抓住复苏的机会。

未来展望全球经济迹象显示未来一年的景气将趋向好转，区域造船场的新订单也可望获得增长。

随着深海探油活动的增加，本区域未来的大型高端船舶需求也会增加，船舶维修需求也因此随着增长。我们对 Recon 和 Denfon 的战略性收购将使我们更有实力满足市场需求。

明铸造的核心价值是诚信、热忱与审慎。凭借本集团过去三十年来累积的坚强的执行能力、基础与优势，我们将无所畏惧地迎接未来的挑战。

股息为了让股东们分享我们优异的业绩，董事会建议派发每股新币 1.0 分的年终股息。

致谢本人谨代表董事会向已于 2009 年 10 月 9 日卸任的前任董事长沈力贤先生致以最诚挚的谢意。

沈先生在任期间为明铸造奠定了坚强的增长基础，卸任后他将继续担任本集团的高级资深顾问，为本集团贡献其专业经验与指导。

同时，本人也要向自 2009 年 10 月 9 日起担任本集团独立董事一职的吴子强先生表示热烈欢迎。吴先生拥有丰富的海事与物流工作经验，并曾担任PSA国际港务集团(PSA International Pte Ltd)的董事以及服务于多家岸外油气业与海事业的上市公司。

最后，本人谨向全体董事会表达诚挚的感谢，并代表董事会衷心感谢本集团的所有客户、商业伙伴和股东的坚定支持。同时，我也要感谢本集团管理团队与所有员工过去一年的辛苦奉献，并期望未来一年各位能继续支持本集团。

沈询益董事长兼执行总裁



Group Structure

* acquisition completed on 23 July 2009

recon propeller & engineering

pte ltd*

Mencast Marine pte ltd

Mencast engineering

pte ltd

M.B.a. heavy

industries pte ltd

Mencast investMent

pte ltd

tg offshore pte ltd

Mencast holdings ltd.

100% 100% 100% 100% 100% 51%

FY2006

33.4%$4.5m

66.6%$8.8m

FY2007

45.7%$8.6m

54.3%$10.3m

FY2008

58.8%$14.7m

41.2%$10.3m

Financial Highlights

revenue By segMents (%)

• Sterngear Manufacturing • Sterngear Services

fy2009

54.4%$14.3m

45.6%$12.0m

For the year (S$’000) fy2009 FY2008 FY2007 FY2006

Revenue 26,274 25,063 18,876 13,348

Earnings before interest, tax, depreciation and amortisation 10,669 8,328 6,699 3,358

Profit before income tax 8,732 7,241 5,892 2,757

net profit attributable to equity holders 7,033 5,803 4,816 2,184

operating cashflow 6,160 6,349 2,380 2,029

At year end (S$’000)

Total Assets 48,548 33,824 22,475 15,994

Total Liabilities 20,412 13,093 9,946 8,031

Total Equity 28,136 20,731 12,529 7,963

Property, plant and equipment 22,145 17,050 11,257 8,130

Cash and cash equivalents 12,706 8,107 2,243 2,328



%

80

70

60

50

40

30

20

10

0FY2006 FY2007 FY2008 fy2009

• Gross Profit Margin • net Profit Margin

16.4%

25.5% 23.2%

35.6%

45.9% 45.0%

26.8%

47.3%

revenue

13,348

18,876

25,06326,274

S$’000

30000

25000

20000

15000

10000

5000

0FY2006 FY2007 FY2008 fy2009

gross profit

4,748

8,663

11,28512,439

S$’000

14000

12000

10000

8000

6000

4000

2000

0FY2006 FY2007 FY2008 fy2009

net profit

2,184

4,816

5,803

7,033

S$’000

8000

7000

6000

5000

4000

3000

2000

1000

0FY2006 FY2007 FY2008 fy2009

Operations Review

Despite the slowdown in the shipbuilding and marine offshore sectors as a result of the global economic situation, Mencast Holdings Ltd. continued to report a solid set of financials founded on its enhanced focus on sterngear repair services and its strong 2008 order books. For the financial year ended 31 December (“FY”) 2009, total Group revenue rose 4.8% from S$25.1 million in FY2008 to S$26.3 million, while net profitability improved to S$7.0 million, up 21.2% over the S$5.8 million recorded for FY2008.

overall, the Group benefitted from better operating margins due to the lower cost of raw materials such as copper and steel as compared to significantly higher prices in FY2008. Gross profit margins improved from approximately 45.0% in FY2008 to 47.3% in FY2009. other gains for FY2009 included recognition for the excess paid on the fair value of assets for a Group acquisition, a write-back on doubtful debt allowances, grants from government schemes and scrap metal sales. These helped to offset rising administrative, finance and tax expenses incurred by the Group over the year.

Sectorally, the Group’s Sterngear Manufacturing Division experienced a general slowdown which saw delays in orders as a result of the global recession, as owners were unable to secure adequate financing in light of global economic uncertainties. Revenue for this division decreased by 3.1% from S$14.7 million in FY2008 to S$14.3 million in FY2009.

The Group’s Sterngear Services Division continued to see improved revenues that included contributions from its recent acquisition of Recon Propeller & Engineering Pte Ltd (“Recon”) and the business of Denfon in July 2009 and october 2009 respectively, both entities offering sterngear repair services synergistic to the Group’s focus. Revenue from this division rose 16.1% from S$10.3 million in FY2008 to S$12.0 million in FY2009. Recon, in particular, will significantly reinforce the Group’s ability to provide propeller repair and modification services to the worldwide marine offshore and oil and gas sectors, enhancing its regional profile in the sterngear services arena.


The Group’s proposed joint venture with Becker Marine Systems and Machinefabriek Amersfoort was put on hold as all partners jointly decided to take a more prudent stance on committing resources to the joint venture in light of the uncertain global economic climate and resultant impact on European shipbuilders. The partners have agreed to reevaluate the market situation in the second half of 2010 and will proceed with the joint venture if it improves.

However, in line with signs of sector optimism and as part of its ongoing business expansion, the Group has leased approximately two hectares of waterfront property on Tanjong Penjuru Road in Singapore, and plans to construct a manufacturing plant to build heavy rudder assemblies and high-end sterngear equipment for the marine and offshore industries in the asia Pacific. the Group is also channeling new capital expenditure to equip the facility with technology and capabilities designed to build bigger and more niche heavy duty sterngear components. When completed, the Group expects to increase the size of its current propeller builds up to ten tonnes, enhancing its scope of offerings, adding to its customer base and improving revenue streams in the process.

During the year, the Group continued its business expansion into the region, targeting the incorporation of representative offices in China, Indonesia and Vietnam to reinforce its Asian footprint. Despite its highly competitive economy, China, in particular, is ramping up its shipping and marine sector capabilities to capitalise on the rising demand for oil and gas exploration. This,

in turn, translates into enormous potential for the Group to strengthen its order books in terms of new shipbuilding and ship propulsion repair and maintenance services. To date, it is already supplying its products and services to many leading shipyards in China and its well-established regional standing puts it in good stead to secure potentially large government projects there.

With increasing signs of market optimism in its core business segments, the Group is taking the opportunity to put in place strategies to build up its core competencies and stimulate growth over the coming year. It has entered into a joint venture agreement with Top Great Engineering & Marine Pte Ltd to jointly set up TG Offshore Pte Ltd, to provide repair services to ships, tankers and other ocean-going vessels as well as construction and repair of engines, boilers and machinery. This enlarged business scope will reinforce the Group’s capabilities in the offshore oil and gas and marine industry and provide an alternate revenue stream that will add to the Group’s overall competitive business position.

As always, prudent cost and productivity management continue to underpin the Group’s business efficiencies. It will also stay vigilant to tactical and synergistic mergers, acquisitions and partnerships that will help expand its operational scope, improve its access to regional and global customers and add to its overall brand equity. Barring any unforeseen circumstances, the Group expects to maintain and improve upon its business performance over the coming year.


Board Of Directors


From left to rightho chew thim • ng eng ho • sunny wong fook choy • ng chee keong • sim soon ngee glenndle


siM soon ngee glenndleExecutive Chairman & Chief Executive Officer

Mr Glenndle Sim is responsible for the overall management, strategic planning, operations and marketing of the Group. He graduated from the National University of Singapore with a Bachelor in Business Administration and later obtained a Master of Business Administration from the University of Delaware in the USA. Mr Sim also attended the Cast Metal Institute Inc. (uSa) in 1996 and completed the certification curriculum in General Foundry Technology and Non-Ferrous Metals Technology. Mr Sim was appointed to our Board on 30 January 2008 and was appointed as the Executive Chairman of the Board on 9 october 2009. He is the sonof the Group’s founder and Senior Advisor, Mr Sim Gok Hian.

sunny wong fook choyLead Independent Director

Mr Sunny Wong joined the Board on 29 May 2008 and is Chairman of the Nominating Committee and a member of the Group’s Audit and Remuneration Committees. A practicing advocate and solicitor of the Singapore Supreme Court, Mr Wong is currently the Managing Director of Wong Tan & Molly Lim LLC. He graduated from the National University of Singapore with a Bachelor of Laws (Honours) and is currently also a Non-Executive Director of Albedo Limited, Excelpoint Technology Ltd, Global Testing Corporation Limited and KTL Global Limited.

ho chew thiMIndependent Director

Mr Ho is the Chairman of the Audit Committee and a member of the Remuneration Committee. He joined our Board on 29 May 2008.

Mr Ho is an accountant by vocation. He has over 33 years experience in financial management and has held senior financial positions in mainly listed companies and banks. These include China Water Holdings Pte Ltd (an associate of SGX-listed CNA Group Ltd), CNA Group Ltd, Achieva Limited, China World Trade Centre Ltd (an associate of Shangri-La Asia Limited), Poh Tiong Choon Logistics Limited, China-Singapore Suzhou Industrial Park Development Co. Ltd, Deutsche Bank (Singapore Branch), L & M Group Investments Ltd, United Industrial Corporation Limited and United Overseas Bank Limited. He is also an Independent Director on the Board of several public listed companies in Singapore.

Mr Ho is a Fellow Member of Institute of Certified Public Accountants of Singapore and CPA Australia. He graduated with a Bachelor of Accountancy (First Class Honours) degree from University of Singapore in 1976.

ng eng hoIndependent Director

Mr ng joined the Board on 29 May 2008 and is Chairman of the Remuneration Committee and a member of the Audit and Nominating Committees. He is currently a Director of Audelia Pte Ltd, a consultancy and investment services firm in Singapore. Mr ng was previously Executive Vice President in charge of operations at Singapore Technologies Telemedia. He has also held the positions as Deputy President Director of PT Indosat TBK, Managing Director of Keppel Telecommunications & Transportation, General Manager of Folec Communications and Assistant General Manager of Steamers Maritime Holdings. Before that, Mr ng was a Chief Signal officer holding various command and staff positions in the Singapore Armed Forces. He graduated from the Royal Military College of Science (UK) with a Bachelor of Science (Honours) in Engineering

ng chee keongIndependent Director

Mr Ng Chee Keong is our Independent Director. He joined our Board on 9 october 2009. He is currently a special advisor to PSA International Pte ltd (“PSa”). Mr ng joined PSa in 1971 and has since then, held various positions including Group President & CEO, President & CEO (Singapore region) and Global Head of Technical and Operations Development. He retired in January 2005 from his position as President & CEO of PSA. Mr Ng received a Bachelor of Social Science(Economics) from the then University of Singapore and graduated from the Advanced Management Programs at Stanford University (USA) and subsequently, INSEAD. He was awarded the Public Administration Medal (Gold) by the Singapore Government in 1997.


Key Management

Top Rowchan tuck wai, Benjamin • dominic chang • wong chin hin • sim wei wei

Bottom Rowphua poh cheng, Jack • phua keow wee

Mencast holdings ltd.

recon propeller & engineering pte ltd

chan tuck wai, BenJaMinFinancial Controller Mr Chan joined our Group in December 2007 and is responsible for the financial, accounting and taxation functions as well as the compliance and reporting obligations of our Group. Mr Chan has accumulated more than 20 years of experience in the financial field, holding various accounting and financial positions in listed and non-listed companies. Mr Chan had also spent many years in professional audit firms, including being an audit senior at Coopers & lybrand from January 1982 to august 1992. Mr Chan is a fellow member of the Chartered association of Certified accountants since 1997. He is a certified Public accountant and non-practising member of the Institute of Certified Public Accountants of Singapore.

doMinic changGeneral Manager, Operations Mr Chang joined our Group in June 2008 and is responsible for the overall operations and effective functioning of the departments in providing quality, technical and applications support to suppliers, customers, distributors and operations. His responsibilities include ensuring a healthy, safe and clean environment in the workplace. Mr Chang has more than 20 years of experience in manufacturing and engineering services, and 11 years of experience in the financial services industry. Prior to this, Mr Chang was the General Manager and Head of Manufacturing and Engineering Operations at Papst Mechatronics (Singapore) Pte Ltd where he started its Singapore manufacturing plant and managed its entire factory operations. Mr Chang holds a Bachelor’s degree in Business Administration, specialising in Finance from RMIT University, Melbourne, Australia. He also holds a Diploma in Mechanical Engineering and a Certificate in aeronautical engineering both from Singapore Polytechnic. wong chin hinProduction Manager Mr Wong joined our Group in 1999. His responsibilities include workers’ supervision, production planning and scheduling, liaison with customers and determination of work scopes for customers’ job. Prior to joining the Group, Mr Wong was a Production Manager with Lintech Engineering Pte ltd for ten years. From 1979 to 1989, he was an electrical technician for Metallock Pte Ltd. Mr Wong graduated from the National Industrial Board in Singapore with a certificate in electrical fitting and installation.

siM wei weiAdministration and Human Resource Manager Ms Sim joined our Group in May 2005 and is in charge of planning and implementing human resource policies and procedures, as well as handling general administrative duties. Her responsibilities include various human resource functions such as career development, compensation and benefits, payroll, screening and recruitment of staff. Ms Sim graduated from the Singapore Management University with a Bachelor’s degree in Business Management in 2003. Ms Sim Wei Wei is the daughter of the Group’s founder and Senior Advisor, Mr Sim Gok Hian, and the sister of the Group’s Executive Chairman and Chief executive officer, Mr Sim Soon Ngee Glenndle.

phua poh cheng, JackDirector, Sterngear ServicesMr Jack Phua is the co-founder of Recon Propeller & Engineering Pte. Ltd. (“Recon”). He joined us as the Director of Sterngear Services Division on 23 July 2009. He is responsible for business and customer development and managing the day to day operations of the Division. In 1986, Mr Phua set up Recon to provide propeller repair and modification services to the worldwide offshore oil and gas and marine industry. Mr Phua has more than 23 years of technical and management experience in the shipbuilding, ship repair and ship maintenance industry and has been instrumental in the growth and development of Recon.

phua keow weeTechnical Manager, ReconMr Phua Keow Wee is the Technical Manager and a founding member of Recon. Mr Phua is responsible for the technical management and operation of Recon’s machining shop and finishing workshop. He also oversees the development of engineering solutions and setting quality standards for Recon. Armed with more than 30 years of experience in the offshore oil and gas and marine industry, Mr Phua is integral with the business expansion of Recon.


Mencast holdings ltd annual report 2009 • 21

the Board of Directors (the “Board”) of Mencast Holdings ltd. (the “company”) is committed to achieving a high standard of corporate governance within the Company and its subsidiaries (the “group”) and to putting in place effective self-regulatory corporate practices to protect the interests of the Company’s shareholders (“shareholders”) and enhance long-term Shareholders’ value. the Company adopts practices based on the Code of Corporate Governance 2005 (the “code”) and the Best practice Guide issued by the Singapore exchange Securities trading limited (the “sgX-st’). the Board is pleased to report on the compliance of the Company with the Code except where otherwise stated and such compliance is regularly reviewed to ensure transparency and accountability.

PrinciPle 1: the Board’s conduct of its affairs

apart from its statutory duties and responsibilities, the Board supervises the management of the businesses and affairs of the Group. the Board reviews and approves on the Group’s strategic plans, key operational initiatives, major funding and investment proposals, identifies principal risks of the Group’s businesses and ensures the appropriate systems are in place to manage these risks; reviews the financial performances of the Group; evaluates the performances and compensation of senior management personnel.

the Board is generally responsible for the approval of the half-yearly and yearly results announcement, annual report and accounts, major investments and fundings, material acquisitions and disposal of assets and interested person transactions of a material nature.

to facilitate effective management, certain functions have been delegated by the Board to the following Committees:

• audit Committee

• nominating Committee

• remuneration Committee

These committees operate under clear defined terms of references and operating procedures. The Chairman of the respective committees reports the outcome of the committee meetings to the Board.

the Board meets at least quarterly informally and twice formally to oversee the business and affairs of the Group. To assist the Board in fulfilling its responsibilities, the Board will be provided with management reports containing complete, adequate and timely information and papers containing relevant background or explanatory information required to support the decision making process.

Corporate Governance Statement

22 • Mencast holdings ltd annual report 2009

the number of Board and other committee meetings held during the year ended 31 December 2009 and the attendance of each director of the Company (“director”) where relevant, is set out as follows:-

Boardaudit

committeenominating committee

remuneration committee

no. of meetings held 3 2 1 1

no. of meetings attended

Sim Soon ngee Glenndle 3 na 1 na

Sim Gok Hian (resigned on 9 october 2009) 2 na na na

Sunny Wong Fook Choy 3 2 1 1

Ho Chew thim 3 2 na 1

ng eng Ho 2 1 1 1

ng Chee Keong (appointed on 9 october 2009) na na na na

PrinciPle 2: Board coMPosition and Balance

The Board currently has five members, comprising one executive Director and four independent Directors. as at the date of this report, the Board comprises the following members:

Sim Soon Ngee Glenndle Executive Chairman and Chief Executive Officer Sunny Wong Fook Choy lead Independent Directorng eng Ho Independent DirectorHo Chew thim Independent Directorng Chee Keong Independent Director

the Board is of the opinion that its current size and composition is appropriate for decision making, taking into account the scope and nature of the Group’s operations. the concept of independence adopted by the Board is in accordance with the definition of an independent director in the Code.

the Board consists of high calibre members with a wealth of experience and knowledge in business. they contribute valuable direction and insight, drawing from their vast experience in matter relating to accounting, finance, legal, business and general corporate matters. The Nominating Committee of the Company (“nc”) is of the opinion that the current Board composition represents a well balanced mix of expertise and experience to provide core competencies necessary to meet the Company’s requirements.

The Board has no dissenting view on the CEO’s statement to Shareholders for the financial year in review.

Corporate Governance Statement (continued)


PrinciPle 3: chairMan and chief eXecutive officer (“ceo”)

Mr Sim Soon ngee Glenndle is both the Chairman of the Board and the Ceo of the Company. as the executive Chairman and executive Director he gives guidance on the corporate direction of the Group, which includes the scheduling and chairing of Board meetings and controlling the quality, quantity and timeliness of information supplied to the Board. as the Ceo, he sets the business strategies and directions for the Group and manages the business operations of the Group.

the Board is of the opinion that based on the Group’s current size and operation, it is not necessary to separate the roles of the chairman and the Ceo. the Board is also of the view that it is in the best interests of the Company to adopt a single leadership culture.

to enhance the independence of the Board, Mr Sunny Wong Fook Choy, the Company’s lead independent Director, coordinates the activities of the independent non-executive Directors and acts as the principal liaison between the independent non-executive Directors and Chairman on sensitive issues. the nominating Committee, remuneration Committee and audit Committee of the Company are also all chaired by independent Directors. The Board is of the view that there are sufficient safeguards and checks in place to ensure that the process of decision making by the Directors is independent and based on collective decision-making without our executive Chairman and Ceo being able to exercise considerable concentration of power or influence.

noMinating coMMittee

PrinciPle 4: Board MeMBershiPPrinciPle 5: Board PerforMance

the nC comprises the following members, the majority of the members, including the Chairman of the nC, are independent non-executive Directors:

Sunny Wong Fook Choy Chairman, lead Independent Directorng eng Ho Member, Independent DirectorSim Soon ngee Glenndle Member, Ceo

the principal functions of the nC include:

• to make recommendations to the Board on the appointment of new executive and non-executive Directors;

• to assess the effectiveness of the Board as a whole and the contribution of each individual Director to the effectiveness of the Board;

• to evaluate the independence of the Directors; and

• to regularly review the Board structure, size and composition having regard to the scope and nature of the operations and the core competencies of the Directors as a group.


In the event that a vacancy on the Board arises, the nC may identify suitable candidates for appointment as new Directors through the business network of the Board members or engage independent professional advisers to assist in the search for suitable candidates. the nC will generally identify suitable candidates skilled in core competencies such as accounting or finance, business or management expertise, or industry knowledge. If the nC decides that the candidate is suitable, the nC then recommends its choice to the Board. Meetings and such candidates may be arranged to facilitate open discussion. upon appointment, arrangements will be made for the new director to attend various briefings with the management team.

Board renewal must be an ongoing process to ensure good governance and to maintain relevance to the changing needs of the Group. No Director stays in office for more than three years without being re-elected by Shareholders.

the Board’s performance is a function of the experience and expertise that each of the Directors bring with them. the nC has implemented a board assessment checklist to assess and increase the overall effectiveness of the Board.

Factors taken into consideration for the assessment of each Director include attendance at meetings, adequacy of preparation, participation, industry knowledge and functional expertise.

the nC would access on an annual basis, the effectiveness of the Board as a whole and the contribution of each individual Director to the effectiveness of the Board.

PrinciPle 6: access to inforMation

Management provide Board members with quarterly management accounts and other financial statements to enable the Board to fulfil its responsibilities. Board members have full and independent access to senior management and the company secretary at all times. In addition, the Board or an individual Board member may seek independent professional advice, if necessary, at the Company’s expense.

the company secretary is responsible for ensuring that Board procedures are being followed and the Company complies with the requirement of the Singapore Companies act (Cap. 50), and other rules and regulations, which are applicable to the Company.

reMuneration coMMittee

PrinciPle 7: Procedures for develoPing reMuneration PoliciesPrinciPle 8: level and MiX of reMunerationPrinciPle 9: disclosure of reMuneration

the remuneration Committee of the Company (“rC”) comprises the following members, all of whom are independent non-executive Directors:

ng eng Ho Chairman, Independent DirectorSunny Wong Fook Choy Member, lead Independent DirectorHo Chew thim Member, Independent Director



the functions of the rC include:

• recommending to the Board a framework of remuneration for the Board and the key executives of the Group, covering all aspects of remuneration such as Directors’ fees, salaries, allowances, bonuses, options and benefit-in-kind;

• proposing to the Board, appropriate and meaningful measures for assessing the executive Directors’ performance;

• Determining the specific remuneration package for each executive Director; and

• Considering and recommending to the Board the disclosure of details of the Company’s remuneration policy, level and mix of remuneration and procedure for setting remuneration and details of the specific remuneration packages of the directors and key executives of the Group to those required by law or by the Code.

In performing its function, the rC endeavours to establish an appropriate remuneration policy to attract, retain and motivate senior executives and executive Directors, while at the same time ensure that the reward in each case takes into account individual performance as well as the Group’s performance.

In carrying out the above, the rC may obtain independent external legal and other professional advice as it deem necessary. the expense of such advice will be borne by the Company.

the non-executive independent Directors receive Directors’ fees in accordance with their level of contributions, taking into account factors such as responsibilities, effort and time spent for serving on the Board and Board committees. the Director’s fees are recommended by the Board for approval by Shareholders at the annual general meeting of the Company (“agM”).

the executive Chairman and Ceo, Mr Sim Soon ngee Glenndle, has entered into a service agreement with the Company for an initial period of three years commencing from 25 June 2008.

the following table shows a breakdown of the annual remuneration of the Directors and the four key executives of the Group for the financial year ended 31 December 2009.


remuneration Bandsalary and

Other BenefitsPerformance

Bonus(1) directors’ fees(2)

% % %

DirectorsS$250,000 to S$500,000Sim Gok Hian (resigned on 9 october 2009) 43 57 –Sim Soon ngee Glenndle 48 52 –Below S$250,000Sunny Wong Fook Choy – – 100ng eng Ho – – 100Ho Chew thim – – 100ng Chee Keong – – 100

Key executivesS$250,000 to S$499,999none – – –Below S$250,000 Dominic Chang 90 10 –Wong Chin Hin 87 13 –Benjamin Chan 86 14 –Sim Wei Wei 90 10 –

notes:

(1) performance bonus, the amounts of which are determined in accordance with the respective service agreement, will be paid in april 2010.

(2) Directors’ fees are subject to Shareholders’ approval at the aGM to be held on 23 april 2010.

Other than as specified above, there are no immediate family members of a Director or substantial Shareholder whose remuneration exceeds S$150,000 for the financial year ended 31 December 2009.

PrinciPle 10: accountaBility

the Board is accountable to the Shareholders while the management is accountable to the Board. as prescribed by the Code, the Board presents to Shareholders a balanced and understandable assessment of the Company’s performance, position and prospects. the management provides all Board members with management reports and accounts which represent balanced, understandable assessment of the Company’s performance, position and prospects on a regular basis.

It is the Board’s policy to provide to Shareholders with all important and price sensitive information. these are done through the SGXnet.



PrinciPle 11: audit coMMitteePrinciPle 12: internal controlsPrinciPle 13: internal audit

the audit Committee (“ac”) comprises three members, all of whom are independent non-executive Directors:

Ho Chew thim Chairman, Independent Directorng eng Ho Member, Independent DirectorSunny Wong Fook Choy Member, lead Independent Director

the aC reviews with the independent auditor of the Company (“independent auditor”), the findings on the audit of the financial statements of the Group. It also reviews the effectiveness of the Group’s internal controls, including financial, operational and compliance controls and risk management. It undertakes the following principal functions:

• reviews with the Independent auditor the audit plan and its report on the weaknesses of internal accounting controls arising from the statutory audit;

• Reviews the half-year and annual financial statements of the Group before submission to the Board for approval, focusing, in particular, on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, compliance with accounting standards as well as compliance with any stock exchange and statutory/regulatory requirements;

• Reviews the adequacy of the Group’s internal financial controls, operational and compliance controls and risk management policies and systems;

• reviews the assistance given by management to the Independent auditor, and discusses problems and concerns, if any, arising from the statutory audit, with the management;

• reviews and discusses with the Independent auditor any suspected fraud and irregularity, or suspected infringement of any relevant laws, rules and regulations, which has or is likely to have a material impact on the Group’s operating results or financial position, and management response;

• reviews the independence and objectivity of the Independent auditor;

• reviews non-audit services performed by the Independent auditor to ensure that the nature and extent of such services will not prejudice the independence and objectivity of the Independent auditor before recommending to the Board;

• Considers the appointment and re-appointment of the Independent auditor and approve the remuneration and terms of engagement of the Independent auditor; and

• reviews transactions falling within the scope of Chapter 9 of the SGX-St listing Manual Section B: rules of Catalist (“catalist rules”).


the aC shall also undertake:

• Such other reviews and projects as may be requested by the Board and report to the Board its findings from time to time on matters arising and requiring the attention of the aC; and

• Such other functions and duties as may be required by statute or the Catalist rules, and by such amendments made thereto from time to time.

to effectively discharge its responsibility, the aC has full access to, and the co-operation of, the management and has full discretion to invite any Director and executive Director to attend its meetings. Full resources are made available to the aC to enable it to discharge its function properly.

With the assistance of the Independent Auditor, management has identified the main business processes and the associated financial and operational risks, and developed a set of minimum acceptable controls to address the key risks. Based on the review by the AC, the Board is satisfied that the internal controls and risks management process of the Group are adequate to safeguard shareholders’ interest and the Company’s assets.

the Group has appointed an external party (“internal auditor”) in February 2010 to perform the internal audit function of the Group in order to satisfy and comply with the requirements of best practices set out in the Code. the Internal auditor reports directly to the aC on audit related matters and reports to the Financial Controller of the Company on administrative-related matters. the Internal auditor plans its audit schedules in consultation with, but independent of, the management. the audit schedules are approved by the aC.

the Internal auditor has met the standards as set out by the Standards for the professional practice of Internal auditing set by the Institute of Internal auditors.

In January 2010, the Group put in place a Whistle Blowing policy (the “Policy”), which provides a channel for employees of the Group and other parties to report in confidence, without fear of reprisals, concerns about possible improprieties in financial reporting or other matters. The Policy is to assist the aC in managing allegations of fraud or other misconduct; disciplinary and civil actions that are initiated following the completion of the investigations are appropriate and fair; and actions taken to correct the weakness in the existing system of internal processes which allowed the perpetration of the fraud and/or misconduct and to prevent recurrence.

The Board affirms its overall responsibility for the Group’s systems of internal controls and noted that all internal control systems contain inherent limitations and no system of internal controls could provide absolute assurance against the occurrence of material errors, poor judgement in decision-making, human error, fraud or other irregularities.



as at the date of this annual report, the aC has met with the Independent auditors once to review any area of audit concern and review of non-audit services. there were no non-audit services provided during the financial year. Ad-hoc AC meetings may be carried out from time to time, as circumstances required.

PrinciPle 14: coMMunication with shareholdersPrinciPle 15: greater shareholder ParticiPation

the Board endeavours to maintain regular, timely and effective communication with Shareholders and investors. Half-yearly and full year results, including disclosure of information on material matters required by the Catalist rules, will be promptly disseminated to Shareholders through announcements made via the SGXnet followed by a news release, and are available on the Company’s website.

the Board welcomes the view of Shareholders on matters affecting the Group. Shareholders are informed of meetings through notices published in the newspapers and reports or circulars sent to all Shareholders.

at general meetings, Shareholders are given the opportunity to pose any questions to the Directors or management relating to the Group’s business or performances.

interested Person transactionsthe Company has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the aC and that the transactions are carried out on an arm’s length basis. there were no interested person transactions (of more than S$100,000) entered into by the Company or any of its subsidiaries for the financial year ended 31 December 2009.

Material contractsthere were no material contracts of the Company or its subsidiaries involving the interest of any Director or controlling Shareholder either still subsisting as at the financial year under review or if not subsisting, were entered into since 31 December 2009.

securities transactionsthe Company has adopted internal regulations with respect to dealings in securities by Directors and officers of the Group that are modelled on the Best Practice Guide of SGX-ST. The Directors, management and officers of the Group who have access to price-sensitive, financial or confidential information are not permitted to deal in the Company’s shares during the periods commencing one month before the announcement of the Group’s half-yearly and yearly results, and ending on the date of announcement of such result, or when they are in procession of unpublished price-sensitive information of the Group. In addition, the officers of the Company are advised not to deal with the Company’s shares for short-term considerations and are expected to observe the insider trading laws at all times even when dealing in securities within the permitted trading periods.



risk Management Policies and Processesthe Company does not have a risk Management Committee. the executive Directors and senior management assume the responsibilities of the risk management function. they regularly assess and review the Group’s business and operational environment in order to identify areas of significant business and financial risks, such as credit risks, foreign exchange risks, liquidity risks and interest rates risks, as well as appropriate measures to control and mitigate these risks.

use of Proceedspursuant to the Company’s initial public offering (“iPo”), the Company issued 22,500,000 new ordinary shares in the capital of the Company at S$0.28 each on 25 June 2008. of the total net proceeds of S$5.0 million raised from the Ipo, as at the date of this annual report, a total of S$1.0 million were utilised for the purchase of the Group’s new plant at no. 12 Kwong Min road.

sponsorDuring the financial year, the Company paid S$20,000 to its sponsor, CIMB Bank Berhad, Singapore Branch (“sponsor”), being advisory fees paid to the Sponsor in connection with the Company’s acquisition of recon propeller & engineering pte. ltd. and the business of Denfon engineering. Save as disclosed above, there were no non-sponsor fees paid to the Sponsor during the financial year ended 31 December 2009.


financial contents

Directors’ report 32 • Statement by Directors 35 • Independent auditor’s report 36Consolidated Statement of Comprehensive Income 38 • Balance Sheets 39 • Consolidated Statement of Changes in equity 40Consolidated Cash Flow Statement 41 • notes to the Financial Statements 42


The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 31 December 2009 and the balance sheet of the Company as at 31 December 2009.

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

Sim Soon ngee GlenndleSunny Wong Fook ChoyHo Chew thimng eng Hong Chee Keong (appointed on 9 october 2009)

arrangeMents to enaBle directors to acquire shares and deBenturesNeither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

directors’ interests in shares or deBenturesAccording to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the shares or debentures of the Company or its related corporations, except as follows:

holdings registered in nameof director or nominee

holdings in which director is deemed to have an interest

the companyas at

31.12.2009

as at 1.1.2009 or date of

appointment, if lateras at

31.12.2009

as at 1.1.2009 or date of

appointment, if later(no. of ordinary shares)

Sim Soon ngee Glenndle 31,000,000 31,000,000 67,000,000 67,000,000Sunny Wong Fook Choy 100,000 100,000 – –Ho Chew thim 100,000 100,000 – –ng eng Ho 100,000 100,000 – –

the directors’ interest in the ordinary shares of the Company as at 21 January 2010 were the same as those as at 31 December 2009.

By virtue of Section 7 of the Singapore Companies act (Cap. 50) (the “act”), Sim Soon ngee Glenndle is deemed to have interests in the shares of all the subsidiaries at the end of the financial year.

Directors’ report


directors’ contractual BenefitsSince the end of previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest, except as disclosed in the accompanying financial statements and in this report.

share oPtionsThere were no options granted during the financial year to subscribe for unissued shares of the Company or its subsidiaries.

No shares have been issued during the financial year by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries.

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

audit coMMitteeThe members of the Audit Committee at the end of the financial year were as follows:

Ho Chew thim (Chairman)Sunny Wong Fook Choyng eng Ho

all members of the audit Committee were independent and non-executive directors.

the audit Committee carried out its functions in accordance with Section 201B (5) of the Singapore Companies act. In performing those functions, the Committee carried out the following:

• reviews with the Independent auditor the audit plan and its report on the weaknesses of internal accounting controls arising from the statutory audit;

• Reviews the half-year and annual financial statements of the Group before submission to the Board for approval, focusing, in particular, on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, compliance with accounting standards as well as compliance with any stock exchange and statutory/regulatory requirements;

• Reviews the adequacy of the Group’s internal financial controls, operational and compliance controls and risk management policies and systems;

• reviews the assistance given by management to the Independent auditor, and discusses problems and concerns, if any, arising from the statutory audit, with the management;

• reviews and discusses with the Independent auditor any suspected fraud and irregularity, or suspected infringement of any relevant laws, rules and regulations, which has or is likely to have a material impact on the Group’s operating results or financial position, and management response;


audit coMMittee (continued)• reviews the independence and objectivity of the Independent auditor;

• reviews non-audit services performed by the Independent auditor to ensure that the nature and extent of such services will not prejudice the independence and objectivity of the Independent auditor before recommending to the Board; and

• Considers the appointment and re-appointment of the Independent auditor and approve the remuneration and terms of engagement of the Independent auditor.

the audit Committee has recommended that nexia tS public accounting Corporation be nominated for re-appointment as independent auditor at the forthcoming annual General Meeting of the Company.

indePendent auditorthe independent auditor, nexia tS public accounting Corporation, has expressed its willingness to accept re-appointment.

on behalf of the directors

sim soon ngee glenndle Director

sunny wong fook choyDirector

5 april 2010

Directors’ report (continued)


In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 38 to 71 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2009 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and

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

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

on behalf of the directors

sim soon ngee glenndle Director

sunny wong fook choyDirector

5 april 2010

Statement by Directors


We have audited the accompanying financial statements of Mencast Holdings Ltd (the “Company”) and its subsidiaries (the “Group”) set out on pages 38 to 71, which comprise the balance sheets of the Company and of the Group as at 31 December 2009, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement of the Group for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies act (Cap. 50) (the “act”) and Singapore Financial reporting Standards. this responsibility includes:

(a) devising and maintaining a system of internal accounting control sufficient to provide a 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 profit and loss accounts and balance sheets and to maintain accountability of assets;

(b) selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on auditing. those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.

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

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

Independent auditor’s reportto the Members of Mencast Holdings ltd


OpinionIn our opinion,

(a) the balance sheet of the Company and the consolidated financial statements of the Group are properly drawn up in accordance with the provisions of the act and Singapore Financial reporting Standards so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2009 and the results, changes in equity and cash flows of the Group for the financial year ended on that date; and

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

nexia ts Public accounting corporationPublic Accountants and Certified Public Accountants

Director-in charge: Henry SK tanAppointed since financial year ended 31 December 2008

Singapore5 april 2010


note 2009 2008$’000 $’000

revenue 4 26,274 25,063

Cost of sales (13,835) (13,778)

Gross profit 12,439 11,285

other gains – net 5 1,286 137

expenses– administrative (4,663) (4,062)– Finance 8 (330) (119)

Profit before income tax 8,732 7,241

Income tax expense 9 (1,699) (1,438)

Net profit 7,033 5,803

other comprehensive income:Fair value gain on financial assets, available-for-sale 16 47 –

total comprehensive income 7,080 5,803

Net profit attributable to equity holders of the Company 7,033 5,803

total comprehensive income attributable to equity holders of the Company 7,080 5,803

earnings per share (cents per share)– Basic and diluted 10 4.71 4.25

Consolidated Statement of Comprehensive IncomeFor the financial year ended 31 December 2009

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


group companynote 2009 2008 2009 2008

$’000 $’000 $’000 $’000

assetscurrent assetsCash and cash equivalents 11 12,706 8,107 4,101 4,369trade and other receivables 12 6,460 4,868 2,348 1,298Inventories 13 2,068 3,025 – –other current assets 14 150 117 – –

21,384 16,117 6,449 5,667

non-current assetsproperty, plant and equipment 15 22,145 17,050 – –Deposits for purchase of property,

plant and equipment 83 657 – –Financial assets, available-for-sale 16 127 –Intangible assets 17 4,781 – – –Club memberships 28 – – –Investments in subsidiaries 18 – – 20,900 12,500

27,164 17,707 20,900 12,500total assets 48,548 33,824 27,349 18,167

liaBilities Current liabilitiestrade and other payables 19 5,256 6,402 6,544 886Borrowings 20 3,677 1,854 – –Current income tax liabilities 1,370 1,342 – –

10,303 9,598 6,544 886

non-current liabilitiesother payable 19 1,800 – 1,800 –Borrowings 20 7,076 2,937 – –Deferred income tax liabilities 22 1,233 558 – –

10,109 3,495 1,800 –total liabilities 20,412 13,093 8,344 886net assets 28,136 20,731 19,005 17,281

equity Capital and reserves attributable to equity

holders of the CompanyShare capital 23 19,699 17,899 19,699 17,899Fair value reserve 47 – – –retained earnings/(accumulated losses) 8,390 2,832 (694) (618)total equity 28,136 20,731 19,005 17,281


Balance Sheetsas at 31 December 2009


note share capitalretained earnings

fair value reserve total

s$’000 s$’000 s$’000 s$’000

group

Balance as at 1 January 2009 17,899 2,832 – 20,731

Shares issued for acquisition of subsidiary 23 1,800 – – 1,800

Dividend 24 – (1,475) – (1,475)

total comprehensive income for the financial year – 7,033 47 7,080

Balance as at 31 December 2009 19,699 8,390 47 28,136

Balance as at 1 January 2008 2,000 10,529 – 12,529

Share swap pursuant to restructuring exercise (2,000) (10,500) – (12,500)

Shares issued for acquisition of subsidiaries 12,500 – – 12,500

Shares issued pursuant to the Ipo 6,300 – – 6,300

Share issue expenses (901) – – (901)

Dividend declared 24 – (3,000) – (3,000)

total comprehensive income for the financial year – 5,803 – 5,803

Balance as at 31 December 2008 17,899 2,832 – 20,731

Consolidated Statement of Changes in equityFor the financial year ended 31 December 2009



groupnote 2009 2008

$’000 $’000

Cash flows from operating activitiesNet profit 7,033 5,803

adjustments for:– Income tax 1,699 1,438– Depreciation of property, plant and equipment 1,607 983 – excess of fair value of business acquired over purchase consideration (766) –– loss/(Gain) on disposal of property, plant and equipment 94 (33)– Impairment of financial assets, available-for-sale 24 –– Interest expense 330 119

10,021 8,310Change in working capital, net of effects from acquisitions of subsidiary

and business– trade and other receivables 93 1,225– Inventories 957 (515)– other current assets (18) (40)– trade and other payables (3,421) (1,057)Cash generated from operations 7,632 7,923

Income tax paid (1,472) (1,574)net cash provided by operating activities 6,160 6,349

Cash flows from investing activitiesacquisition of subsidiary and business, net of cash acquired 11 (1,523) –Acquisition of financial assets, available-for-sale (45) –purchase of property, plant and equipment (1,738) (6,223)proceeds from disposal of property, plant and equipment 295 43 net cash used in investing activities (3,011) (6,180)

Cash flows from financing activitiesDividend paid (1,475) (1,500)repayment of borrowings (126) (70)Repayment of finance lease liabilities (1,619) (515)Interest paid (330) (119)proceeds from borrowings 5,000 2,500proceeds from issuance of shares – 5,399Net cash provided by financing activities 1,450 5,695

net increase in cash and cash equivalents 4,599 5,864Cash and cash equivalents at beginning of financial year 8,107 2,243Cash and cash equivalents at end of the financial year 11 12,706 8,107


Consolidated Cash Flow StatementFor the financial year ended 31 December 2009


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

The financial statements of the Group and the Company for the financial year ended 31 December 2009 were authorised for issue in accordance with a resolution of directors on 5 april 2010.

1 corPorate inforMationThe Company was incorporated in the Republic of Singapore with registered office and principal place of business at no. 7 tuas View Circuit, Singapore 637642. the Company is listed on the Singapore exchange Securities trading limited – Catalist.

In 2008, the Group carried out a restructuring exercise (the “restructuring exercise”) to rationalise and streamline the corporate structure, resulting in the Company becoming the holding company of the Group. Details of the restructuring exercise are disclosed in the Company’s offer Document dated 17 June 2008.

the principal activity of the Company is that of investment holding.

The principal activities of the subsidiaries are disclosed in Note 18 to the financial statements.

2 suMMary of significant accounting Policies2.1 Basis of preparation

These financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. the areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

Interpretations and amendments to published standards effective in 2009on 1 January 2009, the Group adopted the new or amended FrS and Interpretations to FrS (“Int FrS”) that are mandatory for application from that date. Changes to the Group’s accounting policies have been made as required, in accordance with the transitional provisions in the respective FrS and Int FrS.

notes to the Financial StatementsFor the financial year ended 31 December 2009


2 suMMary of significant accounting Policies (continued)2.1 Basis of preparation (continued)

the following are the new or revised FrS and Int FrS that are relevant to the Group:

• FrS 1 (revised) presentation of financial statements (effective from 1 January 2009). the revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity. all non-owner changes in equity are shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). the Group has chosen to adopt the former alternative. Where comparative information is restated or reclassified, a restated balance sheet is required to be presented as at the beginning comparative period. there is no restatement of the balance sheet as at 1 January 2008 in the current financial year.

• FrS 108 operating segments (effective from 1 January 2009) replaces FrS 14 Segment reporting, and requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. the adoption of FrS 108 does not have an impact to the Group.

• Amendment to FRS 107 Improving disclosures about financial statements (effective from 1 January 2009). the amendment requires enhanced disclosures about fair value measurement and liquidity risk. the adoption of the amendment results in additional disclosures but does not have an impact on the accounting policies and measurement bases adopted by the Group.

2.2 group accounting(i) subsidiaries

Subsidiaries are entities over which the Group has power to govern the financial and operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights. the existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

the acquisition of subsidiaries under common control of the Company’s shareholders have been consolidated using the “pooling-of-interest” method, as the restructuring exercise completed as described in note 1 is a legal reorganization of entities under common control. In applying the “pooling-of-interest” method, the consolidated statement of comprehensive income and the consolidated cash flow statement include the result of operations and cash flows of the companies comprising the Group as at 30 May 2008 as if the structure of the Group had been in existence prior to that date. the assets and liabilities are brought into the consolidated balance sheet at their existing carrying amount. any difference between the amount recorded as share capital issued and the amount for the share capital acquired are adjusted against equity.


notes to the Financial Statements (continued)

2 suMMary of significant accounting Policies (continued)2.2 group accounting (continued)

(i) subsidiaries (continued)the acquisition of subsidiaries not under common control of the Company’s shareholders is consolidated using the purchase method of accounting. under the purchase method, the cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the dates of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition, irrespective of the extent of non-controlling interest. please refer to the paragraph “Intangible assets - Goodwill” for the accounting policy on goodwill on acquisition of subsidiaries. Subsidiaries are consolidated from the date on which control is transferred to the Group. they are de-consolidated from the date on which control ceases.

In preparing the consolidated financial statements, transactions, balances and unrealized gains on transactions between group entities are eliminated. unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

please refer to the paragraph “Investments in subsidiaries” for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.

2.3 revenue recognitionrevenue comprises the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Group’s activities. revenue is presented, net of goods and services tax, rebates and discounts, and after eliminating sales within the Group. revenue is recognised as follows:

(i) Sale of goodsrevenue from sale of goods is recognised when the Group has delivered the products to the customer, the customer has accepted the products and the collectibility of the related receivables is reasonably assured.

(ii) rendering of servicesrevenue from reconditioning services is recognised in the period in which the services are rendered and accepted by customers. labour and overhead costs incurred relating to reconditioning services are deferred and classified as “deferred cost” under “inventories” until the revenue is recognised.

(iii) Interest incomeInterest income is recognised using the effective interest method.


2 suMMary of significant accounting Policies (continued)2.4 Property, plant and equipment

Measurementproperty, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

the cost of an item of property, plant and equipment includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

depreciationDepreciation is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives. the estimated useful lives are as follows:

useful livesMachinery and equipment – 10 yearsFurniture and fittings – 5 yearsOffice equipment – 5 yearsMotor vehicles – 5 yearsComputers – 1 yearleasehold building - 60 years

no depreciation is provided on construction-in-progress.

the residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. the effects of any revision are recognised in profit or loss when the changes arise.

subsequent expenditureSubsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance expenses are recognised in profit or loss when incurred.

disposalon disposal of an item of property, plant and equipment, the difference between the disposal proceeds and its carrying amount is recognised in the statement of comprehensive income within “other gains – net”.

2.5 intangible assetsgoodwill on acquisitionGoodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets and contingent liabilities of the acquired subsidiaries at the date of acquisition.



2 suMMary of significant accounting Policies (continued)2.5 intangible assets (continued)

goodwill on acquisition (continued)Goodwill on subsidiaries is recognised separately as “intangible assets” and carried at cost less accumulated impairment losses.

Gains and losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the entity sold.

2.6 investments in subsidiariesInvestments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s balance sheet. on disposal of investments in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investments are recognised in profit or loss.

2.7 Impairment of non-financial assets (a) goodwill

Goodwill is tested for impairment annually and whenever there is indication that the goodwill may be impaired.

For the purpose of impairment testing of goodwill, goodwill is allocated to each of the Group’s cash-generating-units (“CGU”) expected to benefit from synergies arising from the business combination.

an impairment loss is recognised when the carrying amount of a CGu, including the goodwill, exceeds the recoverable amount of the CGu. the recoverable amount of a CGu is the higher of the CGu’s fair value less cost to sell and value-in-use.

The total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGu and then to the other assets of the CGu pro-rata on the basis of the carrying amount of each asset in the CGu.

an impairment loss on goodwill is recognised as an expense and is not reversed in a subsequent period.

(b) Property, plant and equipment investments in subsidiariesproperty, plant and equipment and investments in subsidiaries are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash inflows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the CGu to which the asset belongs.


2 suMMary of significant accounting Policies (continued)2.7 Impairment of non-financial assets (continued)

(b) Property, plant and equipment investments in subsidiaries (continued)If the recoverable amount of the asset (or CGu) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGu) is reduced to its recoverable amount. the difference between the carrying amount and recoverable amount is recognised as an impairment loss in profit or loss.

an impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. the carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognised for the asset in prior years.

A reversal of impairment loss for an asset other than goodwill is recognised in the profit or loss.

2.8 financial assets(a) Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, held-to-maturity, and available-for-sale. The classification depends on the nature of the asset and the purpose for which the assets were acquired. Management determines the classification of its financial assets at initial recognition. There are no financial assets categorised at fair value through profit and loss and held-to-maturity.

(i) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. they are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non-current assets. loans and receivables are presented as “trade and other receivables” and “cash and cash equivalents” on the balance sheet.

(ii) Financial assets, available-for-saleFinancial assets, available-for-sale are non-derivatives that are either designated in this category or not classified in any of the other categories. They are presented as non-current assets unless management intends to dispose of the assets within 12 months after the balance sheet date.

(b) recognition and derecognitionRegular way purchases and sales of financial assets are recognised on trade date - the date on which the Group commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognised in profit or loss. Any amount in the fair value reserve relating to that asset is transferred to profit or loss.



2 suMMary of significant accounting Policies (continued)2.8 financial assets (continued)

(c) MeasurementFinancial assets are initially recognised at fair value plus transaction costs.

Financial assets, available-for-sale are subsequently carried at fair value. loans and receivables are subsequently carried at amortised cost using the effective interest method.

Interest and dividend income on financial assets, available-for-sale are recognised separately in income. Changes in the fair values of available-for-sale debt securities (i.e. monetary items) denominated in foreign currencies are analysed into currency translation differences on the amortised cost of the securities and other changes; the currency translation differences are recognised in profit or loss and the other changes are recognised in the fair value reserve. Changes in fair values of available-for-sale equity securities (i.e. non-monetary items) are recognised in the fair value reserve, together with the related currency translation differences.

(d) impairmentthe Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment when such evidence exists.

(i) Loans and receivables Significant financial difficulties of the debtor, probability that the debtor will enter

bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired.

the carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in profit or loss.

The allowance for impairment loss account is reduced through profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. the carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost had no impairment been recognised in prior periods.

(ii) Financial assets, available-for-saleIn addition to the objective evidence of impairment described in note 2.8 (d)(i), a significant or prolonged decline in the fair value of an equity security below its cost is considered as an indicator that the available-for-sale financial asset is impaired.


2 suMMary of significant accounting Policies (continued)2.8 financial assets (continued)

(d) impairment (continued)(ii) Financial assets, available-for-sale (continued)

If any evidence of impairment exists, the cumulative loss that was recognised in the fair value reserve is reclassified to profit or loss. The cumulative loss is measured as the difference between the acquisition cost (net of any principal repayments and amortisation) and the current fair value, less any impairment loss previously recognised as an expense. the impairment losses recognised as an expense on equity securities are not reversed through profit or loss.

2.9 inventoriesInventories are carried at the lower of cost and net realisable value. Cost is determined using the first-in-first-out method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses.

2.10 BorrowingsBorrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date.

2.11 trade and other payablestrade and other payables are initially recognised at fair value, and subsequently carried at amortised cost, using the effective interest method.

2.12 Fair value estimation of financial assets and liabilitiesThe fair values of financial instruments traded in active markets (such as exchange-traded and over-the-counter securities and derivatives) are based on quoted market prices at the balance sheet date. The quoted market prices used for financial assets are the current bid prices; the appropriate quoted market prices for financial liabilities are the current asking prices.

The fair value of current financial assets and liabilities carried at amortised cost approximate their carrying amounts.



2 suMMary of significant accounting Policies (continued)2.13 leases

When the Group is the lessee:Finance leasesleases of property, plant and equipment where the Group assumes substantially the risks and rewards incidental to ownership are classified as finance leases. The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as property, plant and equipment and finance lease liabilities respectively at the inception of the leases on the lower of the fair values of the leased assets and the present values of the minimum lease payments.

Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in profit or loss on a basis that reflects a constant periodic rate of interest on the remaining balance of the finance lease liability.

Operating leasesLeases of property, plant and equipment where a significant portion of the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the period of the lease.

2.14 income taxesCurrent income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

a deferred income tax liability is recognised on temporary differences arising on investments in subsidiaries, associated companies and joint ventures, except where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

a deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.


2 suMMary of significant accounting Policies (continued)2.14 income taxes (continued)

Deferred income tax is measured:(i) at the tax rates that are expected to apply when the related deferred income tax asset is

realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date; and

(ii) based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.

Current and deferred income taxes are as income or expenses in profit or loss, expect to the extent that the tax arises from a business combination or a transaction which is recognised directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on acquisition.

2.15 Provisions for other liabilities and charges provisions for other liabilities and charges are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated.

2.16 employee compensation(i) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund, on a mandatory, contractual or voluntary basis. the Group has no further payment obligations once the contributions have been paid. The Group’s contributions to defined contribution plans are recognised as employee compensation expense when they are due.

(ii) employee leave entitlementemployee entitlements to annual leave are recognised when they accrue to employees. a provision is made for the estimated liabilities for annual leave as a result of services rendered by employees to balance sheet date.

2.17 currency translation(a) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Singapore dollars, which is the Company’s functional currency.

(b) transactions and balancestransactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in profit or loss.



2 suMMary of significant accounting Policies (continued)2.18 segment reporting

operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors whose members are responsible for allocating resources and assessing performance of the operating segments.

the Group is principally engaged in the manufacture and service of sterngear equipment. no separate segmental information by business segment is presented, except for segment revenue, as both business segments use the same resources and share the same costs. Management is of the opinion that is not practicable to separate the costs, assets and liabilities for each business segment.

2.19 share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issuance of new equity instruments, other than for the acquisition of businesses, are taken to equity as a deduction, net of tax, from the proceeds.

2.20 dividends to company’s shareholdersDividends to the Company’s shareholders are recognised when the dividends are approved for payment.

2.21 government grantsGrants from the government are recognised as a receivable at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions.

Government grants receivable are recognised as income over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Government grants relating to expenses are shown separately as other income.

Government grants relating to assets are deducted against the carrying amount of the assets.

3 critical accounting estiMates, assuMPtions and judgeMentsestimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group is subject to the uncertainty caused by the world financial crisis. The world economy has experienced significant downward pressure and credit has become very tight. Significant judgment is required to determine the fair value and forecasts of business that may have impact on cashflow, collectibility and realisability of assets. In making these judgments, the Group has relied on past experience and their view of the economy.


3 critical accounting estiMates, assuMPtions and judgeMents (continued)(a) Impairment of investments and financial assets

the Group and the Company follow the guidance of FrS 36 Impairment of Assets and FrS 39 Financial Instruments: Recognition and Measurement in determining when an investment or financial asset is other-than-temporary impaired and this requires significant judgement. The Group and the Company evaluate, among other factors, the duration and extent to which the fair value of an investment or financial asset is less than its cost; and the financial health and near-term business outlook for the investment of financial asset, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

(b) depreciation of property, plant and equipmentproperty, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 1 to 60 years. the carrying amounts of the Group’s property, plant and equipment as at 31 December 2009 were $22,145,000 (2008: $17,050,000). Changes in the expected level of usage could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

4 revenue

group2009 2008

$’000 $’000

Sale of goods – sterngear manufacturing 14,281 14,731Service income – sterngear services 11,993 10,332

total sales 26,274 25,063

5 other gains – netgroup

2009 2008$’000 $’000

Interest income 7 15(loss)/gain on disposal of property, plant and equipment (94) 33excess of fair value over purchase consideration 766 –Write back of allowance for impairment of trade receivables 225 –Gain on foreign exchange 50 –Government grant – job credit scheme 184 –other income 148 89

1,286 137

the Jobs credit scheme is a cash grant introduced in the Singapore Budget 2009 to help businesses preserve jobs in the economic downturn. the Jobs Credit will be paid to eligible employers in 2009 in four payments and the amount an employer can receive would depend on the fulfilment of the conditions as stated in the scheme.



6 eXPenses By naturegroup

2009 2008$’000 $’000

purchases of raw materials and consumables 6,495 9,660advertisement 93 48Depreciation (note 15) 1,607 983Directors’ fees 144 245employee compensation (note 7) 7,037 5,165entertainment and refreshment 430 362Freight and handling charges 246 234upkeep and transport expense 195 215property tax 77 64printing and stationery 93 43professional fee 222 142rental expense 150 112telephone expense 59 44Insurance 174 79other expenses 519 778Changes in inventories 957 (334)total cost of sales and administrative expenses 18,498 17,840

7 eMPloyee coMPensationgroup

2009 2008$’000 $’000

Salaries and wages 6,674 4,818Employer’s contribution to defined contribution plans including Central

provident Fund 363 3477,037 5,165

8 finance eXPensegroup

2009 2008$’000 $’000

Interest expense:– Finance lease liabilities 130 76– Bank borrowings 200 43

330 119


9 incoMe taXgroup

2009 2008$’000 $’000

Tax expense attributable to profit is made up of: Current financial year– Current income tax 1,217 1,438– Deferred income tax (note 22) 560 –

1,777 1,438 Over provision of current income tax in prior financial years (78) –

1,699 1,438

The tax expense on profit differs from the amount that would arise using the Singapore standard rate of income tax as follows:

group2009 2008

$’000 $’000

Profit before income tax 8,732 7,241

Income tax using Singapore tax rate at 17% (2008: 18%) 1,484 1,303effects of: – Change in Singapore tax rate (note 22) (31) –– expenses not deductible for tax purposes 329 40– Statutory tax exemption (39) (27)– Income not subject to tax (57) (15)– Deferred income tax asset not recognised 84 137– other 7 –

1,777 1,438

10 earnings Per shareBasic earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year.

group2009 2008

Net profit attributable to equity holders of the Company (S$’000) 7,033 5,803

Weighted average number of ordinary shares outstanding for basic earnings per share (’000) 149,402 136,680

Basic and diluted earnings per share (cents per share) 4.71 4.25

There are no dilutive potential ordinary shares during the financial year.



11 cash and cash equivalentsgroup company

2009 2008 2009 2008$’000 $’000 $’000 $’000

Cash at bank and on hand 8,706 4,107 101 369Short-term bank deposits 4,000 4,000 4,000 4,000

12,706 8,107 4,101 4,369

acquisitions of subsidiary and businesson 23 July 2009, the Company acquired 100% of the issued share capital of recon propeller & engineering pte ltd (“recon”) for a purchase consideration of $8,400,000 (note 18).

on the same date, the Company acquired the business of Denfon engineering for a cash consideration of $200,000.

The aggregate effects of the acquisitions of subsidiary and business on the cash flows of the Group were:group

acquisition of subsidiary acquisition of business

at fairvalues

carryingamounts inacquiree’s

booksat fairvalues

carryingamounts inacquiree’s

books$’000 $’000 $’000 $’000

Identifiable assets and liabilitiesCash and cash equivalents 1,532 1,532 145 145trade and other receivables 1,306 1,341 379 502property, plant and equipment (note 15) 1,636 1,769 497 230Club memberships 28 28 – –Financial assets, available-for-sale (note 16) 58 120 – –other current assets 9 9 6 6total assets 4,569 4,799 1,027 883

trade and other payables (413) (413) (61) (61)Borrowings (61) (61) – –Current income tax liabilities (361) (230) – –Deferred income tax liabilities (note 22) (115) (115) – –total liabilities (950) (819) (61) (61)

Identifiable net assets acquired 3,619 3,980 966 822Goodwill (note 17)/(excess of fair value over

purchase consideration) (note 5) 4,781 (766)purchase consideration 8,400 200Consideration paid via issuance of shares

(note 23) (1,800) –unpaid portion of purchase consideration

(note 19) (3,600) –Cash consideration paid 3,000 200less: cash and cash equivalent in subsidiary/

business acquired (1,532) (145)Net cash outflow on acquisitions 1,468 55


12 trade and other receivaBlesgroup company

2009 2008 2009 2008$’000 $’000 $’000 $’000

trade receivables 6,296 4,372 – –less: allowance for impairment of trade

receivables (114) (249) – –trade receivables–net 6,182 4,123 – –

advances to suppliers 114 722 – –Due from subsidiaries (non–trade) – – 2,264 1,298Due from directors (non–trade) – 23 – –other receivable 164 – 84 –

6,460 4,868 2,348 1,298

the non-trade amounts due from subsidiaries and directors are unsecured, interest-free and are repayable on demand.

13 inventoriesgroup company

2009 2008 2009 2008$’000 $’000 $’000 $’000

raw materials 1,095 307 – –Work–in–progress 904 2,511 – –Deferred cost 69 207 – –

2,068 3,025 – –

the cost of inventories recognised as an expense and included in “cost of sales” amounted to $7,452,000 (2008: $9,326,000).

14 other current assetsgroup company

2009 2008 2009 2008$’000 $’000 $’000 $’000

Deposits 72 83 - -prepayments 78 34 - -

150 117 - -



15 ProPerty, Plant and equiPMent

Machinery furniture construction and and Office Motor leasehold in

equipment fittings equipment vehicles computers Building Progress total

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

2009Costas at 1 January 2009 7,120 242 162 1,246 164 11,829 675 21,438acquisition of subsidiary

and business (note 11) 547 20 1 162 3 1,400 – 2,133additions 3,923 12 34 561 17 46 365 4,958Disposals (1,091) – – (163) – – – (1,254)as at 31 December 2009 10,499 274 197 1,806 184 13,275 1,040 27,275

Accumulated depreciationas at 1 January 2009 2,471 93 74 806 122 822 – 4,388Depreciation charge 1,077 39 33 239 54 165 – 1,607Disposals (737) – – (128) – – – (865)as at 31 December 2009 2,811 132 107 917 176 987 – 5,130

net book valueEnd of financial year 7,688 142 90 889 8 12,288 1,040 22,145

Group2008Cost 4,705 79 136 1,286 83 6,072 2,403 14,764as at 1 January 2008 1,770 163 26 61 81 4,010 675 6,786additions 656 – – – – 1,747 (2,403) –Disposals (11) – – (101) – – – (112)as at 31 December 2008 7,120 242 162 1,246 164 11,829 675 21,438

Accumulated depreciationas at 1 January 2008 1,957 77 49 704 83 637 – 3,507Depreciation charge 525 16 25 193 39 185 – 983Disposals (11) – – (91) – – – (102)as at 31 December 2008 2,471 93 74 806 122 822 – 4,388

net book valueEnd of financial year 4,649 149 88 440 42 11,007 675 17,050

Included in additions are machinery and equipment and motor vehicles acquired under finance leases amounting to $2,646,000 (2008: $1,490,000)

The carrying amounts of machinery and equipment and motor vehicles held under finance leases are $5,363,000 (2008: $3,228,000) at the balance sheet date (note 21).

Bank loans are secured by the leasehold building of the Group with carrying amounts of $10,917,000 (2008: $11,007,000) (note 20).


16 financial assets, availaBle-for-sale

group2009 2008

$’000 $’000

acquisition of subsidiary (note 11) 58 –additions 186 –Disposals (164) –Fair value gain recognised in equity 47 –End of financial year 127 –

Available-for-sale financial assets are analysed as follows:

group2009 2008

$’000 $’000listed equity securities– Singapore 10 –– Malaysia 117 –

127 –

17 intangiBle assetgroup

2009 2008$’000 $’000

goodwill arising from consolidationacquisition of subsidiary (note 11) 4,781 –End of financial year 4,781 –

impairment tests for goodwill on consolidation Goodwill is allocated to the Group’s cash-generating units (“CGU’s”) identified according to business segments.

The recoverable amount of a CGU was determined based on value-in-use. Cash flow projections used in the value-in-use calculations were based on financial budgets approved by management covering a five-year period. There was no impairment of goodwill on the acquisition of Recon propeller & engineering pte ltd as at the balance sheet date. Key assumptions used for value-in-use calculations:

Gross margin 15 – 20%Growth rate 5 – 8%Discount rate 11%



18 investMents in suBsidiariescompany

2009 2008$’000 $’000

equity investments at costBeginning of financial year 12,500 –acquisition (note 11) 8,400 12,500End of financial year 20,900 12,500

Details of subsidiaries are:

name of companies Principal activities

country of business/ incorporation

equity holding2009

%2008

%

Mencast Marine pte ltd (a) Manufacture, supply and refurbishment, and reconditioning of sterngear equipment

Singapore 100 100

Mencast engineering pte ltd (a) Supply of sterngear equipment and Services

Singapore 100 100

Mencast Investment pte ltd (a) other investment holding company

Singapore 100 –

M.B.a. Heavy Industries pte ltd (a) Manufacture marine parts & equipment

Singapore 100 –

recon propeller & engineering pte ltd (a) Sterngear services Singapore 100 –

(a) audited by nexia tS public accounting Corporation, Singapore.

19 trade and other PayaBlesgroup company

2009 2008 2009 2008$’000 $’000 $’000 $’000

trade payables – non-related parties 802 1,715 – ––

advances from customers 989 1,655 –amounts due to subsidiary (non-trade) – – 4,153 665amounts due to former shareholders of recon

(non-trade) 3,600 – 3,600 –Dividends payable – 1,500 – –accrued operating expenses 1,526 1,449 591 221other payables 139 83 –

7,056 6,402 8,344 886less: non-current liabilityamount due to former shareholders of recon

(non-trade) (1,800) – (1,800) –5,256 6,402 6,544 886


19 trade and other PayaBles (continued)the non-trade amounts due to subsidiary and former shareholders of recon are unsecured, interest-free and are repayable on demand.

the amounts due to former shareholders of recon pertain to the remaining purchase consideration of $3,600,000. out of which $1,800,000 are payable within 12 months from acquisition date and another $1,800,000 payable within 24 months from acquisition date.

20 Borrowingsgroup company

2009 2008 2009 2008$’000 $’000 $’000 $’000

CurrentBank loans 2,247 1,048 – –Finance lease liabilities (note 21) 1,430 806 – –

3,677 1,854 – –

Non–CurrentBank loans 4,839 1,682 – –Finance lease liabilities (note 21) 2,237 1,255 – –

7,076 2,937 – –

total borrowings 10,753 4,791 – –

the exposure of the borrowings of the Group and of the Company to interest rate changes and the contractual reprising dates at the balance sheet dates are as follows:

group company2009 2008 2009 2008

$’000 $’000 $’000 $’000

6 months or less 1,880 601 – –6 – 12 months 1,797 1,253 – –1 – 5 years 6,479 1,992 – –over 5 years 597 945 – –

10,753 4,791 – –

(a) Security granted

the bank loans are secured by the Group’s properties (note 15) and corporate guarantees.

Finance lease liabilities of the Group are secured by the rights to the leased machinery and equipment and motor vehicles, which will revert to the lessor in the event of default by the Group.



20 Borrowings (continued)(b) Fair value of non-current borrowings

group company2009 2008 2009 2008

$’000 $’000 $’000 $’000

Bank borrowings 4,038 1,622 – –Finance lease liabilities (note 21) 2,237 1,255 – –

The fair values above are determined from the cash flow analyses, discounted at market borrowing rates of an equivalent instrument at the balance sheet date which the directors expect to be available to the Group as follows:

group company2009 2008 2009 2008

$’000 $’000 $’000 $’000

Bank borrowings 5.08% 3.55% – -Finance lease liabilities 2.81% 2.75% – -

21 finance lease liaBilities the Group leases certain machinery, equipment and motor vehicles from non-related parties under finance leases. The lease agreements do not have renewal clauses but provide the Group with options to purchase the leased assets at nominal values at the end of the lease term.

group2009 2008

$’000 $’000

Minimum lease payments due:– not later than one year 1,553 891– Between two and five years 2,405 1,378

3,958 2,269

Less: Future finance charges (291) (208)

Present value of finance lease liabilities 3,667 2,061

The present value of finance lease payable is analysed as follows:

– not later than one year 1,430 806– Between two and five years 2,237 1,255

3,667 2,061


22 deferred incoMe taX liaBilitiesDeferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The amounts, determined after appropriate offsetting, are shown on the balance sheet as follows:

group2009 2008

$’000 $’000

Deferred income tax liabilities to be settled after one year 1,233 558

Movement in deferred income tax account is as follows:group

2009 2008$’000 $’000

accelerated tax depreciationBeginning of financial year 558 558Change in Singapore tax rate (note 9) (31) –Tax credited to profit or loss (Note 9) 591 –acquisition of subsidiary (note 11) 115 –End of financial year 1,233 558

23 share caPitalgroup and company

2009 2008number of

ordinary shares amount

number of ordinary

shares amount’000 $’000 ‘000 $’000

Issued share capital:Beginning of the financial year 147,500 17,899 – –Issuance upon the completion of

restructuring exercise (after share split) – – 125,000 12,500Issuance of shares pursuant to initial

public offering – – 22,500 5,399Issuance of new shares pursuant to the

acquisition of subsidiary 7,566 1,800 – –End of the financial year 155,066 19,699 147,500 17,899

all issued ordinary shares are fully paid. there is no par value for these ordinary shares.

on 30 September 2009, the Company issued 7,566,000 ordinary shares for a total consideration of $1,800,000 as partial payment for the acquisition of subsidiary (note 11). the newly issued shares rank pari passu in all respects with the previously issued shares.

the holders of ordinary shares are entitled to receive dividends as and when declared by the Company. all ordinary share carry one vote per share without restrictions.



24 dividendsgroup and company2009 2008

$’000 $’000

Ordinary dividends Final exempt dividend paid in respect of the previous financial year of $0.01

(2008: $1.50) per share 1,475 1,500

At the Annual General Meeting on 23 April 2010, a final exempt (one-tier) dividend of $0.01 per share amounting to $1,551,000 will be recommended. These financial statements do not reflect this dividend, which will be accounted for in shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 December 2010.

25 coMMitMents (a) Capital commitments

Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows:

group2009 2008

$’000 $’000

property, plant and equipment – 60

(b) lessee – operating lease commitmentsthe Company leases land under non-cancellable operating lease agreements. the leases have varying terms, escalation clauses and renewal rights.

the future aggregate minimum lease payments under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows:

group2009 2008

$’000 $’000

not later than one year 690 134Later than one year but not later than five years 2,759 631Later than five years 15,797 4,001

19,246 4,766


26 related Party transactionsIn addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties at terms agreed between the parties:

(a) Key management personnel compensationgroup

2009 2008$’000 $’000

Salaries and wages 1,420 1,267Post-employment benefits – contribution to CPF 50 66

1,470 1,333

Included in the above is total compensation to directors of the Company amounting to $936,000 (2008: $852,000).

27 financial risk ManageMent Financial risk factorsthe Group’s activities expose it to market risk (including currency risk and interest rate risk), credit risk and liquidity risk. the Group’s overall risk management strategy seeks to minimize adverse effects from the unpredictability of financial markets on the Group’s financial performance.

The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group. this includes establishing policies such as authority levels, oversight responsibilities, risk identification and measurement and exposure limits.

(a) Market risk(i) Currency risk

The Group’s exposure to currency risk is not significant as its operates mainly in Singapore. revenue and expenses are predominantly denominated in Singapore dollars.

the Group’s currency exposure based on the information provided to key management is as follows:

sgd usd total$’000 $’000 $’000

as at 31 December 2009financial assetsCash and bank balances 12,706 – 12,706trade and other receivables 6,460 – 6,460

19,166 – 19,166

financial liabilitiestrade and other payables (7,024) (32) (7,056)Bank loan (7,086) – (7,086)Finance lease liabilities (3,667) – (3,667)

(17,777) (32) (17,809)Net financial assets/(liabilities) 1,389 (32) 1,357Less: net financial liabilities/(assets) denominated in

the functional currencies of respective entities (1,389) – (1,389)Currency exposure – (32) (32)



27 financial risk ManageMent (continued)Financial risk factors (continued)(a) Market risk (continued)

(i) Currency risk (continued)sgd usd total

$’000 $’000 $’000as at 31 December 2008financial assetsCash and bank balances 8,107 – 8,107trade and other receivables 4,868 – 4,868

12,975 – 12,975financial liabilitiestrade and other payables (5,890) (512) (6,402)Bank loan (2,730) – (2,730)Finance lease liabilities (2,061) – (2,061)

(10,681) (512) (11,193)Net financial assets/(liabilities) 2,294 (512) 1,782Less: net financial liabilities/(assets) denominated in

the functional currencies of respective entities (2,294) – (2,294)Currency exposure – (512) (512)

The Company is not exposed to currency risk since all its financial assets and liabilities as at 31 December 2009 are denominated in Singapore dollars.

(ii) Cash flow and fair value interest rate risksCash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest rate risk mainly arises from bank loan at floating interest rate. The Group manages its interest rate risk by keeping bank loan to the minimum required to sustain the operations of the Group.

the possible change in the movement in the SGD interest rate with all other variables held constant assessed by management is 1% (2008: 1%). Management has assessed the impact to net profit as being not material.


27 financial risk ManageMent (continued)Financial risk factors (continued)(b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, and obtaining cash deposits where appropriate to mitigate credit risk. For other financial assets, the Group adopts the policy of dealing only with high credit quality counterparties.

Credit exposure to an individual counterparty is restricted by credit limits that are approved by the Ceo based on on-going credit evaluation. the Group’s trade receivables comprise 1 debtor (2008: 3 debtors) that individually represented 10 - 20% of trade receivables. as the Group does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. The Group’s major classes of financial assets are bank deposits and trade receivables.

the credit risk for trade receivables based on the information provided to key management is as follows:

group company2009 2008 2009 2008

$’000 $’000 $’000 $’000

By types of customersnon-related parties:– Multi-national companies – – – –– other companies 6,182 4,123 – –

6,182 4,123 – –

(i) Financial assets that are neither past due nor impaired Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group. the Group has no trade receivables past due or impaired that were re-negotiated during the financial year.



27 financial risk ManageMent (continued)Financial risk factors (continued)(b) Credit risk (continued)

(ii) Financial assets that are past due and/or impairedThere is no other class of financial assets that is past due and/or impaired except for trade receivables.

the age analysis of trade receivables past due but not impaired is as follows:

group company2009 2008 2009 2008

$’000 $’000 $’000 $’000

past due 0 to 3 months 1,126 1,547 – –past due 3 to 6 months 685 620 – –past due over 6 months 2,456 753 – –

4,267 2,920 – –

the carrying amount of trade receivables individually determined to be impaired and the movements in the related allowance for impairment are as follows:

group company2009 2008 2009 2008

$’000 $’000 $’000 $’000

Gross amount 140 330 – –less: allowance for impairment (114) (249) – –

26 81 – –

Beginning of financial year 249 249 – –allowance made (135) – – –End of financial year 114 249 – –


27 financial risk ManageMent (continued)Financial risk factors (continued)(c) liquidity risk

The table below analyses the maturity profile of the Group’s and the Company’s financial liabilities based on contractual undiscounted cash flows.

Between Between Moreless than 1 and 2 2 and 5 than

1 year years years 5 years $’000 $’000 $’000 $’000

Group2009at 31 December 2009trade and other payables (5,256) (1,800) – –Borrowings (3,800) (4,063) (2,584) (597)

(9,056) (5,863) (2,584) (597)

2008at 31 December 2008trade and other payables (6,402) – – –Borrowings (1,939) (953) (1,162) (945)

(8,341) (953) (1,162) (945)

Company2009at 31 December 2009trade and other payables (6,544) (1,800) – –

2008at 31 December 2008trade and other payables (886) – – –

The Group manages the liquidity risk by maintaining sufficient cash to enable them to meet their normal operating commitments and having an adequate amount of committed credit facilities.



27 financial risk ManageMent (continued)Financial risk factors (continued)(d) Capital risk

the Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.

Management monitors capital based on a gearing ratio. the Group’s strategies, which were unchanged from 2008, are to maintain gearing ratios within 10% to 35%.

the gearing ratio is calculated as net debt divided by total capital. net debt is calculated as borrowings plus trade and other payables less cash and bank balances. total capital is calculated as equity plus net debt.

group company2009 2008 2009 2008

$’000 $’000 $’000 $’000

net debt 5,103 3,086 4,244 –total equity 28,136 20,731 19,005 17,281

total capital 33,239 23,817 23,249 17,281

Gearing ratio 15% 13% 18% –

the Group has no externally imposed capital requirements for the financial years ended 31 December 2009 and 2008.

28 segMent inforMationthe Group is principally engaged in the manufacture and service of sterngear equipment. no separate segmental information by business segment is presented, except for segment revenue (note 4), as both business segments use the same resources and share the same costs. Management is of the opinion that is not practicable to separate the costs, assets and liabilities for each business segment.


28 segMent inforMation (continued)the following table provides an analysis of the Group revenue by geographical market which is analysed based on the country of domicile of the customers:

group2009 2008

$‘000 $‘000

Singapore 17,900 17,447asia (1) 7,240 7,056rest of the world (2) 1,134 560total 26,274 25,063

notes:

(1) asia refers to customers from Malaysia, Brunei, China, Indonesia, the philippines, Hong Kong, India, Sri lanka, Maldives and australia.

(2) rest of the world refers to customers from europe, the Middle east and uSa.

29 new or revised accounting standards and interPretations

Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2010 or later periods and which the Group has not early adopted. the Group’s assessment of the impact of adopting those standards, amendments and interpretations that are relevant to the Group is set out below:

(a) FrS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 July 2009). FrS 27 (revised) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognised in profit or loss. The Group will apply FRS 27 (revised) prospectively to transactions with minority interests from 1 January 2010.

(b) FrS 103 (revised) Business Combinations (effective for annual periods beginning on or after 1 July 2009)FrS 103 (revised) continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. there is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. all acquisition-related costs should be expensed. the Group will apply FrS 103 (revised) prospectively to all business combinations from 1 January 2010.


distriBution of shareholdings

size of shareholdingsno. of

shareholders % no. of shares %

1 – 999 0 0.00 0 0.00

1,000 – 10,000 126 35.49 642,000 0.41

10,001 – 1,000,000 217 61.13 21,873,000 14.11

1,000,001 and above 12 3.38 132,551,000 85.48

total 355 100.00 155,066,000 100.00

twenty largest shareholdersname no. of shares %

1 SIM GoK HIan @ SIM leCK HIan 48,500,000 31.28

2 HSBC (SInGapore) noMIneeS pte ltD 42,400,000 27.34

3 CHua KIM CHoo 18,500,000 11.93

4 CHua BenG YonG 4,200,000 2.71

5 teo CHenG toH 4,000,000 2.58

6 WonG CHee HernG 3,790,000 2.44

7 KIM enG SeCurItIeS pte. ltD. 3,090,000 1.99

8 leoW DaVID IVan 1,867,000 1.20

9 GoH SenG Huat 1,551,000 1.00

10 lIM Ho HaI 1,551,000 1.00

11 pHua poH CHenG 1,551,000 1.00

12 tan CHeonG HeanG 1,551,000 1.00

13 GoH KaI KuI 1,000,000 0.64

14 oCBC SeCurItIeS prIVate ltD 790,000 0.51

15 CHua aH Guan 757,000 0.49

16 CItIBanK noMIneeS SInGapore pte ltD 750,000 0.48

18 tan nG KuanG 700,000 0.45

19 tan SIanG SenG 675,000 0.44

19 GaY CHee CHeonG 637,000 0.41

20 pHua KeoW Wee 605,000 0.39

total 138,465,000 89.28

Statistics of Shareholdings as at 24 March 2010


suBstantial shareholders(as recorded in the register of Substantial Shareholders)

direct interest % deemed interest %

Sim Gok Hian (1), (2), (3) 48,500,000 31.3 49,500,000 31.9Sim Soon ngee Glenndle (2), (3) 31,000,000 20.0 67,000,000 43.2Chua Kim Choo (1), (2), (3) 18,500,000 11.9 79,500,000 51.3

notes:

(1) Chua Kim Choo is the wife of Sim Gok Hian.

(2) 31,000,000 shares are registered in the name of HSBC (Singapore) nominees pte ltd. Sim Soon ngee Glenndle is the son of Sim Gok Hian and Chua Kim Choo.

(3) each of Sim Gok Hian, Chua Kim Choo and Sim Soon ngee Glenndle is deemed to have an interest in the shares held by the others.

coMPliance with rule 723 of the sgX-st listing Manual section B: rules of catalistBased on information available and to the best knowledge of the Company, as at 24 March 2010, approximately 35.4% of the ordinary shares of the Company are held by the public. the Company is therefore in compliance with rule 723 of the SGX-St listing Manual Section B: rules of Catalist.

the Company has no treasury shares as at 24 March 2010.


notice of annual General Meeting

notice is hereBy given that the annual General Meeting of Mencast Holdings ltd. (the “company”) will be held at Raffles Country Club, Raffles Lounge, 450 Jalan Ahmad Ibrahim, Singapore 639932 on Friday, 23 april 2010 at 10.00 a.m. for the following purposes:

as ordinary Business1. to receive and adopt the Directors’ report and the audited accounts of the Company

for the year ended 31 December 2009 together with the auditors’ report thereon. (resolution 1)

2. To declare a final 1-tier tax exempt dividend of 1.0 cent per share in the capital of the Company for the year ended 31 December 2009. (previous year: 1.0 cent per share) (resolution 2)

3. to re-elect the following directors of the Company (“directors”) retiring pursuant to articles 88 and 89 of the articles of association of the Company:

Mr ng Chee Keong (retiring under article 88)Mr Sunny Wong Fook Choy (retiring under article 89)Mr ng eng Ho (retiring under article 89)

Mr Sunny Wong Fook Choy will, upon re-election as a Director, remain as a lead Independent Director, Chairman of the nominating Committee, a member of the audit and remuneration Committee of the Company and will be considered independent.

Mr ng eng Ho will, upon re-election as a Director of the Company, remain as a Chairman of the remuneration Committee and a member of the nominating and audit Committee of the Company and will be considered independent.

(resolution 3) (resolution 4)(resolution 5)

4. to approve the payment of Directors’ fees of S$151,000 for the year ended 31 December 2009 (previous year: S$95,334). (resolution 6)

5. to re-appoint nexia tS public accounting Corporation as the Independent auditor of the Company and to authorise the Directors to fix their remuneration. (resolution 7)

6. to transact any other ordinary business which may properly be transacted at an annual general meeting.

as sPecial BusinessTo consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:


7. authority to issue shares in the capital of the company (“shares”)that pursuant to Section 161 of the Companies act, Cap. 50 and rule 806 of the Singapore exchange Securities trading limited (“sgX-st”) listing Manual Section B: rules of Catalist (the “catalist rules”), the Directors be authorised and empowered to:

(a) (i) issue Shares whether by way of rights, bonus or otherwise; and/or

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

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

provided that:

1. the aggregate number of Shares (including Shares to be issued in pursuance of the Instruments, made or granted pursuant to this resolution) and Instruments to be issued pursuant to this resolution shall not exceed one hundred per centum (100%) of the total number of issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of Shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed fifty per centum (50%) of the total number of issued Shares (excluding treasury shares) (as calculated in accordance with sub-paragraph (2) below);

2. (subject to such calculation as may be prescribed by the SGX-St) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (1) above, the percentage of Shares that may be issued (excluding treasury shares) shall be based on the total number of issued Shares (excluding treasury shares) at the time of the passing of this resolution, after adjusting for:

(a) new Shares arising from the conversion or exercise of the Instruments or any convertible securities;

(b) new Shares arising from exercising share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this resolution provided that the share options or share awards (as the case may be) were granted in compliance with part VIII of Chapter 8 of the Catalist rules; and

(c) any subsequent bonus issue, consolidation or subdivision of Shares;


3. in exercising the authority conferred by this resolution, the Company shall comply with the provisions of the Catalist rules for the time being in force (unless such compliance has been waived by the SGX-St) and the articles of association of the Company; and

4. unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the conclusion of the next annual general meeting of the Company (“agM”) or the date by which the next aGM is required by law to be held, whichever is earlier.[See Explanatory Note (i)] (resolution 8)

8. authority to issue shares under the Mencast employee share option schemethat pursuant to Section 161 of the Companies act, Cap. 50, the Directors be authorised and empowered to offer and grant options under the Mencast employee Share option Scheme (the “scheme”) and to issue from time to time such number of Shares as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional Shares to be issued pursuant to the Scheme shall not exceed fifteen per centum (15%) of the total number of issued Shares (excluding treasury shares) 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 aGM or the date by which the next aGM is required by law to be held, whichever is earlier. [See Explanatory Note (ii)] (resolution 9)

By order of the Board

chan shok hingCompany SecretarySingapore

7 april 2010

notice of annual General Meeting (continued)


explanatory notes:

(i) the ordinary resolution 8 in item 7 above, if passed, will empower the Directors, effective until the conclusion of the next aGM, or the date by which the next aGM is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue Shares, make or grant Instruments convertible into Shares and to issue Shares pursuant to such Instruments, up to a number not exceeding, in total, one hundred per centum (100%) of the total number of issued Shares (excluding treasury shares), of which up to fifty per centum (50%) may be issued other than on a pro-rata basis to shareholders of the Company.

For determining the aggregate number of Shares that may be issued, the percentage of issued Shares will be calculated based on the total number of issued Shares (excluding treasury shares) at the time this ordinary resolution is passed after adjusting for new Shares arising from the conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time when this ordinary resolution is passed and any subsequent bonus issue, consolidation or subdivision of Shares.

(ii) the ordinary resolution 9 in item 8 above, if passed, will empower the Directors, effective until the conclusion of the next aGM, or the date by which the next aGM is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue Shares pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in aggregate (for the entire duration of the Scheme) fifteen per centum (15%) of the total number of issued Shares (excluding treasury shares) from time to time.

notes:

1. a Member entitled to attend and vote at the aGM is entitled to appoint a proxy to attend and vote in his/her stead. a proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at No.7, Tuas View Circuit, Singapore 637642 not less than forty-eight (48) hours before the time appointed for holding the aGM.


notice of Books closure

notice is hereBy given that subject to approval of shareholders (“shareholders”) of Mencast Holdings ltd. (the “company”) being obtained for the proposed final 1-tier tax exempt dividend of 1.0 cent per ordinary share in the capital of the Company (“shares”) for the financial year ended 31 December 2009 (the “dividend”), the Share transfer Books and register of Members of the Company will be closed on 6 May 2010 for the preparation of dividend warrants.

Duly completed registrable transfers received by the Company’s Share registrar, Boardroom Corporate & Advisory Services Pte. Ltd., at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 up to 5.00 p.m. on 5 May 2010 will be registered to determine Shareholders’ entitlements to the Dividend. Shareholders whose securities accounts with the Central Depository (pte) limited are credited with Shares as at 5.00 p.m. on 5 May 2010 will be entitled to the Dividend.

payment of the Dividend, if approved by the Shareholders at the annual general meeting of the Company to be held on 23 april 2010, will be made on 21 May 2010.

notice of annual General Meeting (continued)

I/We,

of

being a member/members of Mencast Holdings ltd. (the “Company”), hereby appoint:

name nric/Passport no. Proportion of shareholdings

no. of shares %

address

and/or (delete as appropriate)

name nric/Passport no. Proportion of shareholdings

no. of shares %

address

or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the annual General Meeting (the “Meeting”) of the Company to be held on 23 april 2010 at 10.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. the authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “for” or “against” with a tick [ ] within the box provided.)no. resolutions relating to: for against

1 Directors’ report and audited accounts for the year ended 31 December 2009

2 Payment of proposed final 1-tier tax exempt dividend of 1.0 cent per ordinary share in the capital of the Company

3 re-election of Mr ng Chee Keong as a Director of the Company

4 re-election of Mr Sunny Wong Fook Choy as a Director of the Company

5 re-election of Mr ng eng Ho as a Director of the Company

6 approval of Directors’ fees amounting to S$151,000

7 re-appointment of nexia tS public accounting Corporation as Independent auditor of the Company

8 authority to issue shares in the capital of the Company

9 authority to issue shares in the capital of the Company under the Mencast employee Share option Scheme

Dated this day of 2010

Signature of Shareholder(s) or Common Seal of Corporate Shareholder* Delete where inapplicable

Mencast holdings ltd.(company registration no. 200802235c)(Incorporated In the republic of Singapore)

total number of shares in: no. of shares

(a) CDp register

(b) register of Members

proxy Form(Please see notes overleaf before completing this Form)

notes:1. please insert the total number of shares in the capital of the Company (“shares”) held by you. If you have

Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository register and Shares registered in your name in the register of Members, you should insert the aggregate number of Shares entered against your name in the Depository register and registered in your name in the register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. a member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. a proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.

5. the instrument appointing a proxy or proxies must be deposited at the registered office of the Company at no. 7 tuas View Circuit, Singapore 637642 not less than 48 hours before the time appointed for the Meeting.

6. the instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

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

general:the Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

Board of directorsSim Soon Ngee GlenndleExecutive Chairman & Chief Executive OfficerSunny Wong Fook ChoyLead Independent Director Ho Chew ThimIndependent Director Ng Eng HoIndependent Director Ng Chee KeongIndependent Director

audit coMMitteeHo Chew ThimChairmanSunny Wong Fook ChoyNg Eng Ho

noMinating coMMitteeSunny Wong Fook ChoyChairmanNg Eng HoSim Soon Ngee Glenndle

reMuneration coMMitteeNg Eng HoChairmanSunny Wong Fook ChoyHo Chew Thim

coMpany secretaryChan Shok Hing, ACIS

registered officeNo.7 Tuas View Circuit Singapore 637642Tel : 6268 4155Fax : 6264 4156

share registrar and share transfer officeBoardroom corporate & advisory services pte.ltd. 50 Raffles Place #32-01 Singapore land tower Singapore 048623Tel : 6536 5355Fax : 6536 1360

sponsorciMB Bank Berhad, singapore Branch50 Raffles Place #09-01 Singapore land tower Singapore 048623Registered Professional: Mah Kah Loon

auditorsnexia ts public accounting corporation public accountants and Certified Public Accountants 5 Shenton Way uIC Building #16-00 Singapore 068808 Director-in-Charge: Henry SK Tan, FCPA Singapore, ACA Date of Appointment: 14 May 2008

principal Bankersoversea-chinese Banking corporation limited 65 Chulia Street OCBC Centre Singapore 049513

united overseas Bank limited 80 Raffles Place UOB Plaza 1 Singapore 049513

Corporate Information

No 7 Tuas View Circuit Singapore 637642 • Tel +65 6268 4155 Fax +65 6264 4156Email [email protected]

Mencast holdings ltd(Company Reg No.: 200802235C)

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