30 years of excellence - listed companymencast.listedcompany.com/misc/ar2010.pdf · 30 years of...

Annual Report 2010

MEN

CAST HO

LDIN

GS LTD Annual Report 2010

30 Years of Excellence

Designed and produced by

(65) 6578 6522

This document and its contents have

been reviewed by the Company’s

s p o n s o r, C I M B B a n k B e r h a d ,

Singapore Branch (the “Sponsor”),

for compliance with the relevant

rules of the Singapore Exchange

Securi t ies 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

F i n a n c e , C I M B B a n k B e r h a d ,

Singapore Branch, 50 Raffl es Place,

#09-01 Singapore Land Tower,

Singapore 048623, telephone (65)

6337 5115.

RationaleMencast’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.

The 5C PromiseMencast’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

CONTENTS

01Corporate Profi le

04Year In Review

08 Chairman’s Message

11 Group Structure

12 Financial Highlights

14 Operations Review

16Board Of Directors

18Key Management

21Corporate Governance Statement

31Financial Contents

IBCCorporate Information

CORPORATE

PROFILE

Delivering Marine MRO SolutionsEstab l i shed in 1981 , Mencas t

Holdings Ltd. and its subsidiaries

(the "Group") is a Singapore-based

marine maintenance, repair and

overhaul ("Marine MRO") provider,

and a leader in sterngear equipment

manufacturing and servicing. The

Group specialises in the provision of

propeller and sterngear services for

a wide range of vessels catering to

customers in the marine and offshore

oil and gas industries in the Asia

Pacifi c.

First set up in a rented workshop

located on Choa Chu Kang Road,

the Group's main business activities

w e r e c e n t e r e d o n t h e r e p a i r ,

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

expanded into the Marine MRO

industry by extending its capabilities

to include the provision of 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 enjoyed a period of

strong growth since 2001. Successfully

listed on 25 June 2008 as the first

sponsor-approved listing on Singapore's

SGX Catalist, the Group is one of the fi rst

sterngear equipment manufacturers in

Singapore to obtain the ISO 9001:2000

Quality Management System. The Group

also received the Singapore SME 500

award for two years running from 2005

and 2006.

Led by a dedicated and experienced

m a n a g e m e n t t e a m , a n d w e l l

equipped with advanced machinery

and strong technical expertise, the

Group is committed to providing

t imely and re l iab le de l ivery o f

quality Marine MRO solutions to its

customers.

Products and ServicesThe Group provides Marine MRO

s o l u t i o n s , f o c u s s i n g o n h i g h

precision, time sensitive and mission

critical work. The Group's specialist

niche is the manufacture and supply

of an extensive range of sterngear

equipment which meets al l 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

s terngear equipment and a lso

re fu rb ishes them to max im ize

effi ciency. 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.

Mencast Holdings Ltd Annual Report 2010

01

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 defi nes who we are

and emphasizes our drive to make Mencast the choice partner for

companies in the marine and offshore sectors.

COMMITTED &

DEDICATED PROFESSIONALS

YEAR

IN REVIEWGROWTH DRIVERS

SHAPING OUR FUTURE


04

Mencast Central

Building Mencast Central, our fl agship facilities on the Penjuru waterfront

• Additional 1.62ha land lease from JTC in December 2010 for high end manufacturing

and repair

• Production facility of 35,466 square metres (“sqm”) in built-up area when completed

• Construction commenced and fi rst phase expected to complete by end 2011


05

In setting the pace for innovation and service excellence,

Mencast has redefi ned 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.

INNOVATING &

REDEFINING EXCELLENCE

CHAIRMAN’S

MESSAGE

Dear Valued Shareholders,

ANOTHER RECORD YEAR

On behalf of the Board of Directors of Mencast Holdings

Ltd. and its subsidiaries (“Mencast” or the “Group”), I

am delighted to present the Group’s annual report for the

year ended 31 December (“FY”) 2010, marking our sixth

consecutive year of record revenue and profi t growth.

Our investments to strengthen our Group’s revenue base

proved their worth, allowing us to ride through the industry

slowdown with record revenue and profi t. In FY2010, revenue

grew by 21.9% as compared to FY2009 to S$32.0 million,

while net profit attributable to equity holders increased by

20.9% as compared to FY2009 to S$8.5 million.

BUILDING ON OUR TRACK RECORD

From FY2006 to FY2010, the Group’s revenue and net profi t

attributable to equity holders have grown at a compounded

annual rate of growth of 19% and 31% respectively. The

Group continued to deliver healthy gross margins and return

on equity, achieving 49.8% and 21% respectively in FY2010.

Earnings per share increased from 4.71 cents in FY2009

to 5.39 cents in FY2010. Net asset per ordinary share also

increased from 18.1 cents as at 31 December 2009 to 23.8

cents as at 31 December 2010. As at 31 December 2010, the

Group had no outstanding convertible securities.

Bolstered by our continued profitability and proceeds of

S$5.4 million raised during FY2010 from a placement of new

ordinary shares, our balance sheet as at 31 December 2010

is strong with a net cash position.

MARKING OUR 30TH ANNIVERSARY WITH A NEW CHAPTER OF GROWTH

This current year has special signifi cance as it marks the 30th

anniversary of Mencast. At the same time, FY2011 promises

to also be an important transformational year for the Group.

Since our public listing in 2008, Mencast has focused on

strengthening our fi nancial position, core competencies and

human resources to build a strong growth platform for our

marine maintenance, repair and overhaul (“Marine MRO” or

“MMRO”) business. At the same time, we have acquired a

number of important assets that will be the building blocks of

our long-term growth.

A prized asset of the Group is our new waterfront facility,

which is being constructed on our recently secured land at

Penjuru Road on Singapore’s southern coast. At this location,

we are building “Mencast Central”, which will comprise a

production facility of 35,466 square metres (“sqm”) in built-

up area when completed. Catering to the offshore and marine

industries, this state of the art production facility is expected

to be operational in the second half of 2011. As well as

being the premier facility for heavy rudder assemblies and

high-end sterngear equipment in the Asia Pacific region,

Mencast Central will be the headquarters for our Marine MRO

activities.

OUR “TRIPLE PLAY” GROWTH STRATEGY

As the marine industry in Singapore begins to show signs of

renewed growth and confi dence, Mencast is well positioned

to grow and seize new opportunities generated from an

upturn.

Much of the true value of Mencast lies in the business assets

developed over our three decades in operation. Such assets

include our quality client base, strong industry reputation

and accreditations. Mencast's business is time sensitive,

high precision and mission critical. Combined with our


08

specialist knowledge, deep experience and comprehensive

capabilities, we have secured a leading position in the

sterngear and propeller market.

We have an opportunity to deeply leverage our industry

position and client relationships to increase our revenue base

with a fuller range of Marine MRO services. This will create

positive synergies, economies of scale and strengthen our

value proposition to attract and retain new clientele.

Our Marine MRO business focuses on critical high end

and speciality services where a leading market position

can be achieved. Our strategy to create a strong Marine

MRO business has three components, forming a “Triple

Play” to deliver robust margins, return on equity and profit

performance.

1. Expand Capacity

The combined built up area of our premises will increase

from approximately 10,000 sqm in 2008 to 40,000 sqm in

2011 when our facilities at the new waterfront land is fully

completed. Our waterfront facility also provides us with the

capability to manufacture much bigger equipment – up to 80

tonnes for rudder assemblies and sterngear equipment for

vessels of up to 50,000 deadweight tonnes.

2. New Revenue Streams

Our Group successfully added new revenue streams to our

Marine MRO businesses including launching worldwide

propeller services and a fleet maintenance program.

Under our fl eet maintenance program, Mencast acts as the

preferred partner to provide various propeller and sterngear

services to our prestige customers.

Our product range has also been expanded. Especially

signifi cant is the production of the Mewis Duct for our alliance

partner, Becker Marine Systems Gmbh & Co. KG (“Becker”).

The Mewis Duct is a propulsion improvement device that

produces up to 10% fuel and emission savings. Becker is the

global market leader for high-end performance rudder and

manoeuvring solutions and Mencast is honoured to be named

as their preferred manufacturer of heavy rudder assemblies

and high-end sterngear equipment in the Asia Pacifi c region.

3. M&A and Joint-venture

The successful integration of Recon Propeller & Engineering

Pte Ltd into the Group following its acquisition in FY2009 has

already boosted our profi tability and strengthened our service

capabilities. FY2010 also marked the maiden contribution

from our joint venture company, TG Offshore Pte Ltd. We

will continue to look out for synergistic companies for M&A

opportunities.

GEARED FOR GROWTH

There are promising signs of improved confidence and demand, though the outlook remains clouded by uncertainties related to the Middle East, Europe and US. In recent months, the demand for our sterngear manufacturing equipment has been slowly improving and we are cautiously optimistic about growth in this business division. As at 31 December 2010, we had an outstanding order book of S$8.0 million for the sterngear manufacturing segment. Our sterngear services segment is also experiencing an increase in business activity.

With much of the foundations of our “Triple Play” strategy already in place, we are cautiously optimistic about continued growth for the year ahead.

We will continue to explore M&A opportunities, screening for complementary business that offer earnings accretion. Our primary focus is on companies with a similar profile with our own – companies with high margins, high return on equity, a good track record and reputable management. Combined with the capacity increase provided by our new waterfront facility, Mencast’s revenue potential is expected to signifi cantly increase in the years ahead.

DIVIDEND

Balancing the need to fund the signifi cant opportunities that the Group anticipates as well as our desire to reward our shareholders for their unwavering support, the Board has recommended a first and final dividend of 1.1 cents per ordinary share in respect of FY2010.

APPRECIATION

On behalf of the Board, I wish to express my sincerest appreciation to Mr Sim Gok Hian, founder of our Group, who has relinquished his position as the Senior Advisor of the Group during FY2010 for health reasons, for his invaluable contribution to the Group over the years. Mr Sim helmed Mencast's transformation into an industry leader and has been instrumental in positioning the Group on its current growth path. His vision and integrity are an enduring legacy and shining example for us to follow as we continue to drive the Group's growth.

I also l ike to express my deep appreciat ion to our management and staff for their commitment and hard work in FY2010. I also offer my warm thanks to my fellow directors for their advice and guidance, and to our customers, partners and suppliers for their strong and loyal support.

Last and certainly not least, I would like to specially thank our shareholders for your unwavering trust and belief in the Group. I look forward to meeting you at our upcoming annual general meeting.

Sim Soon Ngee GlenndleExecutive Chairman and Chief Executive Offi cer


09

董事长致词

各位尊敬的股东，你们好：

再创历史新高的一年

本人谨代表董事会向各位呈上明铸造控股有限公司及其附属公司(「明铸造」或「本集团」) 截至2010年 12月31日(「财政年」)的年度报告。2010财政年标志着我们连续六年创纪录的收入和利润增长。

我们的投资加强了本集团的收入基础并证明了它们的价值，出使本集团能够在所在行业发展缓慢的情况下得到创纪录的收入和利润。比起2009财政年, 本集团的收入在2010财政年增长了21.9%，达到3,200万新元，而权益持有人应占利润比起2009财政年增长了20.9%，达到850万新元。

建立本集团业绩记录

从2006财政年至2010财政年，本集团的收入和权益持有人应占净利润年复合增长率分别达到19%和31%。本集团在2010财政年持续实现健全的毛利率及股本回报率分别为49.8%及21%。

每股盈利从2009财政年的4.71分增长至2010财政年的5.39分。每普通股净资产值从2009年12月31日的18.1分增长至2010年12月31日的23.8分。截至2010年12月31日，本集团无未偿还可换股证券。

凭着我们持续的盈利能力及我们在2010财政年通过配售新普通股获得的540万新元收益，本集团截至2010年12月31日的资产负债表有着强劲的净现金状况。

标志本集团第30周年增长新篇章

本年度具有特殊意义，因为它标志着明铸造开创第30周年。同时，2011财政年亦是本集团重要的转型年。

自2008年我们上市以来，明铸造一直专注于加强我们的财务状况，核心竞争力和人力资源，为我们的船舶维护、维修和大修(「Marine MRO」或「MMRO」)业务建立一个强大的增长平台。与此同时，我们也收购了一些重点的资产，为我们的长期增长建立基础。

本集团的一个重点资产为我们正在建造中的新水岸设施，位于新加坡南部海岸本茱鲁路的一块土地。在这个位置，我们正在兴建「明铸造中心」，将包括一个完工后达35,466平方米的生产设施。为迎合岸外和海事工业，预计这个先进的生产设施将在2011年下半年开始运作。作为亚太区的重型船舵组装与高端船尾齿轮设备的顶级设施，明铸造中心将成本我们MarineMRO活动的指挥中心。

本集团「三项」发展战略

由于新加坡海事工业开始出现恢复增长和信心的迹象，明铸造已经准备就绪，随时抓住力争上游的机会。

明铸造的真正价值潜藏在我们发展了三十年的商业资产中。该等资产包括我们的优质客户群、强大的行业声誉和认证。明铸造的业务讲究时效性、高精密和关键性。结合我们的专业知识、深厚的经验和综合能力，我们在船尾齿轮和螺旋桨市场已取得领先的位置。

本集团有机会借于我们在行业中的地位和客户关系，提供更全面的MarineMRO服务，以增加我们的收入基础。这将创造积极的协同作用、经济规模和加强我们的价值命题，以吸引和留住新客户。

本集团的MarineMRO业务专注于关键、高端和专业的服务，以保持我们在市场上的领先地位。我们的战略乃创造一个强劲拥有三个组成部分的MarineMRO业务，，形成「三项」，提供强大的利润、股本回报率和盈利表现。

1. 扩充产能

当座落于新晋获得的水岸地带的设施全部竣工后，本集团厂房总面积将由2008年的约10,000平方米增加至2011年的40,000平方米。本集团的水岸设施还为本集团提供了制造更大型设备的能力，可处理达80吨的尾舵机组及供达50,000载重吨船舶使用的船尾齿轮设备的产能。

2. 新收入来源

本集团还为我们Marine MRO业务成功开辟新收入来源，包括推出全球化螺旋桨服务及船队维修计划。根据上述船队维修计划，明铸造将以理想合伙人身份向各大知名客户提供各种螺旋桨和船尾齿轮服务。

本集团的产品组合亦已扩大。尤其重要的是，本集团为联盟伙Becker Marine Systems GmbH & Co. KG (以下简称「Becker」)生产Mewis Duct。Mewis Duct是推进力改良装置，可节省达10％燃油及减少排放。Becker是全球高性能尾舵及操纵舵解决方案的市场翘楚。明铸造能成为Becker在亚太区的重型船舵组装和高端船尾齿轮设备的首选制造商，实属荣幸。

3. 倂购和合资公司

Recon Propeller & Engineering Pte Ltd于2009财政年被收购后成功倂入本集团，使本集团盈利能力上升，服务产能大增。2010财政年亦是合资公司TG Offshore Pte Ltd首次业绩贡献的一年。本集团将继续物色有协同效应的倂购机会。

作好准备迎接增长

尽管中东及欧美局势仍不明朗，令前景迷蒙，但市场信心及需求均出现可喜的好转迹象。最近数月，本集团船尾齿轮制造设备需求已在慢慢改善，本集团对该业务部门的增长持审慎乐观态度。截至2010年12月31日，本集团船尾齿轮制造分部的未完成订单达800万新元。本集团的船尾齿轮服务分部的业务亦见增加。

得力于本集团「三项」策略成功推行，本集团对明年的持续增长持谨慎乐观态度。

本集团将继续寻找倂购机会，物色可增加盈利的互补性业务。本集团会特别注重情况与我们相似、高利润、高股权回报、良好经营记录及良好管理的公司。加上水岸新设施所提供的额外产能后，明铸造未来几年的收入潜力有望大幅增加。

股息

为同时满足重大机会出现时集团的资金需求及集团对股东鼎力支持作出回报的愿望，董事会建议派发2010财政年每股普通股1.1分的首次及末期股息。

鸣谢

本人谨代表董事会，对本集团创办人沈力贤先生多年来为本集团作出的宝贵贡献表示最诚挚的感谢。沈先生于2010财政年因健康原因辞任本集团高级顾问职务。沈先生曾领导明铸造晋身行业翘楚，并协助本集团走上目前的发展道路。他的识见和诚信值得本集团在继续向前发展时继承和认真学习。

本人亦乐意对在2010财政年兢业乐业辛勤工作的管理层及员工深表谢意。同时，本人也诚挚感谢董事同仁给予本人忠告及指引，亦感谢客户、合作伙伴及供应商给予本公司大力支持和忠诚拥戴。

最后，同样重要的是，本人要特别感谢股东对本集团的坚定信任和信赖。本人期待在应届股东常年大会上与各位股东见面。

Sim Soon Ngee Glenndle执行主席兼行政总裁


10

Group

Structure

Mencast

Marine

Pte Ltd

Mencast

Engineering

Pte Ltd

M.B.A.

Heavy

Industries

Pte Ltd

Mencast

Offshore &

Marine Pte Ltd

Recon

Propeller &

Engineering

Pte Ltd

TG

Offshore

Pte Ltd

Mencast

Holdings

Ltd.

100%

100%

100%

100%

100%

51%


11

66.6%$8.8m

33.4%$4.5m

FY2006

54.3%$10.3m

45.7%$8.6m

FY2007 FY2008

41.2%$10.3m

58.8%$14.7m

FY2009

45.6%$12.0m

54.4%$14.3m

FY2010

60.2%$19.3m

39.8%$12.7m

FINANCIAL

HIGHLIGHTS

For the year (S$’000) FY2010 FY2009 FY2008 FY2007 FY2006

Revenue 32,031 26,274 25,063 18,876 13,348

Earnings before interest, tax, depreciation

and amortisation 12,106 10,669 8,343 6,700 3,358

Profi t before income tax 9,800 8,732 7,241 5,892 2,757

Net profi t attributable to equity holders 8,495 7,033 5,803 4,816 2,184

Operating cashfl ow 2,240 6,160 6,349 2,374 2,029

At year end (S$’000)

Total Assets 62,141 48,548 33,824 22,475 15,994

Total Liabilities 21,624 20,412 13,093 9,946 8,031

Total Equity 40,517 28,136 20,731 12,529 7,963

Property, plant and equipment 25,967 22,145 17,050 11,257 8,130

Cash and cash equivalents 11,604 12,706 8,107 2,243 2,328

REVENUE BY SEGMENTS (%) Sterngear Manufacturing

Sterngear Services


12

35000

25000

30000

20000

15000

10000

5000

FY2006 FY2007 FY2008 FY2009 FY2010

13,348

18,876

25,06326,274

32,031

S$’000

REVENUE

0

GROSS PROFIT

NET PROFIT Gross profit MarginNet Profit Margin

60

80

90

70

50

40

30

20

10

16.4%

35.6%

45.9% 45.0%49.8%47.3%

25.5% 23.2%26.5%26.8%

%

0

21000

15000

18000

12000

9000

6000

3000

FY2006 FY2007 FY2008 FY2009 FY2010

4,748

8,663

11,28512,439

15,958

S$’000

0

9000

7000

8000

6000

5000

4000

2000

1000

3000

FY2006 FY2007 FY2008 FY2009 FY2010 FY2006 FY2007 FY2008 FY2009 FY2010

2,184

4,816

5,803

7,033

8,495

S$’000

0


13

OPERATIONS

REVIEW

For the financial year ended 31 December ("FY") 2010,

Mencast Holdings Ltd. and its subsidiaries ("Mencast"

or the "Group") delivered a net profit attributable to

shareholders of S$8.5 million, an increase 20.8% from the

prior year. This marked the sixth consecutive record year

of revenue and profi t for Mencast.

Key Business Highlights in FY2010

During the year, the demand for new shipbuilding

remained sluggish in the wake of the global economic

crisis of 2008. This resulted in lower demand for

sterngear manufacturing, but was mitigated comfortably

by the growth in our sterngear services division, which

also included maiden full year contributions from our

subsidiary, Recon Propeller & Engineering Pte. Ltd.

("Recon").

The Group also successfully integrated Recon and the

business of Denfon Engineering ("Denfon"), both of which

were acquired in June 2009. Along with the maiden

contribution from TG Offshore Pte Ltd, a joint venture

company, the Group's M&A and joint venture activities

has given the sterngear services segment a significant

revenue boost.

In the sterngear manufacturing segment, the Group

continues to explore new business opportunities through

its strategic alliance with Becker Marine Systems Gmbh &

Co. KG ("Becker"). During the year, the Group expanded

its product range with Becker to include the Mewis Duct.

This revolutionary product is showing strong acceptance

by shipbuilders around the globe. As Becker's preferred

manufacturer of heavy rudder assemblies and high-

end sterngear equipment in the Asia Pacifi c region, this

product has the potential to be a significant driver of

future growth for Mencast.


14

OPERATIONS

REVIEW

On the capacity expansion front, construction of the

new manufacturing plant at Penjuru Road is progressing

smoothly and is expected to be completed by the second

half of 2011.

Review of Financial Performance

Mencast's sterling performance was achieved on the

back of an increase in revenue to S$32.0 million in

FY2010, up 21.9% from the prior year. The increase was

mainly attributed to a 60.8% increase in revenue from the

sterngear services segment. This was driven by greater

demand for sterngear services as well as the additional

revenue contribution from Recon and Denfon, which

were acquired in June 2009. Revenue from our sterngear

manufacturing segment decreased by 10.8% in FY2010

as compared to FY2009 due to the slowdown in the

shipbuilding industry.

Revenue from the sterngear services segment accounted

for 60.2% of the Group's total revenue in FY2010, as

compared to 45.6% in FY2009. The change in sales

mix resulted in an improvement in gross margin from

47.3% in FY2009 to 49.8% in FY2010, as the sterngear

services segment typically commands higher margins as

compared to the sterngear manufacturing segment. Both

the increased revenue and margin expansion led to a

higher gross profi t of S$16.0 million in FY2010, up 28.3%

from the prior year.

Driven by the higher business volume, the consolidation

of expenses from Recon and Denfon and the rental

expenses for the Group's waterfront land at Penjuru Road

from December 2009, administrative expenses rose by

38.9% as compared to FY2009 to S$6.2 million in FY2010.

Finance expenses also increased by 41.5% as compared

to FY2009 to S$0.5 million in FY2010, due mainly to

interest paid on the S$5 million bridging loan from SPRING

Singapore which was drawn down in September 2009.

The Group maintains a healthy cash balance of S$11.6

million as at 31 December 2010. The cash balance was

boosted by cash generated from both our operating and

fi nancing activities in FY2010. The increase in cash from

fi nancing activities was mainly due to the net proceeds of

S$5.4 million from the placement of new ordinary shares

in November 2010, offset by the repayment of bank

borrowings and finance lease liabilities and payment of

dividends.

The purchase of equipment and machinery, coupled with

the construction-in-progress of the Group's manufacturing

plant at Penjuru Road, resulted in a net cash outfl ow from

investing activities for the Group in FY2010. Overall, the

Group remains in a net cash position as at 31 December

2010.

Looking Ahead

After experiencing a number of consecutive years of

growth in revenue and profi tability, the Group is cautiously

optimistic that the trend will continue. Going forward,

the Group will continue to exercise prudence in its cost

management, and actively grow its business through

searching for selective investments and exploit strategic

opportunities in related businesses.


15

BOARD

OF DIRECTORS

From left to right

Sunny Wong Fook Choy • Ng Chee Keong • Sim Soon Ngee Glenndle • Ng Eng Ho • Ho Chew Thim


16

Sim Son Ngee GlenndleExecutive Chairman & Chief

Executive Offi cer

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

w i t h a B a c h e l o r i n B u s i n e s s

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 certifi cation 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

son of the Group’s founder, 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

Univers i ty o f S ingapore wi th a

Bachelor of Laws (Honours) and

is currently also a Non-Executive

Director of Albedo Limited, Excelpoint

Technology Ltd, Global Test ing

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 Certifi ed

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 jo ined 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 fi rm 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

Genera l Manager o f S teamers

Marit ime 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

M r N g C h e e K e o n g i s o u r

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 Socia l 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.


17

KEY

MANAGEMENT

From left to right

Sim Wei Wei • Wong Chin Hin • Phua Poh Cheng, Jack • Phua Keow Wee • Chan Tuck Wai, Benjamin


18

Chan Tuck Wai, BenjaminFinancial Controller

M r C h a n j o i n e d o u r G ro u p i n

December 2007 and is responsible

for the financial, accounting and

t a x a t i o n f u n c t i o n s a s w e l l a s

the compl iance and repor t ing

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 fi rms, 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

certifi ed Public Accountant and non-

practising member of the Institute

of Certified Public Accountants of

Singapore.

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 Metal lock Pte Ltd. Mr Wong

graduated from the National Industrial

Board in Singapore with a certifi cate

in electrical fi tting and installation.

Sim Wei WeiAdmin i s t ra t i on 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 ca ree r deve lopmen t ,

compensation and benefits, payroll,

sc reen ing and rec ru i tmen t o f

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, Mr Sim Gok Hian, and

the sister of the Group’s Executive

Chai rman and Chief Execut ive

Offi cer, Mr Sim Soon Ngee Glenndle.

Phua Poh Cheng, JackDirector, Sterngear Services

Mr Jack Phua is the co-founder

of Recon Propeller & Engineering

Pte. L td. ( “Recon”) . He jo ined

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, Recon

Mr 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

fi nishing workshop. He also oversees

the development of engineering

s o l u t i o n s a n d s e t t i n g q u a l i t y

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.


19


20

CORPORATE GOVERNANCE STATEMENT

21Mencast Holdings Ltd Annual Report 2010

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”). 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.

Principle1: 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.


22Mencast Holdings Ltd

Annual Report 2010

The number of Board and other committee meetings held during the year ended 31 December 2010 (“FY2010”)

and the attendance of each director of the Company (“Director”) where relevant, is set out as follows: -

Audit Nominating Remuneration

Board Committee Committee Committee

No. of meetings held 2 2 1 1

No. of meetings attended

Sim Soon Ngee Glenndle 2 2* 1 1*

Sunny Wong Fook Choy 2 2 1 1

Ho Chew Thim (1) 2 2 1* 1

Ng Eng Ho 2 2 1 1

Ng Chee Keong (2) 2 2* 1* 1*

* – By invitation

(1) – Mr. Ho Chew Thim was appointed as a member of the Nominating Committee on 26 May 2010.

(2) – Mr. Ng Chee Keong was appointed as a member of the Nominating Committee, Remuneration Committee and Audit

Committee on 26 May 2010.

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 (“CEO”)

Sunny Wong Fook Choy Lead Independent Director

Ng Eng Ho Independent Director

Ho Chew Thim Independent Director

Ng 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 matters 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.


Principle 3: Chairman and CEO

Mr Sim Soon Ngee Glenndle is both the Chairman of the Board and the CEO of the Company. As the Executive

Chairman and the CEO, 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 operations, 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 Membership

Principle 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 Director

Sim Soon Ngee Glenndle Member, CEO

Ng Eng Ho Member, Independent Director

Ho Chew Thim Member, Independent Director (Appointed on 26 May 2010)

Ng Chee Keong Member, Independent Director (Appointed on 26 May 2010)

The principal functions of the NC include:

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

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

effectiveness of the Board;

• evaluating the independence of the Directors; and

• regularly reviewing the Board structure, size and composition having regard to the scope and nature of the

operations of the Group and the core competencies of the Directors as a group.



Annual Report 2010

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.

The NC would access on an annual basis, the effectiveness of the Board as a whole.

Principle 6: Access to Information

The management of the Company provides 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 (the “Act”) of Singapore, and other rules and

regulations, which are applicable to the Company.

REMUNERATION COMMITTEE

Principle 7: Procedures for Developing Remuneration Policies

Principle 8: Level and Mix of Remuneration

Principle 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 Director

Sunny Wong Fook Choy Member, Lead Independent Director

Ho Chew Thim Member, Independent Director

Ng Chee Keong Member, Independent Director (Appointed on 26 May 2010)


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 our CEO; 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 ensuring that the reward in each

case takes into account individual performance as well as the Group’s performance.

The Company advocates a performance based remuneration system for executive Directors and key executives

that is flexible and responsive to the market, comprising a base salary and other fixed allowances, as well as

variable performance bonus and participation in an employee share option scheme or performance share award

scheme based on the Group’s performance and linking it to the individual’s performance.

In determining such remuneration packages, the RC will ensure that they are adequate by considering, in

consultation with the CEO, amongst other things, the respective individuals’ responsibilities, skills, expertise and

contribution to the Group’s performance, and whether they are competitive and sufficient to ensure that the Group

is able to attract and retain the best available executive talent.

At an extraordinary general meeting of the Company held on 10 November 2010, the Shareholders had approved

the adoption of the Mencast Performance Share Award Scheme (the “Scheme”). Under the Scheme, the aggregate

number of shares in the capital of the Company (“Shares”) that are issued or issuable in respect of such other

share-based incentive schemes of the Company (if any),shall not exceed fifteen per cent (15%) of the total number

of issued Shares (excluding treasury shares) and will be in force for a maximum period of 10 years commencing

from 10 November 2010.

The award of Shares under the Scheme is performance-based and is contingent upon predetermined targets

being achieved. Performance targets set under the Scheme are intended to be based on medium-term corporate

objectives covering market competitiveness, quality of returns, business growth and productivity growth.

The adoption of the Scheme is to complement the existing Mencast Employee Share Option Scheme (“ESOS”)

and to increase the Group’s flexibility and effectiveness in its continuing efforts to reward, retain and motivate

employees to achieve increased performance. To date, the Company has not granted any awards under the

Scheme or options under the ESOS.

In carrying out the above, the RC may obtain independent external human resource and other professional advice

as it deem necessary. The expense of such advice will be borne by the Company.



Annual Report 2010

The 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 five key executives

of the Group for FY2010.

Remuneration Band

Salary and

Other Benefits

%

Performance

Bonus(1)

%

Directors’ Fees(2)

%

Directors

S$500,000 to S$749,999

Sim Soon Ngee Glenndle 50 50 –

Below S$250,000

Sunny Wong Fook Choy – – 100

Ng Eng Ho – – 100

Ho Chew Thim – – 100

Ng Chee Keong – – 100

Key Executives

Below S$250,000

Phua Poh Cheng, Jack 83 17 –

Phua Keow Wee 70 30 –

Wong Chin Hin 90 10 –

Benjamin Chan 80 20 –

Sim Wei Wei(3) 75 25 –

Notes:

(1) Performance bonus, the amounts of which are determined in accordance with the respective service agreement, will be

paid in April 2011.

(2) Directors’ fees are subject to Shareholders’ approval at the AGM to be held on 20 April 2011.

(3) Sim Wei Wei is the daughter of substantial shareholders Sim Gok Hian and Chua Kim Choo and the sister of Sim Soon

Ngee Glenndle.

Other than as specified above, there are no immediate family members of a Director or substantial Shareholder

whose remuneration exceeds S$150,000 for FY2010.


Principle 10: Accountability

The Board is accountable to the Shareholders while the management is accountable to the Board. As defined in the Code, the Board presents to Shareholders a balanced and understandable assessment of the Group’s performance, position and prospects. The management provides all Board members with management reports and accounts which represent balanced, understandable assessment of the Group’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 Committee

Principle 12: Internal Controls

Principle 13: Internal Audit

The Audit Committee of the Company (“AC”) comprises four 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 DirectorNg Chee Keong Member, Independent Director (Appointed on 26 May 2010)

The AC carried out its functions in accordance with Section 210B (5) of the Singapore Companies Act. In performing those functions, the committee carried out the following:-

• Reviews the scope and results of internal audit procedures with the internal auditor;

• Reviews the adequacy of the Group’s internal financial controls, operational and compliance controls and

risk management policies and systems;

• 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 assistance given by management to the independent auditor, and discusses problems and

concerns, if any, arising from the statutory audit, with the management;

• Reviews the balance sheet of the Company and the consolidated financial statements of the Group for the

financial year ended 31 December 2010 before their submission to the Board of Directors, as well as the

independent auditor’s report on the balance sheet of the Company and the consolidated financial statements

of the Group;

• 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 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 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;

• Reviews the independence and objectivity of the independent auditor;

• Evaluates quality of work carried out by independent auditor;



Annual Report 2010

• 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 Singapore Exchange Securities Trading

Limited (“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.

The AC has reviewed with management and the assistance of the Independent Auditor, the major business risks

and the effectiveness of the Group’s internal controls, including financial, operational and compliance controls.

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 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 auditor once to review any area of audit

concern and review of non-audit services in respect of FY2010. There were no non-audit services provided by the

Independent Auditor during FY2010. Ad-hoc AC meetings may be carried out from time to time, as circumstances

required.


Principle 14: Communication with Shareholders

Principle 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 Transactions

The 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 was no interested

person transaction entered into by the Company or any of its subsidiaries in FY2010.

Material Contracts

There 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 2010.

Securities Transactions

The Company has adopted internal regulations with respect to dealings in securities by Directors and officers of

the Group which complies with Rule 1204(18) of the Catalist Rules. 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

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

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 Processes

The Company does not have a Risk Management Committee. The executive Director 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.



Annual Report 2010

Use of Proceeds

IPO

Pursuant to the Company’s initial public offering (“IPO”), the Company issued 22,500,000 new Shares at S$0.28

each on 25 June 2008. Of the total net proceeds of S$5.0 million raised from the IPO, an aggregate of S$2.2 million

has been utilised as at the date of this Annual Report, details of which are as follows:

S$’ million

Total net proceeds from the IPO 5.0

Less:

Purchase of new plant at No. 12 Kwong Min Road (1.0)

Down payment for construction of new manufacturing plant at Penjuru Road (1.2)

Total amount utilised (2.2)

Balance of net proceeds from IPO 2.8

Placement

Pursuant to a private placement exercise (“Placement”), the Company issued 15,506,600 new Shares at S$0.350

each on 1 November 2010, raising net proceeds of approximately S$5.4 million. As at the date of this Annual

Report, the Company has not utilised any of the net proceeds raised from the Placement.

Sponsor

No fees relating to non-sponsorship activities or services were paid to the Sponsor during FY2010.

DIRECTORS’

REPORT


31

The directors present their report to the members together with the audited financial statements of the Group for

the financial year ended 31 December 2010 and the balance sheet of the Company as at 31 December 2010.

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

Sim Soon Ngee Glenndle

Sunny Wong Fook Choy

Ho Chew Thim

Ng Eng Ho

Ng Chee Keong

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, other than as disclosed under “Share Options” and

“Performance Share Plan” on pages 32 and 33 of this report.

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 name

of director or nominee

Holdings in which director

is deemed to have an interest

The Company

As at

31.12.2010

As at

1.1.2010

As at

31.12.2010

As at

1.1.2010

(No. of ordinary shares)

Sim Soon Ngee Glenndle 31,000,000 31,000,000 67,076,000 67,000,000

Sunny 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 2011 were the same as those as

at 31 December 2010.

By virtue of Section 7 of the Singapore Companies Act, Sim Soon Ngee Glenndle is deemed to have interests in

the shares of all the subsidiaries at the beginning and at the end of the financial year.

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.

DIRECTORS’

REPORT


32

Share optionsThe Company implemented the Mencast Employee Share Option Scheme (the “ESOS”) on 30 May 2008 for granting

of options to full-time employees and directors of the Company and its subsidiaries. The total number of ordinary

shares over which the Company may grant under the ESOS shall not exceed 15% of the issued share capital of

the Company on the day preceding the date of grant.

The Scheme is administered by the Remuneration Committee (“RC”) which consist of directors (including directors or

persons who may be participants of the ESOS). A member of the Remuneration Committee who is also a participant

of the ESOS must not be involved in its deliberation in respect of options granted or to be granted to him.

The exercise price for each ordinary share in respect of which an option is exercisable shall be determined by

the Committee as follows:

(i) at a price equal to the average of the last dealt prices for the Shares on the Catalist for the five consecutive

Market Days immediately preceding the relevant date of grant of the relevant option; or

(ii) at a price which is set at a discount to the Market Price provided that the maximum discount shall not exceed

20% of the Market Price.

Options granted with the exercise price set at Market Price shall only be exercisable after 12 months of the date of

grant of that option. Options granted with exercise price set at a discount to Market Price shall only be exercisable

after 24 months from the date of grant of that option. Options granted under the ESOS will have a life span of ten

years.

Under the rules of the ESOS, there are no fixed periods for the grant of options. As such, offers for the grant of

options may be made at any time from time to time at the discretion of the Remuneration Committee. However, no

options shall be granted during the period of 30 days immediately preceding the date of announcement of interim

or final results (as the case may be).

In addition, in the event that an announcement on any matter of an exceptional nature involving unpublished price

sensitive information is imminent, offers may only be made after the second Market Day from the date on which

the aforesaid announcement is made.

The lapsing of option is provided for upon the occurrence of certain events, which includes:

(a) termination of the participant’s employment;

(b) bankruptcy of the participant;

(c) death of the participant;

(d) take-over of the Company; and

(e) the winding-up of the Company (voluntary or otherwise).

Since the commencement of the ESOS till the end of the financial year, no option has been granted under the

ESOS.

No shares have been issued during the financial year by virtue of the exercise of options to take up unissued

shares of the Company and its subsidiaries.

There were no unissued shares of the Company and its subsidiaries under option at the end of the financial

year.


33

Performance share planThe Mencast Performance Share Award Scheme (the “Scheme”) was approved by members of the Company at

extraordinary general meeting (“EGM”) held on 10 November 2010 which provides for the award of fully paid-up

ordinary shares in the share capital of the Company, free of charge to Group executive and non-executive Directors

when and after pre-determined performance target(s) being achieved.

Controlling shareholders or associates or a controlling shareholder who meet the eligibility criteria are also eligible

to participate in the Scheme provided that the participation of and the terms of each grant and the actual number of

awards granted under the Scheme to a participant who is a controlling shareholder or an associate of a controlling

shareholder shall be approved by the independent shareholders in separate resolutions for each such person.

The Scheme is a share incentive scheme which will allow the Company, inter alia, to target specific performance

objectives and to provide an incentive for Participants to achieve these targets. The directors believe that the new

plan will help to achieve the following positive objectives:

(a) reward, retain and motivate employees to achieve increased performance;

(b) provide Company with comprehensive set of remuneration tools and further strengthen its competitiveness

in attracting and retaining superior local and foreign talent; and

(c) encourage greater dedication and loyalty by enabling the Company to give recognition for past contributions

and services as well as motivating Scheme Participants generally to contribute towards the Group’s long-term

prosperity.

The Scheme is administered by Directors which should comprise one independent director at all times.

The Scheme shall continue in force at the discretion of the Remuneration Committee, subject to a maximum

period of ten (10) years commencing on the date on which the Scheme is adopted by the Company in general

meeting, provided always that the Scheme may continue beyond the above stipulated period with the approval

of Shareholders by ordinary resolution in general meeting, and of any relevant authorities which may then be

required.

The Company may deliver shares pursuant to awards granted under the Scheme by way of:

(i) issuance of new shares; and/or

(ii) delivery of existing shares purchased from the market or shares held in treasury

The total number of ordinary shares over which the Company may grant under the Scheme shall not exceed 15%

of the issued share capital of the Company on the day preceding the date on which the award is granted.

The adoption of the Scheme is to complement the existing Mencast Employee Share Option Scheme (the “ESOS”).

Since the commencement of the Scheme, the Company has not granted any awards under the Scheme.

DIRECTORS’

REPORT


34

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

Ho Chew Thim (Chairman)


Ng Eng Ho

Ng Chee Keong

All members of the Audit Committee were 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:

• Reviews the scope and results of internal audit procedures with the internal auditor;

• Reviews the adequacy of the Group’s internal financial controls, operational and compliance controls and

risk management policies and systems;

• 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 assistance given by management to the independent auditor, and discusses problems and

concerns, if any, arising from the statutory audit, with the management;

• Reviews the balance sheet of the Company and the consolidated financial statements of the Group for the

financial year ended 31 December 2010 before their submission to the Board of Directors, as well as the

independent auditor’s report on the balance sheet of the Company and the consolidated financial statements

of the Group;

• 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 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 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;

• Reviews the independence and objectivity of the independent auditor;

• 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 Singapore Exchange Securities Trading

Limited (“SGX-ST”) Listing Manual Section B: Rules of Catalist (“Catalist Rules”).

The Audit Committee has recommended to the board that the independent auditor, Nexia TS Public Accounting

Corporation, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.


35

Independent AuditorThe independent auditor, Nexia TS Public Accounting Corporation, has expressed its willingness to accept

re-appointment.

On behalf of the directors


Director


Director

1 April 2011

STATEMENT BY

DIRECTORS


Annual Report 2010

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 39 to 79 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 2010 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


Director


Director

1 April 2011

INDEPENDENT

AUDITOR’S REPORTTO THE MEMBERS OF MENCAST HOLDINGS LTD


Report on the Financial StatementsWe have audited the accompanying financial statements of Mencast Holdings Ltd (the “Company”) and its

subsidiaries (the “Group”), which comprise the consolidated balance sheet of the Group and the balance sheet

of the Company as at 31 December 2010, 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 information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance

with the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards,

and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable

assurance that assets are safeguarded against loss from unauthorised use or disposition, that 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.

Auditor’s Responsibility

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

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

requirements and plan and perform the audit to obtain reasonable assurance about 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 controls relevant to the entity’s preparation of financial statements that

give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. 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


Annual Report 2010

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are

properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so

as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010,

and the results, changes in equity and cash flows of the Group for the financial year ended on that date.

Report on Other Legal and Regulatory RequirementsIn our opinion, the accounting and other records required by the Act to be kept by the Company and by those

subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with

the provisions of the Act.

Nexia TS Public Accounting Corporation

Public Accountants and Certified Public Accountants

Director-in charge: Loh Ji Kin

Appointed since financial year ended 31 December 2010

Singapore

1 April 2011

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


Note 2010 2009

$’000 $’000

Revenue 4 32,031 26,274

Cost of sales (16,073) (13,835)

Gross profit 15,958 12,439

Other gains – net 7 476 1,061

Expenses

– Administrative (6,167) (4,438)

– Finance 8 (467) (330)

Profit before income tax 9,800 8,732

Income tax expense 9 (1,295) (1,699)

Net profit 8,505 7,033

Other comprehensive income, net of tax

Financial assets, available-for-sale

– Fair value gains 14 – 47

Total comprehensive income 8,505 7,080

Net profit attributable to:

Equity holders of the Company 8,495 7,033

Non-controlling interests 10 –

8,505 7,033

Total comprehensive income attributable to:

Equity holders of the Company 8,495 7,080

Non-controlling interests 10 –

8,505 7,080

Earnings per share attributable to equity holders of

the Company (cents per share)

– Basic and diluted 10 5.39 4.71

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

BALANCE

SHEETSAS AT 31 DECEMBER 2010


Annual Report 2010

Group Company

Note 2010 2009 2010 2009

$’000 $’000 $’000 $’000

ASSETS

Current assets

Cash and cash equivalents 11 11,604 12,706 9,483 4,101

Trade and other receivables 12 13,924 6,610 2,669 2,348

Inventories 13 4,463 2,068 – –

29,991 21,384 12,152 6,449

Non-current assets

Financial assets, available-for-sale 14 127 127 – –

Investments in subsidiaries 15 – – 20,900 20,900

Property, plant and equipment 16 25,967 22,145 – –

Deposits for purchase of property, plant

and equipment 1,247 83 – –

Intangible asset 17 4,781 4,781 – –

Club memberships 28 28 – –

32,150 27,164 20,900 20,900

Total assets 62,141 48,548 33,052 27,349

LIABILITIES

Current liabilities

Trade and other payables 18 8,413 5,256 9,149 6,544

Borrowings 19 5,340 3,677 – –

Current income tax liabilities 1,237 1,370 – –

14,990 10,303 9,149 6,544

Non-current liabilities

Other payable 18 – 1,800 – 1,800

Borrowings 19 5,392 7,076 – –

Deferred income tax liabilities 21 1,242 1,233 – –

6,634 10,109 – 1,800

Total liabilities 21,624 20,412 9,149 8,344

NET ASSETS 40,517 28,136 23,903 19,005

EQUITY

Capital and reserves attributable to

equity holders of the Company

Share capital 22 25,126 19,699 25,126 19,699

Fair value reserve 47 47 – –

Retained profits/(accumulated losses) 15,334 8,390 (1,223) (694)

40,507 28,136 23,903 19,005

Non-controlling interests 10 – – –

Total equity 40,517 28,136 23,903 19,005


CONSOLIDATED STATEMENT OF

CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


Attributable to equity holders of the Company

Note Share capital

Fair value

reserve

Retained

profits Total

Non-controlling

interests Total equity

S$’000 S$’000 (a) S$’000 S$’000 S$’000 S$’000

2010

Beginning of financial year 19,699 47 8,390 28,136 – 28,136

Issue of new shares 22 5,427 – – 5,427 – 5,427

Dividend relating to 2009 paid 24 – – (1,551) (1,551) – (1,551)

Total comprehensive income for

the year – – 8,495 8,495 10 8,505

End of financial year 25,126 47 15,334 40,507 10 40,517

2009

Beginning of financial year 17,899 – 2,832 20,731 – 20,731

Issue of new shares 22 1,800 – – 1,800 – 1,800

Dividend relating to 2008 paid 24 – – (1,475) (1,475) – (1,475)

Total comprehensive income for

the year – 47 7,033 7,080 – 7,080

End of financial year 19,699 47 8,390 28,136 – 28,136

(a) Fair value reserve is not available for distribution


CONSOLIDATED CASH FLOW

STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


Annual Report 2010

Group

Note 2010 2009

$’000 $’000

Cash flows from operating activities


Adjustments for

– Income tax expense 1,295 1,699

– Depreciation of property, plant and equipment 1,839 1,607

– Bargain purchase on acquisition 11 – (766)

– (Gain)/loss on disposal of property, plant and equipment (95) 94

– Loss on disposal of financial assets, available-for-sale – 24

– Interest income 18 7

– Interest expense 467 330

12,029 10,028

Change in working capital, net of effects from acquisitions of

subsidiary and business

– Trade and other receivables (7,314) 213

– Inventories (2,395) 819

– Trade and other payables 1,357 (3,420)

Cash generated from operations 3,677 7,640

Interest received (18) (7)

Income tax paid (1,419) (1,472)

Net cash provided by operating activities 2,240 6,161

Cash flows from investing activities

Acquisition of subsidiary and business, net of cash acquired 11 – (1,523)

Additions to property, plant and equipment (5,770) (1,738)

Purchases of financial assets, available-for-sale – (186)

Proceeds from disposal of financial assets, available-for-sale – 140

Proceeds from disposal of property, plant and equipment 247 295

Net cash used in investing activities (5,523) (3,012)

Cash flows from financing activities

Proceeds from issuance of ordinary shares 5,427 –

Proceeds from bank borrowings 2,084 5,000

Repayments of bank borrowings (1,846) (126)

Repayments of finance lease liabilities (1,466) (1,619)

Interest paid (467) (330)

Dividends paid to equity holders of the Company (1,551) (1,475)

Net cash provided by financing activities 2,181 1,450

Net (decrease)/increase in cash and cash equivalents (1,102) 4,599

Cash and cash equivalents at beginning of financial year 12,706 8,107

Cash and cash equivalents at end of financial year 11 11,604 12,706


NOTES TO THE FINANCIAL

STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010


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 2010 were

authorised for issue in accordance with a resolution of directors on 1 April 2011.

1. General informationMencast Holdings Ltd (the “Company”) is listed on the Singapore Exchange Securities Trading Limited –

Catalist and incorporated and domiciled in Singapore. The address of its registered office is No. 7 Tuas

View Circuit, Singapore 637642.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries

are disclosed in Note 15 to the financial statements.

2. 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 2010

On 1 January 2010, 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.

The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the

Group’s and Company’s accounting policies and had no material effect on the amounts reported for

the current or prior financial years except as disclosed below:

(a) FRS 103 (revised) Business Combinations (effective for annual periods beginning on or after

1 July 2009)

Please refer to note 2.3(a)(ii) for the revised accounting policy on business combinations.

As the changes have been implemented prospectively, no adjustments were necessary to any

of the amounts previously recognised in the financial statements.




Annual Report 2010

2. Significant accounting policies (continued)2.1 Basis of preparation (continued)

Interpretations and amendments to published standards effective in 2010 (continued)

(b) FRS 27 (revised) Consolidated and Separate Financial Statements (effective for annual periods

beginning on or after 1 July 2009)

The revisions to FRS 27 principally change the accounting for transactions with non-controlling

interests. Please refer to Notes 2.3(a)(iii) for the revised accounting policy on changes in

ownership interest that results in a lost of control and 2.3(b) for that on changes in ownership

interests that do not result in lost of control.

As the changes have been implemented prospectively, no adjustments were necessary to any

of the amounts previously recognised in the financial statements. There were no transactions

with non-controlling interests in the current financial year. Accordingly, these changes do not

have any impact on the financial statements for the current financial year.

(c) Amendment to FRS 7 Cash Flow Statement (effective for annual periods beginning on or after

1 January 2010)

Under the amendment, only expenditures that result in a recognised asset in the balance

sheet can be classified as investing activities in the cash flow statement. Previously, such

expenditure could be classified as investing activities in the cash flow statement. This change

has been applied retrospectively. It had no material effect on the amounts presented in the

consolidated cash flow statement for the current or prior year.

2.2 Revenue recognition

Revenue 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.

The Group recognises revenue when the amount of revenue and related cost can be reliably

measured, it is probable that the collectability of the related receivables is reasonably assured and

when the specific criteria for each of the Group’s activities are met as follows:

(i) Sale of goods

Revenue 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 services

Revenue 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 income

Interest income is recognised using the effective interest method.

(iv) Dividend income

Dividend income is recognised when the right to receive payment is established.


2. Significant accounting policies (continued)2.3 Group accounting

(a) Subsidiaries

(i) Consolidation

Subsidiaries are entities (including special purpose entities) over which the Group has

power to govern the financial and operating policies so as to obtain benefits from its

activities, generally accompanied by a shareholding giving rise to a 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.

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 unrealised

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.

Non-controlling interests are that part of the net results of operations and of net assets

of a subsidiary attributable to the interests which are not owned directly or indirectly

by the equity holders of the Company. They are shown separately in the consolidated

statement of comprehensive income, statement of changes in equity and balance sheet.

Total comprehensive income is attributed to the non-controlling interests based on their

respective interests in a subsidiary, even if this results in the non-controlling interests

having a deficit balance.

(ii) Acquisition of businesses

The acquisition method of accounting is used to account for business combinations

by the Group.

The consideration transferred for the acquisition of a subsidiary comprises the fair value

of the assets transferred, the liabilities incurred and the equity interests issued by the

Group. The consideration transferred also includes the fair value of any contingent

consideration arrangement and the fair value of any pre-existing equity interest in the

subsidiary.

Acquisition-related costs are expensed as incurred.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a

business combination are, with limited exceptions, measured initially at their fair values

at the acquisition date.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest

in the acquiree at the date of acquisition either at fair value or at the non-controlling

interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest

in the acquiree and the acquisition-date fair value of any previous equity interest in

the acquiree over the fair value of the net identifiable assets acquired is recorded as

goodwill. Please refer to the paragraph “Intangible assets – Goodwill” for the subsequent

accounting policy on goodwill.




Annual Report 2010

2. Significant accounting policies (continued)2.3 Group accounting (continued)

(a) Subsidiaries (continued)

(iii) Disposals of subsidiaries or businesses

When a change in the Company’s ownership interest in a subsidiary results in a loss

of control over the subsidiary, the assets and liabilities of the subsidiary including

any goodwill are derecognised. Amounts recognised in other comprehensive income

in respect of that entity are also reclassified to profit or loss or transferred directly to

retained earnings if required by a specific Standard.

Any retained interest in the entity is remeasured at fair value. The difference between

the carrying amount of the retained investment at the date when control is lost and its

fair value is recognised in profit or loss.

Please refer to the paragraph “Investments in subsidiaries” for the accounting policy on

investments in subsidiaries in the separate financial statements of the Company.

(b) Transactions with non-controlling interests

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of

control over the subsidiary are accounted for as transactions with equity owners of the Group.

Any difference between the change in the carrying amounts of the non-controlling interest and

the fair value of the consideration paid or received is recognised in a separate reserve within

equity attributable to the equity holders of the Company.

2.4 Property, plant and equipment

(a) Measurement

(i) Leasehold buildings

Leasehold buildings are initially recognised at cost. Leasehold buildings are subsequently

carried at cost less accumulated depreciation and accumulated impairment losses.

(ii) Other property, plant and equipment

All other items of property, plant and equipment are initially recognised at cost

and subsequently carried at cost less accumulated depreciation and accumulated

impairment losses.

(iii) Components of costs

The cost of an item of property, plant and equipment initially recognised 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. Cost also includes borrowing costs that are directly attributable to the

acquisition, construction or production of a qualifying asset.

(b) Depreciation

Depreciation on other items of property, plant and equipment is calculated using the

straight-line method to allocate their depreciable amounts over their estimated useful lives

as follows:

Useful lives

Machinery and equipment 10 years

Furniture and fittings 5 years

Office equipment 5 years

Motor vehicles 5 years

Computers 1 year

Renovation 5 years

Leasehold buildings 60 years


2. Significant accounting policies (continued)2.4 Property, plant and equipment (continued)

(b) Depreciation (continued)

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.

(c) Subsequent expenditure

Subsequent 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 repair and maintenance expenses are recognised in profit or

loss when incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the disposal

proceeds and its carrying amount is recognised in profit or loss within ‘Other gains – net’. Any

amount in revaluation reserve relating to that asset is transferred to retained profits directly.

2.5 Club memberships

Club memberships are stated at cost less impairment loss.

2.6 Intangible assets

(a) Goodwill on acquisitions

Goodwill on acquisitions of subsidiaries on or after 1 January 2010 represents the excess of

the consideration transferred, the amount of any non-controlling interest in the acquiree and

the acquisition-date fair value of any previous equity interest in the acquiree over the fair value

of the net identifiable assets acquired.

Goodwill on acquisition of subsidiaries prior to 1 January 2010 represents the excess of the

cost of the acquisition over the fair value of the Group’s share of the net identifiable assets

acquired.

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, except for goodwill arising from acquisitions prior to 1 January

2001. Such goodwill was adjusted against retained profits in the year of acquisition and is not

recognised in profit or loss on disposal.

2.7 Borrowing costs

Borrowing costs are recognised in profit or loss using the effective interest method.

2.8 Investments in subsidiaries

Investments 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.




Annual Report 2010

2. Significant accounting policies (continued)2.9 Impairment of non-financial assets

(a) Goodwill

Goodwill recognised separately as an intangible asset 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 subsidiaries

Property, 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 cash-generating-units (“CGU”)

to which the asset belongs.

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.

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 amortisation or 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 profit or loss,

unless the asset is carried at revalued amount, in which case, such reversal is treated as a

revaluation increase. However, to the extent that an impairment loss on the same revalued

asset was previously recognised as an expense, a reversal of that impairment is also credited

to profit or loss.


2. Significant accounting policies (continued)2.10 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 receivables

Loans 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 expected to be realised 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-sale

Financial 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 derecognition

Regular 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 reclassified to profit or loss.

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs.

(d) Subsequent measurement

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.

(e) Impairment

The 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.




Annual Report 2010

2. Significant accounting policies (continued)2.10 Financial assets (continued)

(e) Impairment (continued)

(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-sale

In addition to the objective evidence of impairment described in Note 2.10(e)(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.

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.

2.11 Financial guarantees

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These

guarantees are financial guarantees as they require the Company to reimburse the banks if the

subsidiaries fail to make principal or interest payments when due in accordance with the terms of

their borrowings.

Financial guarantees are initially recognised at their fair values plus transaction costs in the

Company’s balance sheet.

Financial guarantees are subsequently amortised to profit or loss over the period of the subsidiaries’

borrowings, unless it is probable that the Company will reimburse the bank for an amount higher

than the unamortised amount. In this case, the financial guarantees shall be carried at the expected

amount payable to the bank in the Company’s balance sheet.

Intra-group transactions are eliminated on consolidation.


2. Significant accounting policies (continued)2.12 Borrowings

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.

Borrowings 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.

2.13 Trade and other payables

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised

cost, using the effective interest method.

2.14 Fair value estimation of financial assets and liabilities

The 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.

2.15 Leases

(a) When the Group is the lessee:

The Group leases motor vehicles and certain plant and machinery under finance leases and

land under operating leases from non-related parties.

(i) Lessee – Finance leases

Leases where the Group assumes substantially all risks and rewards incidental to

ownership of the leased assets 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 plant and equipment and

borrowings respectively, at the inception of the leases based on the lower of the fair

value of the leased assets and the present value 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 finance lease liability.

(ii) Lessee – Operating leases

Leases where substantially all 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 lessors) are recognised in profit or loss on a

straight-line basis over the period of the lease.

Contingent rents are recognised as an expense in profit or loss when incurred.




Annual Report 2010

2. Significant accounting policies (continued)2.16 Inventories

Inventories 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.

2.17 Income taxes

Current 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.

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 recognised as income or expense in profit or loss, except

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.

2.18 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. Significant accounting policies (continued)2.19 Employee compensation

Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an

asset.

(a) 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.

(b) Share-based compensation

The Group operates an equity-settled, share-based compensation plan. The value of the

employee services received in exchange for the grant of options is recognised as an expense

with a corresponding increase in the share option reserve over the vesting period. The total

amount to be recognised over the vesting period is determined by reference to the fair value

of the options granted on the date of the grant. Non-market vesting conditions are included in

the estimation of the number of shares under options that are expected to become exercisable

on the vesting date. At each balance sheet date, the Group revises its estimates of the number

of shares under options that are expected to become exercisable on the vesting date and

recognises the impact of the revision of the estimates in profit or loss, with a corresponding

adjustment to the share option reserve over the remaining vesting period.

When the options are exercised, the proceeds received (net of transaction costs) and the

related balance previously recognised in the share option reserve are credited to share capital

account, when new ordinary shares are issued, or to the “treasury shares” account, when

treasury shares are re-issued to the employees.

(c) Performance shares

Benefits to employees including the directors are provided in the form of share-based payment

transactions, whereby employees render services in exchange for the shares or right over

shares (“equity-settled transactions”). The fair value of the employee services rendered is

determined by reference to the fair value of the shares awarded or granted, excluding the

impact of any non-market vesting conditions. The amount is determined by reference to the fair

value of the performance shares on the grant date. This fair value is recognised in profit or loss

over the remaining vesting period of the share-based payment scheme, with the corresponding

increase in equity. The value of charge is adjusted in profit or loss over the remaining vesting

period to reflect expected and actual levels of shares vesting, with the adjustment made in

equity. Cancellations of grants of equity instruments during the vesting period (other than a

grant cancelled by forfeiture when the vesting conditions are not satisfied) are accounted as

an acceleration of vesting, therefore any amount unrecognised that would otherwise have been

charged is recognised immediately in profit or loss.

(d) Employee leave entitlement

Employee 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 up to balance sheet date.




Annual Report 2010

2. Significant accounting policies (continued)2.20 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 Dollar, which is the functional

currency of the Company.

(b) Transactions and balances

Transactions 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 resulting 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.

Non-monetary items measured at fair values in foreign currencies are translated using the

exchange rates at the date when the fair values are determined.

2.21 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.

2.22 Cash and cash equivalents

For the purpose of presentation in the consolidated cash flow statement, cash and cash equivalents

include cash on hand, deposits with financial institutions which are subject to an insignificant risk

of change in value.

2.23 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of

new equity instruments are deducted against the share capital account.

2.24 Dividends to Company’s shareholders

Dividends to the Company’s shareholders are recognised when the dividends are approved for

payment.

2.25 Government grants

Grants 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 relating to expenses are shown separately as other income.


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.

3.1 Critical accounting estimates and assumptions

(a) Depreciation of property, plant and equipment

Property, 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 2010

were $25,967,000 (2009: $22,145,000). 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.

(b) Impairment of loans and receivables

Management reviews its loans and receivables for objective evidence of impairment at least

quarterly. Significant financial difficulties of the debtor, the probability that the debtor will enter

bankruptcy, and default or significant delay in payments are considered objective evidence

that a receivable is impaired. In determining this, management makes judgement as to whether

there is observable data indicating that there has been a significant change in the payment

ability of the debtor, or whether there have been significant changes with adverse effect in the

technological, market, economic or legal environment in which the debtor operates in.

Where there is objective evidence of impairment, management makes judgements as to whether

an impairment loss should be recorded as an expense. In determining this, management uses

estimates based on historical loss experience for assets with similar credit risk characteristics.

The methodology and assumptions used for estimating both the amount and timing of future

cash flows are reviewed regularly to reduce any differences between the estimated loss and

actual loss experience.

4. Revenue

Group

2010 2009

$’000 $’000

Sale of goods – sterngear manufacturing 12,744 14,281

Servicing income – sterngear services 19,287 11,993

Total sales 32,031 26,274




Annual Report 2010

5. Expenses by nature

Group

2010 2009

$’000 $’000

Purchases of inventories 11,842 6,654

Advertisement 106 93

Allowance for/(reversal of) impairment of trade receivables 116 (218)

Commission 145 2

Depreciation of property, plant and equipment (Note 16) 1,839 1,607

Directors’ fees 225 28

Donation 59 42

Employee compensation (Note 6) 6,951 6,778

Entertainment and refreshment 169 273

Employee welfare 241 307

Freight and handling charges 258 246

Insurance 187 174

General expenses 158 96

Property tax 206 77

Printing and stationery 97 93

Professional fee 381 302

Rental expense on operating lease 718 150

Security fees 118 113

Telephone 70 59

Travelling 293 157

Upkeep of motor vehicles and transportation 216 195

Utilities 71 34

Others 169 54

Changes in inventories (2,395) 957

Total cost of sales and administrative expenses 22,240 18,273

6. Employee compensation

Group

2010 2009

$’000 $’000

Wages and salaries 6,595 6,415

Employer’s contribution to defined contribution

plans including Central Provident Fund 356 363

6,951 6,778


7. Other gains – net

Group

2010 2009

$’000 $’000

Interest income – bank deposits 18 7

Gain/(loss) on disposal of property, plant and equipment 95 (94)

Bargain purchase on acquisition (Note 11) – 766

Loss on disposal of financial assets, available-for-sale – 24

Foreign currency exchange (loss)/gain – net (21) 50

Government grant – Jobs Credit Scheme 49 184

Sales of scrap 236 80

Mooring fees 96 22

Other income 3 22

476 1,061

The Jobs Credit Scheme is a cash grant introduced in the Singapore Budget 2009 to help businesses

preserve jobs in the economic downturn. The amount an employer can receive depends on the fulfilment

of certain conditions under the scheme.

8. Finance expenses

Group

2010 2009

$’000 $’000

Interest expense

– bank borrowings 291 200

– finance lease liabilities 176 130

467 330

9. Income taxes(a) Income tax expenses

Group

2010 2009

$’000 $’000

Tax expense attributable to profit is made up of:

Profit from current financial year

– Current income tax – Singapore 1,273 1,217

– Deferred income tax (Note 21) 184 560

1,457 1,777

Under/(over) provision in prior financial years

– Current income tax 13 (78)

– Deferred income tax (Note 21) (175) –

1,295 1,699




Annual Report 2010

9. Income taxes (continued)The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the

Singapore standard rate of income tax as follows:

Group

2010 2009

$’000 $’000

Profit before income tax 9,800 8,732

Tax calculated at tax rate of 17% (2009: 17%) 1,666 1,484

Effects of:

– Change in Singapore tax rate (Note 21) – (31)

– Expenses not deductible for tax purposes 296 329

– Statutory tax exemption (134) (39)

– Income not subject to tax (14) (57)

– Deferred income tax not recognised (307) 84

– Other (50) 7

1,457 1,777

10 Earnings per share(a) Basic earnings per share

Basic 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.

(b) Diluted earnings per share

For the purpose of calculating diluted earnings per share, profit attributable to equity holders of the

Company and the weighted average number of ordinary shares outstanding are adjusted for the

effects of all dilutive potential ordinary shares.

There are no dilutive potential ordinary share in respect of share options and performance shares

during the financial year.

Group

2010 2009

Net profit attributable to equity holders of the Company (S$’000) 8,495 7,033

Weighted average number of ordinary shares outstanding for

basic and diluted earnings per share (’000) 157,658 149,402

Basic and diluted earnings per share (cents per share) 5.39 4.71


11. Cash and cash equivalents

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Cash at bank and on hand 2,175 8,706 54 101

Short-term bank deposits 9,429 4,000 9,429 4,000

11,604 12,706 9,483 4,101

Acquisitions of subsidiary and business

On 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 15).

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 in

2009 were:

Group

Acquisition of subsidiary Acquisition of business

At fair

values

Carrying

amounts in

acquiree’s

books

At fair

values

Carrying

amounts in

acquiree’s

books

$’000 $’000 $’000 $’000

Identifiable assets and liabilities

Cash and cash equivalents 1,532 1,532 145 145

Trade and other receivables 1,306 1,341 379 502

Property, plant and equipment (Note 16) 1,636 1,769 497 230

Club memberships 28 28 – –

Financial assets, available-for-sale (Note 14) 58 120 – –

Other current assets 9 9 6 6

Total 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 21) (115) (115) – –

Total liabilities (950) (819) (61) (61)

Identifiable net assets acquired 3,619 3,980 966 822




Annual Report 2010

11. Cash and cash equivalents (continued)Acquisitions of subsidiary and business (continued)

Group

Acquisition of subsidiary Acquisition of business

At fair

values

Carrying

amounts in

acquiree’s

books

At fair

values

Carrying

amounts in

acquiree’s

books

Identifiable net assets acquired 3,619 3,980 966 822

Goodwill (Note 17)/Bargain purchase on

acquisition (Note 7) 4,781 (766)

Purchase consideration 8,400 200

Consideration paid via issuance of shares

(Note 22) (1,800) –

Unpaid portion of purchase consideration

(Note 18) (3,600) –

Cash consideration paid 3,000 200

Less: cash and cash equivalent

in subsidiary/business acquired (1,532) (145)

Net cash outflow on acquisitions 1,468 55

12. Trade and other receivables

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Trade receivables – non-related parties 13,188 6,189 – –

Less: Allowance for impairment of trade

receivables – non-related parties (123) (7) – –

Trade receivables – net 13,065 6,182 – –

Advances to suppliers 321 114 – –

Due from subsidiaries (non-trade) – – 2,668 2,264

Deposits 325 72 – –

Prepayments 126 78 1 –

Other receivables 87 164 – 84

13,924 6,610 2,669 2,348

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


13. Inventories

Group

2010 2009

$’000 $’000

Raw materials 2,743 1,095

Work-in-progress 1,046 609

Finished goods 602 295

Deferred costs 72 69

4,463 2,068

The cost of inventories recognised as an expense and included in “cost of sales” amounted to $9,447,000

(2009: $7,611,000).

14. Financial assets, available-for-sale

Group

2010 2009

$’000 $’000

Beginning of financial year 127 –

Acquisition of subsidiary (Note 11) – 58

Additions – 186

Disposals – (164)

Fair value gains recognised in equity – 47

End of financial year 127 127

Financial assets, available-for-sale are analysed as follows:

Group

2010 2009

$’000 $’000

Listed securities

– equity securities – Singapore 10 10

– equity securities – Malaysia 117 117

Total 127 127




Annual Report 2010

15. Investments in subsidiaries

Company

2010 2009

$’000 $’000

Equity investments at cost

Beginning of financial year 20,900 12,500

Acquisition (Note 11) – 8,400

End of financial year 20,900 20,900

Details of subsidiaries are as follows:

Name of companies Principal activities

Country of

business/

incorporation Equity holding

2010

%

2009

%

Mencast Marine Pte Ltd (a) Manufacture, supply

and refurbishment, and

reconditioning of

sterngear equipment

Singapore 100 100

Mencast Engineering Pte Ltd (a)(b) Supply of sterngear

equipment and Services

Singapore 100 100

Mencast Offshore & Marine Pte Ltd (a)(b) Repair of ships, tankers

and other ocean-going

vessels Singapore

Singapore 100 100

M.B.A. Heavy Industries Pte Ltd (a)(b) Manufacture marine

parts & equipment

Singapore 100 100

Recon Propeller & Engineering Pte Ltd (a) Sterngear services Singapore 100 100

TG Offshore Pte Ltd (a)(b) Construction and repair

of engines, boilers and

machinery

Singapore 51 –

(a) Audited by Nexia TS Public Accounting Corporation, Singapore.

(b) Cost of investment is less than $1,000.


16. Property, plant and equipment

Machineryand

Equipment

Furnitureand

FittingsOffice

EquipmentMotor

Vehicles ComputersLeaseholdBuildings Renovation

Constructionin

Progress Total

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

Group

2010

Cost

Beginning of financial year 10,499 255 197 1,806 184 13,275 19 1,040 27,275

Additions 3,069 20 60 194 34 138 15 2,283 5,813

Reclassifications – – – – – 1,137 – (1,137) –

Disposals (96) – – (399) – – – – (495)

End of financial year 13,472 275 257 1,601 218 14,550 34 2,186 32,593

Accumulated depreciation

Beginning of financial year 2,811 128 107 917 176 987 4 – 5,130

Depreciation charge (Note 5) 1,025 39 41 272 20 433 9 – 1,839

Disposals (42) – – (301) – – – – (343)

End of financial year 3,794 167 148 888 196 1,420 13 – 6,626

Net book value

End of financial year 9,678 108 109 713 22 13,130 21 2,186 25,967

Group

2009

Cost

Beginning of financial year 7,120 242 162 1,246 164 11,829 – 675 21,438

Acquisition of subsidiary and business (Note 11) 547 1 1 162 3 1,400 19 – 2,133

Additions 3,923 12 34 561 17 46 – 365 4,958

Disposals (1,091) – – (163) – – – – (1,254)

End of financial year 10,499 255 197 1,806 184 13,275 19 1,040 27,275

Accumulated depreciation

Beginning of financial year 2,471 93 74 806 122 822 – – 4,388

Depreciation charge (Note 5) 1,077 35 33 239 54 165 4 – 1,607

Disposals (737) – – (128) – – – – (865)

End of financial year 2,811 128 107 917 176 987 4 – 5,130

Net book value

End of financial year 7,688 127 90 889 8 12,288 15 1,040 22,145

Included in additions in the consolidated financial statements are machinery and equipments and motor vehicles acquired under finance leases amounting to $1,207,000 (2009: $2,646,000).

The carrying amounts of machinery and equipment and motor vehicles held under finance leases are $6,709,000 (2009: $5,363,000) at the balance sheet date (Note 20).

Bank loans are secured on leasehold buildings of the Group with carrying amounts of $11,827,000 (2009: $10,917,000) (Note 19).




Annual Report 2010

17. Intangible asset

Group

2010 2009

$’000 $’000

Goodwill arising on consolidation

Beginning of financial year 4,781 –

Acquisition of subsidiary (Note 11) – 4,781


Impairment tests for goodwillGoodwill is allocated to the Group’s cash-generating units (“CGUs”) 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:

2010 2009

Net margin 26 – 31% 15 – 20%

Growth rate 5 – 15% 5 – 8%

Discount rate 11% 11%

18. Trade and other payables

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Trade payables – non-related parties 4,303 802 62 –

Advances from customers 586 989 – –

Amounts due to subsidiary (non-trade) – – 7,093 4,153

Amounts due to former shareholders of Recon (non-trade) (Note 11) 1,800 3,600 1,800 3,600

Accruals for operating expenses 1,374 1,526 194 591

Other payables 350 139 – –

8,413 7,056 9,149 8,344

Less: Non-current liability

Amounts due to former shareholders of Recon (non-trade) – (1,800) – (1,800)

8,413 5,256 9,149 6,544

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.


19. Borrowings

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Current

Bank borrowings 3,912 2,247 – –

Finance lease liabilities (Note 20) 1,428 1,430 – –

5,340 3,677 – –

Non-Current



5,392 7,076 – –

Total borrowings 10,732 10,753 – –

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 Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

6 months or less 3,952 1,880 – –

6 – 12 months 1,388 1,797 – –

1 – 5 years 4,795 6,259 – –

Over 5 years 597 817 – –

10,732 10,753 – –

(a) Security granted

The bank borrowings are secured by the Group’s leasehold buildings (Note 16) and corporate

guarantees by the Company.

Finance lease liabilities of the Group are secured over the leased machinery and equipment and

motor vehicles, as the legal title is retained by the lessor and will be transferred to the Group upon

full settlement of the finance lease liabilities.

(b) Fair value of non-current borrowings

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000






Annual Report 2010

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

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 Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Bank borrowings 5.14% 5.08% – –

Finance lease liabilities 5.39% 5.44% – –

20. Finance lease liabilitiesThe Group leases certain plant and 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.

Group

2010 2009

$’000 $’000

Minimum lease payments due

– Not later than one year 1,598 1,553

– Between one and five years 2,132 2,405

3,730 3,958

Less: Future finance charges (322) (291)

Present value of finance lease liabilities 3,408 3,667

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

– Not later than one year 1,428 1,430

– Between one and five years 1,980 2,237

Total 3,408 3,667


21. Deferred income taxesDeferred 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:

Group

2010 2009

$’000 $’000

Deferred income tax liabilities to be settled after one year 1,242 1,233

Movement in deferred income tax account is as follows:

Group

2010 2009

$’000 $’000

Accelerated tax depreciation

Beginning of financial year 1,233 558

Effect of change in Singapore tax rate recognised in profit or loss (Note 9) – (31)

Tax credited to profit or loss (Note 9) 184 591

Over provision in prior financial year (Note 9) (175) –

Acquisition of subsidiary (Note 11) – 115


22. Sh are capital

No. of ordinaryshares

Issued sharecapital

AmountShare capital

$’000 $’000

Group and Company

2010


Shares issued (a) 15,507 5,427

End of the financial year 170,573 25,126

2009


Shares issued (b) 7,566 1,800

End of the financial year 155,066 19,699

All issued ordinary shares are fully paid. There is no par value for these ordinary shares.

Fully paid ordinary share carry one vote per share and carry a right to dividends as when declared by the Company.

(a) On 1 November 2010, the Company issued 15,507,000 ordinary shares for a total consideration of $5,427,000 pursuant to a private placement exercise. The newly issued shares rank pari passu in all respects with the previously issued shares.




Annual Report 2010

22. Sh are capital (continued)(b) 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.

(i) Share options

The Company implemented the Mencast Employee Share Option Scheme (the “ESOS”) on

30 May 2008 for granting of options to full-time employees and directors of the Company

and its subsidiaries. The total number of ordinary shares over which the Company may grant

under the ESOS shall not exceed 15% of the issued share capital of the Company on the day

preceding the date of grant.

The Scheme is administered by the Remuneration Committee (“RC”) which consist of directors

(including directors or persons who may be participants of the ESOS). A member of the

Remuneration Committee who is also a participant of the ESOS must not be involved in its

deliberation in respect of options granted or to be granted to him.

The exercise price for each ordinary share in respect of which an option is exercisable shall

be determined by the Committee as follows:

(i) at a price equal to the average of the last dealt prices for the Shares on the Catalist for

the five consecutive Market Days immediately preceding the relevant date of grant of

the relevant option; or

(ii) at a price which is set at a discount to the Market Price provided that the maximum

discount shall not exceed 20% of the Market Price.

Options granted with the exercise price set at Market Price shall only be exercisable after 12

months of the date of grant of that option. Options granted with the exercise price set at a

discount to Market Price shall only be exercisable after 24 months from the date of grant of

that option. Options granted under the ESOS will have a life span of ten years.

Under the rules of the ESOS, there are no fixed periods for the grant of options. As such,

offers for the grant of options may be made at any time from time to time at the discretion of

the Remuneration Committee. However, no options shall be granted during the period of 30

days immediately preceding the date of announcement of interim or final results (as the case

may be).

In addition, in the event that an announcement on any matter of an exceptional nature involving

unpublished price sensitive information is imminent, offers may only be made after the second

Market Day from the date on which the aforesaid announcement is made.

The lapsing of option is provided for upon the occurrence of certain events, which includes:

(a) termination of the participant’s employment;

(b) bankruptcy of the participant;

(c) death of the participant;

(d) take-over of the Company; and

(e) the winding-up of the Company (voluntary or otherwise).

Since the commencement of the ESOS till the end of the financial year, no option has been

granted under the ESOS.

No shares have been issued during the financial year by virtue of the exercise of options to

take up unissued shares of the Company and its subsidiaries.

There were no unissued shares of the Company and its subsidiaries under option at the end

of the financial year.


22. Sh are capital (continued)(ii) Performance share plan

The Mencast Performance Share Award Scheme (the “Scheme”) was approved by members

of the Company at extraordinary general meeting (“EGM”) held on 10 November 2010 which

provides for the award of fully paid-up ordinary shares in the share capital of the Company,

free of charge to Group executive and non-executive Directors when and after pre-determined

performance target(s) being achieved.

Controlling shareholders or associates of a controlling shareholder who meet the eligibility

criteria are also eligible to participate in the Scheme provided that the participation of and

the terms of each grant and the actual number of awards granted under the Scheme to a

participant who is a controlling shareholder or an associate of a controlling shareholder shall be

approved by the independent shareholders in separate resolutions for each such person.

The Scheme is a share incentive scheme which will allow the Company, inter alia, to target

specific performance objectives and to provide an incentive for Participants to achieve these

targets. The directors believe that the new plan will help to achieve the following positive

objectives:

(a) reward, retain and motivate employees to achieve increased performance;

(b) provide Company with comprehensive set of remuneration tools and further strengthen

its competitiveness in attracting and retaining superior local and foreign talent; and

(c) encourage greater dedication and loyalty by enabling the Company to give recognition

for past contributions and services as well as motivating Scheme Participants generally

to contribute towards the Group’s long-term prosperity.

The Scheme is administered by the directors which include one Independent Director at all

times.

The Scheme shall continue in force at the discretion of the Remuneration Committee, subject to

a maximum period of ten (10) years commencing on the date on which the Scheme is adopted

by the Company in general meeting, provided always that the Scheme may continue beyond

the above stipulated period with the approval of Shareholders by ordinary resolution in general

meeting, and of any relevant authorities which may then be required.

The Company may deliver shares pursuant to awards granted under the Scheme by way of:-

(i) issuance of new shares; and/or

(ii) delivery of existing shares purchased from the market or shares held in treasury

The total number of ordinary shares over which the Company may grant under the Scheme

shall not exceed 15% of the issued share capital of the Company on the day preceding the

date on which the award is granted.

The adoption of the Scheme is to complement the existing Mencast Employee Share Option

Scheme (the “ESOS”). Since the commencement of the Scheme, the Company has not granted

any awards under the Scheme.




Annual Report 2010

23. Retained profitsMovement in retained profits for the Company is as follows:

Company

2010 2009

$’000 $’000

Beginning of financial year (694) (618)


Dividends paid (Note 24) (1,551) (1,475)

End of the financial year (1,223) (694)

24. Dividends

Group and Company

2010 2009

$’000 $’000

Ordinary dividends paid

Final exempt dividend paid in respect of the previous financial year

of $0.01 (2009: $0.01) per share (Note 22) 1,551 1,475

At the Annual General Meeting on 20 April 2011, a final exempt (one-tier) dividend of $0.011 per share

amounting to $1,876,000 will be recommended. These financial statements do not reflect this dividend,

which will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial

year ending 31 December 2011.

25. ContingenciesThe Company has issued corporate guarantees to banks for borrowings of certain subsidiaries with net

liability positions. These bank borrowings amounted to $7,324,000 (2009: $7,086,000) at the balance sheet

date. The subsidiaries have not defaulted in the payment of borrowings.

In additions, the Company has given an undertaking to provide continued financial support to certain

subsidiaries in the normal course of business.

26. Commitments(a) Capital commitments

Capital expenditure contracted for at the balance sheet date but not recognised in the financial

statements are as follows:

Group

2010 2009

$’000 $’000

Property, plant and equipment 7,667 –


26. Commitments (continued)(b) Operating lease commitments – where the Group is a lessee

The Group leases land from non-related parties under non-cancellable operating lease agreements.

The leases have varying terms, escalation clauses and renewal rights.

The future aggregate minimum lease payables under non-cancellable operating leases contracted

for at the balance sheet date but not recognised as liabilities, are as follows:

Group and Company

2010 2009

$’000 $’000

Not later than one year 1,070 690

Later than one year but not later than five years 4,278 2,759

Later than five years 27,009 15,797

32,357 19,246

27. Financial risk managementFinancial risk factors

The Group’s activities expose it to market risk (including currency risk, interest rate risk and price risk),

credit risk and liquidity risk. The Group’s overall risk management strategy seeks to minimise any adverse

effects from the unpredictability of financial markets on the Group’s financial performance. It is, and has

been throughout the year under review, the Group’s policy that no trading in derivative financial instruments

shall be undertaken

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.

Financial risk management is carried out by the finance department in accordance with the policies set. The

finance personnel identifies, evaluates and hedges financial risks in close co-operation with the Group’s

operating units. The finance personnel measures actual exposures against the limits set and prepares daily

reports for review by the Financial Controller. Regular reports are also submitted to the Board of Directors.

(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 Dollar.

Currency risk arises within entities in the Group when transactions are denominated in foreign

currencies such as United State Dollar (“USD”).

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

follows:

SGD USD Total

$’000 $’000 $’000

At 31 December 2010

Financial assets

Cash and cash equivalents and financial assets, available-for-sale 11,731 – 11,731

Trade and other receivables 11,130 2,668 13,798

22,861 2,668 25,529

Financial liabilities

Trade and other payables (6,518) (1,895) (8,413)

Borrowings (10,732) – (10,732)

(17,250) (1,895) (19,145)




Annual Report 2010

27. Financial risk management (continued)Financial risk factors (continued)

(a) Market risk (continued)

(i) Currency risk (continued)

SGD USD Total

$’000 $’000 $’000

Net financial assets 5,611 773 6,384

Add: Net non-financial assets 34,007 – 34,007

Currency profile including

non-financial assets 39,618 773 40,391

Currency exposure of financial

assets/(liabilities) net of those

denominated in the respective

entities’ functional currencies – 773 773

SGD USD Total

$’000 $’000 $’000

At 31 December 2009

Financial assets

Cash and cash equivalents and financial assets, available-for-sale 12,833 – 12,833

Trade and other receivables 6,532 – 6,532

19,365 – 19,365

Financial liabilities

Trade and other payables (7,024) (32) (7,056)

Borrowings (10,753) – (10,753)

(17,777) (32) (17,809)

Net financial assets/(liabilities) 1,588 (32) 1,556

Add: Net non-financial assets 20,900 – 20,900

Currency profile including non-financial assets 22,488 (32) 22,456

Currency exposure of financial assets/(liabilities) net of those denominated in the respective entities’ functional currencies – (32) (32)

If the USD change against the SGD by 5% (2009: 5%) with all other variables including tax rate being held constant, the effects arising from the net financial liability/asset position to the

net profit and equity of the Group will not be significant.

The Company is not exposed to currency risk since all its financial assets and liabilities as at 31 December 2009 and 2010 are denominated in Singapore Dollar.



(a) Market risk (continued)

(ii) Price risk

The Group is exposed to equity securities price risk arising from the investments classified as

available-for-sale. These securities are listed in Singapore and Malaysia.

Further details of these equity investments can be found in Note 14 to the financial

statements.

Equity price sensitivity

The sensitivity analyses below have been determined based on the exposure to equity price

risks at the reporting date.

In respect of equity investments classified as financial assets, available-for-sale, if equity prices

had been 10% higher or lower, with all other variables including tax rate being held constant,

the impact to the net profit and equity of the Group will not be significant.

(iii) Cash flow and fair value interest rate risks

Cash 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 fair 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 is substantially

independent of changes in market interest rates.

The Group’s exposure to cash flow interest rate risks arises mainly from non-current variable-

rate borrowings. 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% (2009: 1%). Management has assessed the impact

to net profit and equity of the Group as being not material.




Annual Report 2010


(b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in

financial loss to the Group. The major classes of financial assets of the Group and of the Company are

bank deposits and trade receivables. For trade receivables, the Group adopts the policy of dealing

only with customers of appropriate credit history, and obtaining sufficient collateral or buying credit

insurance 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 counterparty’s payment profile and credit exposure

are continuously monitored at the entity level by the respective management and at the Group level

by CEO.

As the Group and the Company do 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, except as follows:

Company

2010 2009

$’000 $’000

Corporate guarantees provided to banks on subsidiaries’ loans 7,324 7,086

The trade receivables of the Group comprise 1 debtor (2009: 1 debtor) that individually represented

10 – 20% of trade receivables.

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

follows:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

By types of customers

Non-related parties

– Multi-national companies – – – –

– Other companies 13,065 6,182 – –

13,065 6,182 – –

(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.

(ii) Financial assets that are past due and/or impaired

There is no other class of financial assets that is past due and/or impaired except for trade

receivables.



(b) Credit risk (continued)

(ii) Financial assets that are past due and/or impaired (continued)

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

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Past due 0 to 3 months 8,751 1,126 – –

Past due 3 to 6 months 1,680 685 – –

Past due over 6 months 879 2,456 – –

11,310 4,267 – –

The carrying amount of trade receivables individually determined to be impaired and the

movements in the related allowance for impairment are as follows:

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Gross amount 138 140 – –

Less: Allowance for impairment (123) (7) – –

15 133 – –

Beginning of financial year 7 249 – –

Allowance made/(written back) 116 (218) – –

Allowance utilised – (24)

End of financial year 123 7 – –

(c) Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash and the availability of funding

through an adequate amount of committed credit facilities. At the balance sheet date, assets held

by the Group and Company for managing liquidity risk included cash and short-term deposits as

disclosed in Note 11.

Management monitors rolling forecasts of the Group’s and Company’s liquidity reserve and cash

and cash equivalents (Note 11) on the basis of expected cash flow. This is generally carried out at

local level in the operating entities of the Group in accordance with the practice and limits set by

the Group.

The table below analyses non-derivative financial liabilities of the Group and the Company into

relevant maturity groupings based on the remaining period from the balance sheet date to the

contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash

flows. Balances due within 12 months equal their carrying amounts as the impact of discounting is

not significant.




Annual Report 2010

27 Financial risk management (continued)Financial risk factors (continued)

(c) Liquidity risk (continued)

Between Between

Less than 1 and 2 2 and 5 Over

1 year years years 5 years

$’000 $’000 $’000 $’000

Group

At 31 December 2010

Trade and other payables (8,413) – – –

Borrowings (5,340) (2,587) (2,360) (597)

(13,753) (2,587) (2,360) (597)

At 31 December 2009

Trade and other payables (5,256) (1,800) – –

Borrowings (3,677) (4,063) (2,364) (817)

(8,933) (5,863) (2,364) (817)

Company

At 31 December 2010

Trade and other payables (9,149) – – –

At 31 December 2009

Trade and other payables (6,544) (1,800) – –

(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 2009, are to maintain positive 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 cash equivalents. Total capital is calculated

as equity plus net debt.



(d) Capital risk (continued)

Group Company

2010 2009 2010 2009

$’000 $’000 $’000 $’000

Net debt 7,541 5,103 – 4,243

Total equity 40,517 28,136 23,903 19,005

Total capital 48,058 33,239 23,903 23,248

Gearing ratio 16% 15% – 18%

The Group and the Company has no externally imposed capital requirements for the financial years

ended 31 December 2010 and 2009.

(e) Fair value measurements

The following table presents assets and liabilities measured at fair value and classified by level of

the following fair value measurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

Group

2010 2009

$’000 $’000

Assets

Financial assets, available-for-sale 127 127

The fair value of financial instruments traded in active markets (such as trading and available-

for-sale securities) is based on quoted market prices at the balance sheet date. The quoted

market price used for financial assets held by the Group is the current bid price. These

instruments are included in Level 1.

The carrying amount less impairment provision of trade receivables and payables are assumed

to approximate their fair values. The fair value of financial liabilities for disclosure purposes

is estimated based on quoted market prices or dealer quotes for similar instruments by

discounting the future contractual cash flows at the current market interest rate that is available

to the Group for similar financial instruments. The fair value of current borrowings approximates

their carrying amount.




Annual Report 2010

28. Related party transactions(a) Key management personnel compensation

Key management personnel compensation is as follows:

Group

2010 2009

$’000 $’000

Wages and salaries 1,749 1,566

Employer’s contribution to defined contribution plans,

including Central Provident Fund 51 50

1,800 1,616

Details on directors’ remuneration are disclosed in the Corporate Governance Report.

29. 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

it is not practicable to separate the costs, assets and liabilities for each business segment.

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:

Group

2010 2009

$’000 $’000

Singapore 24,745 17,900

Asia (1) 6,254 7,240

Rest of the world (2) 1,032 1,134

Total 32,031 26,274

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.


30. New or revised accounting standards and interpretationsBelow are the mandatory standards, amendments and interpretations to existing standards that have been

published, and are relevant for the Group’s accounting periods beginning on or after 1 January 2011 or

later periods and which the Group has not early adopted:

• Amendments to FRS 24 – Related party disclosures (effective for annual periods beginning on or

after 1 January 2011)

• Amendments to FRS 32 Financial instruments: Presentation – classification of rights issues (effective

for annual periods beginning on or after 1 February 2010)

• Amendments to INT FRS 114 – Prepayments of a minimum funding requirement (effective for annual

periods commencing on or after 1 January 2011)

• INT FRS 119 Extinguishing financial liabilities with equity instruments (effective for annual periods

commencing on or after 1 July 2010)

The management anticipates that the adoption of the above FRSs, INT FRSs and amendments to FRS in the

future periods will not have a material impact on the financial statements of the Group and of the Company

in the period of their initial adoption.

STATISTICS OF

SHAREHOLDINGSAS AT 11 MARCH 2011


Annual Report 2010

DISTRIBUTION OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGS

NO. OF

SHAREHOLDERS %

NO. OF

SHARES %

1 – 999 0 0.00 0 0.00

1,000 – 10,000 135 33.25 761,000 0.45

10,001 – 1,000,000 251 61.82 24,169,000 14.17

1,000,001 AND ABOVE 20 4.93 145,642,600 85.38

TOTAL 406 100.0 170,572,600 100.00

TWENTY LARGEST SHAREHOLDERS

Name No. of Shares %

1 HSBC (SINGAPORE) NOMINEES PTE LTD 48,754,000 28.58

2 SIM GOK HIAN @ SIM LECK HIAN 48,500,000 28.43

3 CHUA KIM CHOO 18,500,000 10.85

4 GAY CHEE CHEONG 3,710,000 2.18

5 WONG CHEE HERNG 3,640,000 2.13

6 KIM ENG SECURITIES PTE. LTD. 2,653,000 1.56

7 CIMB SECURITIES (SINGAPORE) PTE LTD 2,370,000 1.39

8 BANK OF SINGAPORE NOMINEESS PTE LTD 1,870,000 1.10

9 GOH SENG HUAT 1,551,000 0.91

10 LIM HO HAI 1,551,000 0.91

11 TAN CHEONG HEANG 1,551,000 0.91

12 PHUA POH CHENG 1,511,000 0.89

13 RAMESH S/O PRITAMDAS CHANDIRAMANI 1,500,000 0.88

14 OCBC SECURITIES PRIVATE LTD 1,221,000 0.72

15 NG KENG TEONG 1,208,000 0.71

16 LEOW DAVID IVAN 1,200,000 0.70

17 WONG SWEE CHUN 1,200,000 0.70

18 MAYBAN NOMINEES (S) PTE LTD 1,100,000 0.64

19 SIM SIAW KHANG 1,046,000 0.61

20 S C WONG HOLDINGS PTE. LTD. 1,006,600 0.59

TOTAL 145,642,600 85.39

SUBSTANTIAL SHAREHOLDERS(AS RECORDED IN THE REGISTER OF SUBSTANTIAL SHAREHOLDERS)


Direct

Interest%

Deemed

Interest%

Sim Gok Hian(1), (2), (3), (4) 48,500,000 28.43 49,576,000 29.06

Sim Soon Ngee Glenndle(2), (3), (4) 31,000,000 18.17 67,076,000 39.32

Sim Wei Wei(2), (3), (4) 76,000 0.04 98,000,000 57.45

Chua Kim Choo(1), (2), (3), (4) 18,500,000 10.85 79,576,000 46.65

Gay Chee Cheong(5) 9,110,000 5.34 6,050,000 3.55

Chua Siok Lan(5) 6,000,000 3.52 9,160,000 5.37

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) Sim Wei Wei is the daughter of Sim Gok Hian and Chua Kim Choo and the sister of Sim Soon Ngee Glenndle.

(4) Each of Sim Gok Hian, Chua Kim Choo, Sim Soon Ngee Glenndle and Sim Wei Wei is deemed to have an interest in the

shares held by each other.

(5) Chua Siok Lan is the wife of Gay Chee Cheong and each of them are deemed to have an interest in the shares held by

each other.

COMPLIANCE WITH RULE 723 OF THE SGX-ST LISTING MANUAL SECTION B:

RULES OF CATALIST

Based on information available and to the best knowledge of the Company, as at 11 March 2011, approximately

32.46% 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 11 March 2011.

NOTICE OF

ANNUAL GENERAL MEETING


Annual Report 2010

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 Wednesday, 20

April 2011 at 10.00 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the financial year

ended 31 December 2010 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a first and final 1-tier tax exempt dividend of 1.1 cent per ordinary share in the capital of the

Company for the financial year ended 31 December 2010 (previous year: 1.0 cent per ordinary share).

(Resolution 2)

3. To re-elect the following directors of the Company (“Directors”) retiring pursuant to Articles 89 of the Articles

of Association of the Company:

Mr Sim Soon Ngee Glenndle (Resolution 3)

Mr Ho Chew Thim (Resolution 4)

Mr Sim Soon Ngee Glenndle will, upon re-election as a Director, remain as a member of the Nominating

Committee of the Company and will be considered non-independent.

Mr Ho Chew Thim will, upon re-election as a Director, remain as the Chairman of the Audit Committee and

a member of the Nominating and the Remuneration Committee of the Company and will be considered

independent.

4. To approve the payment of Directors’ fees of S$189,000.00 for the financial year ended 31 December 2010

(previous year: S$151,000.00). (Resolution 5)

5. To re-appoint Nexia TS Public Accounting Corporation as the Independent Auditors of the Company and

to authorise the Directors to fix their remuneration. (Resolution 6)

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


AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any

modifications:

7. Authority to issue shares in the capital of the Company (“Shares”)

That pursuant to Section 161 of the Companies Act, Cap. 50 of Singapore (“Companies Act”) and Rule

806 of Section B of the Singapore Exchange Securities Trading Limited (“SGX-ST”) Listing Manual: 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) 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 total number

of issued Shares (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 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; and

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

NOTICE OF



Annual Report 2010

(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 7)

8. Authority to issue shares under the Mencast Employee Share Option Scheme

That pursuant to Section 161 of the Companies Act, the Directors be authorised and empowered to offer

and grant options (“Options”) under the Mencast Employee Share Option Scheme (the “ESOS”) and to

issue from time to time such number of fully-paid Shares as may be required to be issued pursuant to the

exercise of Options, whether granted during the subsistence of this authority or otherwise, provided always

that the aggregate number of Shares to be allotted and issued pursuant to the ESOS, when added to the

number of Shares issued and issuable in respect of all options granted or awards granted under any other

share incentive schemes or share plans adopted by the Company and for the time being in force, 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 8)

9. Authority to issue shares under the Mencast Performance Share Award Scheme

That pursuant to Section 161 of the Companies Ac, the Directors be and are hereby authorized to offer

and grant awards (“Awards”) in accordance with the provisions of the Mencast Performance Share Award

Scheme (the “Scheme”) and to allot and issue from time to time such number of fully-paid Shares as

may be required to be issued pursuant to the vesting of the Awards under the Scheme, provided that the

aggregate number of Shares to be allotted and issued pursuant to the Scheme, when added to the number

of Shares issued and issuable in respect of all Awards, and all Shares issued and issuable in respect of

all options granted or awards granted under any other share incentive schemes or share plans adopted by

the Company and for the time being in force, shall not exceed fifteen per centum (15%) of the total 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 (iii)] (Resolution 9)


10. Renewal of the Share Buy-Back Mandate

That for the purposes of Sections 76C and 76E of the Companies Act, the Directors be and are hereby

authorised to make purchases or otherwise acquire issued Shares in the capital of the Company from time

to time (whether by way of market purchase or off-market purchase on an equal access scheme) of up to

ten per centum (10%) of the total number of issued Shares (excluding treasury shares) (as ascertained as

at the date of AGM) at the price of up to but not exceeding the Maximum Price as defined in the Appendix

attached, and this authority shall, unless revoked or varied by the Company in general meeting, continue

in force until the date on which the next AGM is held or required by law to be held; the date on which the

purchase(s) of Share(s) by the Company is carried out to the full extent mandated; or the date on which the

authority contained in the Share Buy-Back Mandate is revoked or varied by shareholders of the Company

in general meeting.

[See Explanatory Note (iv)] (Resolution 10)

By Order of the Board

Lee Tiong Hock

Secretary

Singapore, 5 April 2011

Explanatory Notes:

i. The Ordinary Resolution 7, if passed, will empower the Directors, to issue Shares, make or grant Instruments up to a

number not exceeding 100% of the total number of issued Shares (excluding treasury shares), of which up to 50% may

be issued other than on a pro-rata basis to shareholders of the Company.

ii. The Ordinary Resolution 8, if passed, will empower the Directors, to issue Shares pursuant to the exercise of Options

granted or to be granted under the ESOS. The aggregate number of Shares which may be issued pursuant to the ESOS

and any other share-based schemes (if applicable) shall not exceed in aggregate (for the entire duration of the ESOS)

fifteen per centum (15%) of the total number of issued Shares (excluding treasury shares) from time to time.

iii. The Ordinary Resolution 9, if passed, will empower the Directors to offer and grant Awards under the Scheme in

accordance with the provisions of the Scheme and to issue from time to time such number of fully paid Shares as may

be required to be issued pursuant to the vesting of the Awards subject to the maximum number of Shares prescribed

under the terms and conditions of the Scheme. The aggregate number of Shares which may be issued pursuant to the

Scheme and any other share-based schemes (if applicable) shall not exceed 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.

NOTICE OF



Annual Report 2010

iv. The Ordinary Resolution 10 is to renew the Share Buy-Back Mandate and to permit the Company to purchase or acquire

Shares at the Maximum Price as defined in the Appendix attached. The rationale for, the authority and limitation on, the

sources of funds to be used for the purchase or acquisition including the amount of financing and the financial effects

of the purchase or acquisition of Shares by the Company pursuant to the Share Buy-Back Mandate on the audited

consolidated financial accounts of the Group for the financial year ended 31 December 2010 are set out in greater detail

in the Appendix attached.

Notes:

1. A Member entitled to attend and vote at the AGM is entitled to appoint not more than two proxies to attend and vote in

his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 7 Tuas View Circuit,

Singapore 637642, not less than forty-eight (48) hours before the time appointed for holding the AGM.

MENCAST HOLDINGS LTD.(Incorporated in the Republic of Singapore)

Company Registration No. 200802235C

PROXY FORM(Please see notes overleaf before completing this Form)

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 20 April 2011 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

1Directors’ Report and Audited Accounts for the financial year ended 31 December 2010

2Payment of proposed first and final 1-tier tax exempt dividend of 1.1 cent per ordinary share in the capital of the Company.

3Re-election of Mr Sim Soon Ngee Glenndle as a Director of the Company

4 Re-election of Mr Ho Chew Thim as a Director of the Company

5 Approval of Directors’ fees amounting to S$189,000.00

6Re-appointment of Nexia TS Public Accounting Corporation as Independent Auditors of the Company

7 Authority to issue shares in the capital of the Company

8Authority to issue shares in the capital of the Company under the Mencast Employee Share Option Scheme

9Authority to issue shares in the capital of the Company under the Mencast Performance Share Award Scheme

10 Renewal of the Share Buy-Back Mandate

Dated this day of 2011

Total number of Shares in: No. of Shares

Signature of Shareholder(s)

or, Common Seal of Corporate Shareholder

(a) CDP Register

(b) Register of Members

* Delete where inapplicable

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 7 Tuas View

Circuit, Singapore 637642 not less than forty-eight (48) hours before the time appointed for the Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised

in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either

under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or

proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy

thereof must be lodged with the instrument.

7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it

thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50

of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed

or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in

the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company

may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares

entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting,

as certified by The Central Depository (Pte) Limited to the Company.

Designed and produced by

(65) 6578 6522

This document and its contents have

been reviewed by the Company’s

s p o n s o r, C I M B B a n k B e r h a d ,

Singapore Branch (the “Sponsor”),

for compliance with the relevant

rules of the Singapore Exchange

Securi t ies 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

F i n a n c e , C I M B B a n k B e r h a d ,

Singapore Branch, 50 Raffl es Place,

#09-01 Singapore Land Tower,

Singapore 048623, telephone (65)

6337 5115.

RationaleMencast’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.

The 5C PromiseMencast’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

CONTENTS

01Corporate Profi le

04Year In Review

08 Chairman’s Message

11 Group Structure

12 Financial Highlights

14 Operations Review

16Board Of Directors

18Key Management

21Corporate Governance Statement

31Financial Contents

IBCCorporate Information

Annual Report 2010

MEN

CAST HO

LDIN

GS LTD Annual Report 2010

30 Years of Excellence

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