technology solution growth 2007 annual report · “m.tech malaysia” • m-security technology...

Multi-Chem Limited AR 2007 • 1

2007 ANNUAL REPORT

GROWTH

TECHNOLOGY

SOLUTION

2 • Multi-Chem Limited AR 2007

CONTENTS01 • Definitions02 • Corporate Profile 03 • Corporate Data04 • Board of Directors06 • Management Team07 • Statement From The Chairman 12 • Operations Review14 • Prospects and Future Plan18 • Significant Events21 • Group Structure 23 • Financial Highlights 28 • Financial Review 33 • Value Added Statement 34 • Investor Relations 35 • Information on Employees 37 • Corporate Governance Report 48 • Corporate Directory 51 • Financial Contents

THE MULTI-CHEM GROUP’S BUSINESSMulti-Chem has been engaged as a value added supplier to PCB manufacturers for close to two decades. With the ability to apply advanced technologies, a skilful and dedicated production team and customer oriented services, Multi-Chem has emerged as the leading drilling and routing service provider in terms of capacity and technology in South East Asia and Eastern China.

In addition to being a service provider to PCB manufacturers, the Company is also in the complementary business of distribution of PCB specialty chemicals and related materials. Its distribution business extends to the IT arena, where Multi-Chem, through the M.Tech group, has been engaged in the distribution of IT products since 2002. The M.Tech group is a leading regional IT products distributor, carrying best-of-breed products from industry leading vendors and with a presence in 18 cities in 9 countries.


DEFINITIONSIn this Annual Report, the following definitions apply throughout where the context so admits:“Group” • The Company and its subsidiaries“Multi-Chem” or “Company” • Multi-Chem Limited“M.Tech” • One or more of the M.Tech companies

SUBSIDIARIES“M-Precision” • M-Precision Tech Sdn. Bhd.“M.Tech Hong Kong” • M.Tech Products (HK) Pte Limited“M.Tech India” • M-Virtual Technology India Private Limited“M.Tech Indochina” • M-Security Technology Indochina Pte. Ltd.“M.Tech Indonesia” • PT. M.Tech Products“M.Tech Malaysia” • M-Security Technology Sdn. Bhd.“M.Tech Philippines” • M.Tech Products Philippines, Inc.“M.Tech Shanghai” • M.Tech (Shanghai) Co., Ltd.“M.Tech Singapore” • M.Tech Products Pte Ltd“M.Tech Taiwan” • M.Tech Products TW Pte. Ltd.“M.Tech Thailand” • M-Solutions Technology (Thailand) Co., Ltd.“M.Tech Training Centre” • M.Tech Training Centre Pte. Ltd.“Multi-Chem Laser” • Multi-Chem Laser Technology (Suzhou) Co., Ltd.“Multi-Chem Kunshan” • Multi-Chem Electronics (Kunshan) Co., Ltd“Multi-Chem PCB Kunshan” • Multi-Chem PCB (Kunshan) Co., Ltd.“Multi-Chem Suzhou” • Multi-Chem (Suzhou) Co., Ltd.“Multi-Chem Wuxi” • Multi-Chem Electronics (Wuxi) Co., Ltd.“SecureOneAsia” • SecureOneAsia Pte. Ltd.

ASSOCIATES“HPTec Singapore” • Hawera Precision Tec Pte Ltd“Multi-Chem Philippines” • Multi-Chem Electronics Philippines Corporation

OTHER TERMS“AC” • Audit Committee“Board” • Board of Directors“CNC” • Computer numeric controlled“FY” • Financial year“IT” • Information technology“M” • Million“NC” • Nominating Committee“PAT” • Profit after tax“PBT” • Profit before tax“PCB” • Printed circuit board“RC” • Remuneration Committee


CORPORATE PROFILE

Multi-Chem is a drilling and routing service provider and a distributor of specialty chemicals and materials to PCB manufacturers. Incorporated in 1985, Multi-Chem was listed on SESDAQ in January 2000 and upgraded to the Main Board of The Singapore Exchange in November 2000.

Already established in South East Asia, we expanded to Suzhou, China in 2002. In 2003, we expanded into Wuxi, China and commenced the provision of routing services to our customers in both China and Singapore. In 2004, we moved into laser drilling in China which complements our strengths in mechanical drilling and allows us to drill microvia of sizes not achievable by mechanical drilling. In 2006, we expanded into Kunshan, China and further expanded into Kunshan Export Process Zone in 2007 to support customers there.

We are currently the leading PCB drilling and routing provider, in terms of both capacity and technology, in Singapore, and in the Huadong area in China (Eastern China, in particular, Shanghai, Suzhou, Kunshan and Wuxi regions).

In May 2002, we diversified into the business of IT distribution where we carry internet security and network storage products from industry leading vendors.

Through Multi-Chem’s subsidiaries under the M.Tech umbrella, our IT business has expanded in both product range and geographical coverage since inception and now spans Singapore, Malaysia, Thailand, Vietnam, Indonesia, Philippines, China (including Hong Kong), Taiwan and India.

We started an IT training centre in Singapore in late second quarter of 2004 and are currently authorised to conduct training for Nokia, Check Point, RSA, TippingPoint and Blue Coat courses. We were subsequently appointed as authorised training provider for Nokia courses in China.

Today, the Group comprises the Company, 18 subsidiaries, 2 representative offices, 3 branches, 4 offices and 2 associated companies, with a staff strength of more than 1000.


CORPORATE DATA

Board of DirectorsFoo Suan SaiHan Juat HoonHo Boon Chuan WilsonWong Meng YengChew Thiam KengLim Keng Jin

Company SecretariesHo Boon Chuan WilsonLawrence Kwan

Audit CommitteeWong Meng Yeng (Chairman)Chew Thiam KengLim Keng Jin

Nominating CommitteeChew Thiam Keng (Chairman)Foo Suan SaiWong Meng YengLim Keng Jin

Remuneration CommitteeLim Keng Jin (Chairman)Wong Meng YengChew Thiam Keng

Registered Office11 Tuas Avenue 5 Singapore 639337Tel: (65) 6863 1318Fax: (65) 6863 1618

Share RegistrarM & C Services Private Limited138 Robinson Road #17-00 The Corporate Office Singapore 068906

Independent AuditorPricewaterhouseCoopers8 Cross Street #17-00 PWC Building Singapore 048424Audit partner: Soh Kok LeongYear of appointment: 2004

Internal AuditorYang Lee & Associates10 Anson Road #13-16 International Plaza Singapore 079903

Principal BankersDBS Bank Ltd6 Shenton Way DBS Building Tower One Singapore 068809

HSBC Limited21 Collyer Quay #08-01 HSBC Building Singapore 049320

KBC Bank N.V. Singapore Branch30 Cecil Street #12-01 Prudential Tower Singapore 049712

Standard Chartered Bank 6 Battery Road #22-00 Singapore 049909

Share ListingThe Company’s shares are listed on the Main Board of the Singapore Exchange Securities Trading Limited since November 2000

GeneralFor further information about Multi-Chem, please contact the secretariat at the registered office

E-mail: [email protected] [email protected]

Websites: http://www.multichem.com.sg http://www.mtechpro.com

Chinese website: http://ir.zaobao.com/multichem/multichem.html


BOARD OF DIRECTORS

Foo Suan SaiChairman, Chief Executive Officer and Member of NCMr Foo, one of the founding shareholders of Multi-Chem, has more than 20 years of experience in the PCB industry, of which the last 19 years were spent building up the Company. Mr Foo is currently responsible for the overall direction and development of the Group. He holds a Diploma in Chemical Process Technology from the Singapore Polytechnic and a Diploma in Management Studies from the Singapore Institute of Management.

Han Juat HoonChief Operating OfficerMdm Han is a founding shareholder of Multi-Chem. She has been a Director of the Company since 1987 and commenced working in an executive capacity with the Company in 1992. Mdm Han is well versed in factory operations, having held the appointment of factory manager with a

chemical company for 12 years from 1980 to 1992. She is responsible for the overall operations of the Group. Mdm Han holds a Diploma in Chemical Process Technology from the Singapore Polytechnic and a Diploma in Management Studies from the Singapore Institute of Management.

Ho Boon Chuan WilsonChief Financial OfficerMr Ho was appointed as a Director of the Company in April 2005. He has been with the Company since March 2000. Before joining the Company, he worked for six years in DBS Bank Ltd, specialising in the area of corporate finance. A certified public accountant (CPA Singapore) and a chartered financial analyst, he is responsible for the Group’s finance, tax and investor relations functions. Since May 2002, he has been responsible for the growth and development of the Group’s IT business. Mr Ho is also currently a Company Secretary of Multi-Chem.

Standing (Left to right): Ho Boon Chuan Wilson, Chew Thiam Keng, Wong Meng Yeng

Sitting (Left to right): Foo Suan Sai, Han Juat Hoon, Lim Keng Jin


Wong Meng YengIndependent Director, Chairman of AC, Member of RC and NCMr Wong was appointed as a Director in January 2000. He has been an advocate and solicitor in Singapore for 23 years, with the past 18 years spent as a corporate lawyer. He holds a Bachelor of Law (Hons) degree from the National University of Singapore. He is currently a director in Alliance LLC, a law corporation he co-founded.

Chew Thiam KengIndependent Director, Chairman of NC, Member of AC and RCMr Chew has been on the Board since January 2000. He is currently the Chief Executive Officer of Ezion Holdings Limited ( formerly known as Nylect Technology Limited). Prior to joining Ezion Holdings Limited, Mr Chew was the Managing Director cum CEO of KS Energy Services Limited for about 5 years and was the Executive Director of Kian Ann Engineering Limited between 1996 and

November 2001. Before that, Mr Chew was with DBS Bank Ltd for nine years working in the areas of banking such as corporate finance and retail banking. He is also a director and an audit committee member of several other listed companies. Mr Chew holds a Master degree in Business Administration from the University of Hull and a Bachelor’s degree (Hons) in Mechanical Engineering from the National University of Singapore.

Lim Keng JinIndependent Director, Chairman of RC, Member of AC and NCMr Lim was appointed as a Director of the Company in April 2005. He is currently the non-executive director of G.K.Goh Holdings Limited and has more than 25 years of experience in the stock broking industry. He is a fellow member of the Institute of Chartered Accountants of England and Wales. He was an auditor and accountant in Singapore and England before he joined the stock broking industry in 1971.

BOARD OF DIRECTORS

Standing (Left to right): Ho Boon Chuan Wilson, Chew Thiam Keng, Wong Meng Yeng

Sitting (Left to right): Foo Suan Sai, Han Juat Hoon, Lim Keng Jin


MANAGEMENT TEAM

Koh HenrySenior Manager, OperationsMr Koh joined the Company as a Service Engineer in May 2000 after completing his university education. He was promoted from QA & Process Manager to Senior Manager (Operations) in November 2005. He currently oversees the operation in the Manufacturing Services Division, which include quality assurance and production. From 1996 to 1997, he worked as an assistant engineer in Hitachi Chemical Asia Pacific Pte Ltd. He holds a Bachelor’s degree in Mechanical & Production Engineering from the Nanyang Technological University.

Pui Boon Tiong EugeneSenior Manager, Equipment & SystemsMr Pui worked as an engineer with local PCB manufacturers, Motorola Electronics Pte Ltd and WUS Printed Circuits Pte Ltd prior to joining the Company in December 1999. He worked his way up in Multi-Chem from Assistant Production Manager and Equipment Manager to Operations Manager before being named Senior Manager (Equipment & Systems) in November 2005. He currently oversees the manufacturing division’s equipment and facilities maintenance. He is responsible for factory planning and expansion projects as well. He holds a Diploma in Electronics & Computers Engineering from Ngee Ann Polytechnic.

Yang Wen KuaiSenior Manager, Business (China Operations)Mr Yang has been with the Company since August 2001. He worked with Multi-Chem for 2 months before being posted to Multi-Chem Suzhou as sales manager and he is based there for the last 7 years. He currently oversees the marketing and business development of the Group‘s operations in China. Before joining the Company, Mr Yang has 8 years of sales experience in the automotive industry in Taiwan.

Lim San SanFinancial ControllerMs Lim has been with the Company since October 2000, where she joined as an accountant and was promoted to Finance Manager and subsequently Financial Controller, a position she currently holds. She assists the Chief Financial Officer in the Group’s financial reporting, finance and tax functions and works closely with internal and external auditors, tax agent and the bankers in performing her role. Prior to joining the Company, Ms Lim worked for 4 years as an auditor with a local accounting firm. Ms Lim is a certified public accountant (CPA Singapore).

Left to right: Koh HenryPui Boon Tiong EugeneYang Wen KuaiLim San San



STATEMENT FROM THE CHAIRMAN

Dear shareholders

The Group posted another stellar set of results in 2007, outperforming the record breaking year of 2006, with revenue and profits hitting new highs. It is the best set of financial performance since the Group was formed in 1985.

In addition to the solid financial performance, I am proud to report that in 2007, Multi-Chem was again recognized by Forbes Asia as one of Asia’s 200 Best-under-a-Billion companies. It is the second consecutive year we have been named in this prestigious award and one of the 20% making a repeat appearance on the list.

The Company won the Best Annual Report (Silver) for companies under $500 million market capitalization in the Singapore Corporate Awards 2007. In February 2008, we also received the award for Best Annual Report (Gold) for companies under $500 million market capitalization in the Singapore Corporate Awards 2008.

The GroupThe Group has been investing in the manufacturing service business in China since 2002. We are currently the leading player in this area in terms of technology and capacity, with a fleet of 252 CNC drilling machines, 56 CNC routing machines and 16 laser drilling machines in China.

We have a total of five manufacturing facilities in the Eastern China cities of Suzhou, Wuxi and Kunshan, a region known to be one of the fastest growing in terms of PCB production volume. This includes Multi-Chem PCB Kunshan which was incorporated in August 2007 with an investment amount and registered capital of US$5.0M and US$2.5M respectively. This facility, together with the existing Kunshan company, Multi-Chem Kunshan, now houses 114 CNC drilling machines and 20 CNC routing machines and enables the Group to support its customers in the Kunshan area with a faster turnaround time due to proximity.



Although the PCB industry has experienced a slowdown since December 2007, the electronics industry in China is still expected to grow in the longer term. With our leading position in this area and our established customer network in China, the Group is well positioned to benefit from any additional capacity requirements of the PCB manufacturers based there.

While Multi-Chem continues to be the Group’s headquarters and operates the most advanced CNC drilling machines and inspection equipment to service the high end PCB manufacturers based in Singapore, the bulk of our manufacturing service business now comes out of China. This is evidenced in the fewer number of machines operating in Singapore compared to China. Multi-Chem currently houses 34 CNC drilling machines and 4 CNC routing machines in Singapore.

Besides adding CNC drilling machines, the Group also upgraded a number of such machines to higher speeds. Among the CNC drilling machines the Group has, 131 of such machines are capable of drilling at up to speeds of 200,000 rpm, which can achieve higher accuracy for micro vias particularly for hole-size of 0.2mm and below. These machines enable us to service customers with more stringent hole-size requirements.

The Group’s other main business is our IT business, which commenced in 2002. Through the M.Tech companies, the Group diversified into the area of IT security in Singapore and Malaysia that year. We have since increased our geographical coverage to include Thailand, Vietnam, Philippines,

Indonesia, China, India and Taiwan. In Vietnam, the Group has offices in Hanoi and Ho Chi Minh City and in China, we are present in Shanghai, Beijing, Guangzhou and Nanjing. In 2007, we entered into a joint venture (“JV”) with an Indian party, extending our business westwards into India. We currently have a presence in the Indian cities of Delhi, Mumbai, Bangalore and Ahmedabad.

While IT security remains our main focus, the Group also carries complementary products in the areas of IT storage and WAN optimization. During the year, the Group added more leading IT security products such as Blue Coat and Citrix to its product portfolio. The Group is also authorized to provide certified IT training courses for Nokia, Check Point, RSA, TippingPoint and Blue Coat.

Financial PerformanceI am pleased to report that the Group recorded a significantly better financial performance in 2007 compared to 2006, achieving our highest revenue and profit since inception. The Group registered a revenue increase of 45%, from $97.4M in 2006 to $140.8M in 2007, crossing the $100M mark for the first time in our history. Comparing the fourth quarter of 2007 to fourth quarter of 2006, turnover grew by 42%, from $26.9M to $38.2M.

The better revenue performance was largely due to the contribution of both the manufacturing service business in China as well as the IT business. The Group’s China manufacturing operations saw an increase in revenue due to a more diverse customer


base and strong demand for our services, particularly in the second half of 2007, which we were able to fulfil with a higher number of machines. The IT business also grew, with a significant increase in revenue contribution coming from the regional offices although Singapore remains the main market.

With the robust growth in China, 47% of the Group’s revenue is derived from China in 2007, up from 40% in 2006. Revenue from Singapore and ASEAN accounted for 27% and 26% respectively of the Group’s revenue.

Revenue from the manufacturing service business made up approximately 40% of Group revenue while contribution from the M.Tech companies and the PCB distribution business made up about 55% and 5% of Group revenue respectively in 2007. Profit before tax increased from $17.7M in 2006 to $19.9M in 2007, an increase of 13%. In line with the record revenue, this was the highest profit achieved by the Group since inception. On a weighted average basis, Group earnings per share grew from 4.02 cents in 2006 to 4.28 cents in 2007.

Financial PositionThe Group has kept its balance sheet strong and maintained a healthy financial position. As at 31 December 2007, the net working capital of the Group stood at $3.7M, which includes cash and cash equivalents of $10.7M. Gearing stood at 61% and shareholders’ funds stood at approximately $78.6M. Net asset value per share grew from 16.8 cents in 2006 to 21.2 cents in 2007.

DividendsA first and final dividend of tax-exempt one tier dividend of 0.83 cents per ordinary share is recommended for FY2007. This represents a dividend yield of 3.9% based on closing price of 21.5 cents as at 31 December 2007 and a dividend payout of 19.4%. We intend to pay out up to 50% of our profits as dividends in the future, subject to the debt servicing ratio imposed by the Bank following the draw down of the term loans.

Business OutlookThe momentum has remained strong for 2007, particularly in our China manufacturing service and the IT business. However, our Singapore manufacturing service business experienced a slowdown during the year. While the IT business showed good year-on-year growth throughout 2007, our China manufacturing service business slowed from December 2007. This stretched through the Chinese New Year period in February 2008 and the pick up so far has been gradual. With a weak demand further hampered by the harsh winter conditions in China, which affected power and logistics, a weaker first quarter 2008 can be expected for our manufacturing service business. This is expected to dampen the Group’s performance for 2008, although the impact is expected to be mitigated by the Group’s IT business. We continue to be optimistic over the outlook of the manufacturing service business in China, given the continuing and robust growth in China, and its strong economic outlook for the longer term.

The Group aims to maintain its position as the leader both in terms of capacity and




technology in the area of PCB drilling and routing services both in Singapore and the Huadong area in China, where we currently serve most of the major PCB producers. Furthermore, the trend in outsourcing in the precision drilling and routing of PCBs is expected to continue as the benefits of outsourcing are increasingly recognised. Being a leader in this drilling and routing services, Multi-Chem is poised to benefit from any additional capacity requirements. As our customers produce more, there will also be additional demand for the products under our Distribution Division, including the specialty chemicals that we distribute.

In the IT business, the Group will continue to focus on the distribution of only the top names in IT security products, and will continue to look for suitable products to add to its product suite. The Group expanded into Taiwan and India during the year, and we now have a presence in 18 cities in 9 countries in Asia. The M.Tech regional offices are expected to contribute positively to the Group’s business in 2008.

The importance of IT whether as a business enabling tool or for home applications has grown over the years and IT will continue to remain a key part of our lives. Accordingly, IT security is increasingly becoming a “need to have” rather than a “good to have” as costs from the impact of IT security breaches, including business disruption, loss of productivity, data and reputation outweigh the costs of security tools. As economies and companies mature, more awareness of the

importance of IT security can be expected and that can only augur well for the Group.

The IT business commenced in May 2002 and in 2007, contributed $78M to and accounted for around 55% of Group revenue. More will be expected in 2008.

AppreciationOn behalf of the Board of Directors of the Company, I wish to thank the staff and management of the Group for their commitment and dedication during the past year. Special thanks to my colleagues on the Board for their strong support and positive contribution. In particular, I would like to thank Mr Toshiaki Suzuki for his service as a Director for the past eight years. He stepped down from the Board on 31 December 2007 due to poor health.

I would also like to express my sincere appreciation to our shareholders, suppliers, customers and business partners for their valued support.

We will strive to achieve even better financial performance in the coming years.

Foo Suan SaiGroup Chairman & Chief Executive Officer


Operations Review


OPERATIONS REVIEW

PCB-related BusinessThe PCB-related business of the Group performed well in 2007, and it is the third year running that the Group’s volume hit record levels. The strong momentum in the China business from FY2006 continued into FY2007, which more than offset the slow-down in the Singapore manufacturing business in FY2007.

Manufacturing Services DivisionThe demand for drilling services remained strong generally for 2007, mainly due to the growth in the China operations. For Singapore operations, the Group experienced a slowdown in FY2007 which continued from 4Q2006. Drilling service revenue growth accounted for 92% of the revenue increase in this division.

The strong growth for drilling services in China was mainly due to the pick up in demand for our services, a more diversified customer base in China which includes the top PCB manufacturers in the Huadong area in China, an increase in the Group’s mechanical and laser drilling capacity as well as higher efficiency from more advanced machines. The Group was in a

good position to capture a significant portion of any increase in demand for outsourced PCB manufacturing services and this translated into higher sales in 2007. To further enhance the Group’s position in China, a production facility was set up in Kunshan Export Process Zone in August 2007 to support a customer there.

The routing services in both Singapore and China recorded a 22% growth year-on-year as the Group increased its routing capacity to tap on the increasing demand in the region.

The laser drilling services recorded a significant improvement in 2007 since its commencement in April 2004. This was largely due to the demand for handset PCBs. Although there was a slowdown in the 1st half of 2007, revenue grew by 118% year-on-year.

The Group increased its production capacity in 2007 with the net addition of 76 mechanical drilling machines, 10 routing machines and 10 laser drilling machines. As at 31 December 2007, the Group had 16 laser drilling machines, 60 routing machines and


OPERATIONS REVIEW

312 CNC drilling machines, of which 131 are capable of drilling at 200,000 rpm, 151 are capable of drilling at 160,000 rpm and 30 are capable of drilling at 125,000 rpm. The higher drilling speeds allow for higher accuracy for drilling smaller holes.

Distribution Division

PCBThe Group currently supplies a range of PCB specialty chemicals for the wet processes in PCB production, as well as other PCB-related products, including dry film, cleaning brushes, clean room products and entry and back-up materials to our customers.

The PCB distribution business slowed down further in 2007 since 1Q2006. The Group continues to face price reduction pressure from customers and price competitiveness also remains a challenge.

As PCB manufacturers continue to shift their production to China and other low cost venues, this business is still expected to experience reduction in volumes, since its operation is mainly confined to South East Asia. This business has reduced in significance to the Group, accounting for 5% of Group revenue in 2007, down from 8% in 2006.

IT The IT business of the Group under the M.Tech companies has expanded every year in both product range and geographical coverage since its commencement in May 2002.

In 2007, the Group extended its presence into Taiwan and India. The Group also added more leading internet security products, including Citrix and Blue Coat to its product suite during the year. Of the products that it carries, the Group is also sole distributor for several leading products in selected regions. Several vendors have also extended our partnership into Taiwan and India when we started our operations there.

The Group is selective of its product range and, unlike a broad based distribution house that carries hundreds of products, the Group has remained focused on selling the best-of-breed IT security products and on delivering value added services to major systems integrators and resellers in Singapore and the region.

The Group currently has a presence in 18 cities in 9 countries and carries internet security and network storage products from industry leading vendors.


PROSPECTS AND FUTURE PLAN

PCBWhile 2006 was a good year for the Group in terms of turnover and profit growth, the Group recorded another strong performance in 2007 for its PCB-related business due primarily to a buoyant electronics sector in China. The strong momentum in the China business from FY2006 continued into FY2007 which more than offset the slow down in the Singapore manufacturing business in FY2007 while the business of distributing PCB-related products witnessed a strong 4Q2007.

In addition to its leading position in Singapore, the Group is also currently the leading PCB drilling and routing service provider in terms of capacity and technology in Eastern China. The Group currently has five production facilities in China located in the Suzhou, Kunshan and Wuxi regions of the Jiangsu province and one in Singapore to cater for the outsourcing needs of its customers. Its China facilities include a second production facility in Kunshan which was set up in August 2007. This production facility enables the Group to support its customers in the Kunshan area with a faster turnaround time due to proximity.

Since 2004, China has overtaken Singapore as the Group’s largest manufacturing base in terms of sales, capacity and customer base and accounted for 74% of the Group revenue in the manufacturing service division in FY2007, increasing from 61% in FY2006. The Group also has a more diverse customer base in China compared to Singapore.

The PCB-related business of the Group is dependent on the overall electronics cycle. With a wider customer base and the available capacity, the Group is well poised to meet any increase in demand for the services we provide. Correspondingly, the Group is vulnerable to any downturn in demand from customers in its areas of operation.

As at 31 December 2007, the Group has 312 CNC drilling machines, 16 laser drilling machines and 60 routing machines. Included in the Group’s machines currently are 131 drilling machines capable of drilling at speeds of 200,000 rpm, which can achieve higher accuracy for micro vias, particularly for hole-sizes of 0.2mm and below.

In the area of distribution of PCB-related products, the performance of the Group is tied to the demands of its existing customers in South East Asia. In a growing PCB market, this business is expected to continue to grow but this growth is expected to be limited to the volumes confined to such existing customers. The Group will continue to face price reduction pressure from these customers and price competitiveness also remains a challenge.

IT The IT business has seen good growth since its inception in May 2002. During its initial year in 2002, revenue was a mere $2.6M whereas it touched $78.1M in 2007, a growth of approximately 29 times over that period.


The Group has a focus strategy of selling and promoting only the best-of-breed IT products. Among the products the Group currently carries are industry-leading IT products from Nokia, Check Point, Blue Coat, Citrix, Foundry Networks, NetApp, Riverbed, RSA Security and TippingPoint.

To promote technical competency internally and to train its partners, the Group started to provide certified IT training through M.Tech Training Centre, which is authorised to conduct training for Nokia, Check Point, RSA, TippingPoint and Blue Coat courses. The Group is also an authorised training provider for Nokia courses regionally. This business is complementary to the core IT distribution business and is expected to bring about more awareness and technical knowledge through the courses conducted.

As at 31 December 2007, the Group’s IT business has a presence in 18 cities in 9 countries, with a network extending into Taiwan and westward into India in 2007. These new overseas offices are expected to make positive contribution to the Group’s performance in FY2008. The existing offices are also expected to contribute more to the Group’s performance.

In January 2008, M.Tech’s headquarters in Singapore also consolidated its operations from two locations into a single location at TradeHub21. This is expected to result in greater efficiency in communications and result in operational cost savings.

For growth, the Group will focus on its best-of-breed products and will continue to look out for opportunities for regional expansion. The Group will also be selective of the products we carry so as to be able to do the best for the principals that the M.Tech companies represent. The Group will also promote the M.Tech brand name and intends to work closely with key partners to further promote the products.

Reliance on IT has been growing and applications of IT are now not confined only to the business area. Governments around the region are also strong advocates of IT. With this higher reliance on IT comes the need for security.

The higher need for IT security also comes in the form of legislation such as the Sarbanes-Oxley Act of 2002 in the US, which has requirements for stringent internal controls, including IT controls. Following the lead from the US, Japan has also introduced J-SOX, effective for fiscal years beginning on or after 1 April 2008. J-SOX has similar requirements for internal controls, including a section on IT support, which was added as an internal control element to reflect the importance of the IT environment to effective internal control.

With the standards imposed by the corporations themselves or by legislation, the needs for IT security are expected to grow. Also, as economies mature and awareness grows, an increasing amount of the total IT budget is expected to be incurred for IT security. These developments can only augur well for the Group.




Despite the Group’s bright long term outlook in the IT business, events such as those political or economic in nature which are beyond our control could affect business in certain markets. However, the Group is diversified across markets and is expected to be better able to mitigate such impact than if it were in a single market.

The Group experienced a slowdown starting from December 2007 for its China manufacturing service business and there were no improvement in January 2008 and no signs of any pick-up through February 2008. In March 2008, however, business has picked up, albeit a gradual one and a weak 1Q2008 can be expected as the first quarter is traditionally a slow quarter for PCB producers due to Chinese New Year festival. Additionally, the power situation in China, aggravated by the severe winter conditions, is expected to result in disruption in factory operations. The new China labour contract law effective on 1 January 2008 is expected to raise business costs.

All in, 1Q2008 is not expected to be better than 4Q2007 and any noticeable turnaround is only expected to happen after 1Q2008. As the outlook in the business of distributing PCB specialty materials and related products continues to remain poor, the performance of the Group in its PCB business will be largely dependent on the performance of the Manufacturing Service Division. Given the high fixed costs nature of this business, a high sales turnover will ensure good profitability and the reverse holds.

The IT business is expected to grow further in importance to the Group. As the Group plans to further expand its IT business territorially, the performance of the IT business will also depend on the political and economic climates of the markets the Group is operating in. The Group’s outlook in this business area is positive.


Based on the current visibility and market outlook in the region, the Directors, while positive of the prospects of the IT business in 2008, are of the view that the PCB business would be challenging. This takes into account the reduced consumer spending in the US. The Directors are of the view that the performance of the Group in FY2008 would not be better than FY2007 unless the IT business picks up significantly from where it left off in FY2007 and the Asian economies are resilient to the negativity surrounding the US.

Risk FactorsThe Group’s primary business risk is the exposure to the electronics products sector. Our customers are PCB manufacturers most of whom will be exposed to the cyclical nature of the electronics business. Any downturn in the electronics cycle will result in a cutback in outsourcing which will impact the Group negatively. Additionally, with the typically heavy capital investment required in the manufacturing service business, the Group will be adversely affected should there be a downturn in the electronics business due to the high fixed costs in this business.

The Group’s success in the China market will depend on our ability to maintain our technological, quality assurance, capacity and pricing advantage over our competitors. Additionally, we have to monitor trade debts closely as collection of accounts receivable generally takes longer in China.

The Group, with significant investment in China, is also exposed to the political, legal and economic climates of the country. Such risks pertaining to the political, legal and economic climates extend to the other markets which the Group is operating in.

We are also exposed to foreign exchange risks as we mainly transact with our suppliers, vendors and customers in Singapore dollars, US dollars, Chinese renminbi, and albeit to a lesser extent, European euro, Thailand baht, Malaysia ringgit, Indonesia rupiah, Philippines peso, Hong Kong dollars and India rupee. The Company may, from time to time, enter into borrowing and foreign exchange arrangements as currency hedges.

In the area of IT distribution, the Group is subject to risk of reliance on a few key vendors, in respect of their channel strategies, as well as product roadmap. The Group is also exposed to the risks of product obsolescence in respect of the hardware carried. Despite such risks, the Group has taken steps to align with the leading names in the IT arena and as such, there is a good probability that such companies will take steps to ensure that their products maintain the technological edge. The Group also monitors its stock on a quarterly basis and will make provisions where necessary.



SIGNIFICANT EVENTS

• M.Tech appointed as distributor for F5 Networks, the global leader in Application Delivery Networking, in Hong Kong.

• Nokia extended the partnership with M.Tech to Philippines.• Netapp extended the partnership with M.Tech to Vietnam.• M.Tech appointed as distributor for Websense, the global leader in web filtering and recognized

provider of web and desktop security software, in Hong Kong.

• SecureOneAsia entered into JV agreement with Mr Rajendra Shah for expansion of the M.Tech business in India with paid-up share capital of INR5M with SecureOneAsia owning 51%.

• M.Tech appointed as reseller for LANDesk, the leading global supplier of IT infrastructure management solutions, in Singapore, Thailand and Vietnam.

• Multi-Chem won the Best Annual Report (Silver) for companies under $500M in market capitalization in the Singapore Corporate Award 2007, organized by The Business Times and supported by The Singapore Exchange.

• M.Tech appointed as distributor for Citrix Systems on its NetScaler product which deliver web applications with the highest availability, security and performance, in Singapore, Malaysia, Thailand, Vietnam and Indonesia.

• M.Tech appointed as reseller for Data Domain, leading provider of Enterprise Protection Storage systems for disk-backup and network-based disaster recovery, in Malaysia.

• Multi-Chem purchased new CNC mechanical and laser drilling machines for China at a cost of approximately US$14.5M.

• Multi-Chem incorporated Multi-Chem PCB Kunshan in China with investment amount of US$5M and registered capital of US$2.5M

• Secure Computing extended the partnership with M.Tech to Thailand.• Multi-Chem Suzhou reduced its investment amount and registered capital from US$60M to

US$48M and US$20M to US$16M respectively, due to diversification of investment to Multi-Chem Kunshan.

• Multi-Chem was selected as one of the 200 companies in Forbes Asia’s annual Best-under-a-Billion selections which showcase the region’s most dynamic publicly traded firms with sales of under a billion US dollars.

• Multi-Chem Wuxi reduced its investment amount and registered capital from US$25M to US$12.5M and US$10M to US$5M respectively, due to diversification of investment to Multi-Chem PCB Kunshan.

• Multi-Chem incorporated M.Tech Taiwan with paid-up share capital of S$230,000.• Check Point extended the partnership with M.Tech to India.• Riverbed extended the partnership with M.Tech to Singapore.• SecureOneAsia together with Mr Rajendra Shah injected INR5M as paid-up share capital into the

JV, M.Tech India.

• Multi-Chem signed a term loan facility agreement with a foreign bank for US$12M to refinance the Letters of Credit.

• Multi-Chem won the Best Annual Report (Gold) for companies under $500M in market capitalization in the Singapore Corporate Award 2008, organized by The Business Times and supported by The Singapore Exchange.

• RSA Security extended the partnership with M.Tech to Thailand.• Blue Coat extended the partnership with M.Tech to Indonesia.• Nokia extended the partnership with M.Tech to Taiwan.• Citrix Systems extended the partnership with M.Tech to India.

1Q07

2Q07

3Q07

4Q07

1Q08


• Ranked 18 out of 665 companies who announced their results by 1 March 2007. Published on 18th April 2007

• Ranked 17 out of 672 companies who announced their results by 29 August 2007. Published on 22nd October 2007

• Ranked 17 out of 675 companies who announced their results by 29 November 2007. Published on 22nd January 2008

BUSINESS TIMES CORPORATE TRANSPARENCY INDEX 2007

SIGNIFICANT EVENTS



FINANCIAL CALENDAR

27 April 2007

Annual General Meeting and Announcement of 2007 1st quarter results

25 July 2007

Announcement of 2007 half year results

30 October 2007

Announcement of 2007 3rd quarter results

29 January 2008

Announcement and analyst briefing of 2007 full year results

22 April 2008

Annual General Meeting and announcement of 2008 1st quarter results

12 May 2008

Book closure date

23 May 2008

Payment of 2007 final dividends

July 2008

Announcement of 2008 half year results

October 2008

Announcement of 2008 3rd quarter results

January 2009

Announcement and analyst briefing of 2008 full year results


GROUP STRUCTURE

Dormant CompaniesUnder Multi-Chem:• M-Precision (100%)• Multi-Chem Philippines (50%)

(1) M.Tech Thailand deemed to be a wholly owned subsidiary as the Company controls 100% of the voting rights and its financial and operating policies.

(2) HPTec GmbH, a PCB tool manufacturer based in Germany, holds 65% of HPTec Singapore.

HPTecSingapore2

35%

M.Tech Malaysia

100%

Multi-Chem Kunshan

100%

Multi-Chem Wuxi100%

M.Tech Hong Kong

100%

PenangOffice

M.Tech Thailand1

49%

M.Tech Philippines

100%

M.Tech Training Centre

80%

Multi-Chem Suzhou100%

M.Tech Singapore

73.75%

M.Tech Shanghai

100%

MULTI-CHEMLIMITED

M.Tech India51%

Delhi Office

Bangalore Office

MumbaiOffice

Ho Chi Minh City

Representative Office

Hanoi Representative

Office

M.Tech Indochina

100%

SecureOneAsia100%

Multi-Chem Laser100%

Multi-Chem PCB

Kunshan100%

Guangzhou Branch

Beijing Branch

Taipei Branch

M.Tech Taiwan100%

M.Tech Indonesia

100%


REVENUE $141 MILLION

increased by 44.5%PBT $20 MILLION

increased by 12.7%RETURN ON SHAREHOLDERS’ EQUITY

20.2%


FINANCIAL HIGHLIGHTS

GROUP BALANCE SHEETAs at 31 December 2007 ($’000) 2007 2006 2005 2004 2003

Property, plant and equipment 85,639 65,982 48,019 40,664 33,059

Investment in an associated company 1,618 1,735 2,084 2,082 1,835

Other non-current assets 143 148 132 150 351

Current assets 68,062 56,360 34,914 23,029 24,110

Current liabilities (64,500 ) (43,912 ) (23,408 ) (13,568 ) (11,007 )

Net current assets 3,562 12,448 11,506 9,461 13,103

Borrowings (11,862 ) (18,495 ) (5,386 ) (6,298 ) (6,015 )

Deferred income tax liabilities (546 ) (502 ) (732 ) (626 ) (1,130 )

Other payables - - - - (100 )

78,554 61,316 55,623 45,433 41,103

Share capital and share premium 37,288 36,559 35,604 27,461 27,025

Other reserves (1,461 ) (1,534 ) 810 2,032 2,836

Retained earnings 40,465 24,881 18,486 15,425 11,074

76,292 59,906 54,900 44,918 40,935

Minority interests 2,262 1,410 723 515 168

78,554 61,316 55,623 45,433 41,103


GROUP PROFIT & LOSSYear Ended ($’000) 2007 2006 2005 2004 2003

Turnover 140,779 97,418 71,330 53,002 34,041

Gross Profit 36,971 31,038 23,084 17,610 10,144

Other gains/(losses) - net 698 1,877 953 (265 ) 879

Earnings before interest, tax, 33,852 27,271 20,804 16,156 9,862 depreciation & amortisation (EBITA)

Depreciation & amortisation (12,282 ) (8,812 ) (7,472 ) (6,497 ) (5,665 )

Interest expense (1,555 ) (686 ) (322 ) (174 ) (771 )

Profit from operations 20,015 17,773 13,010 9,485 3,426

Share of (loss)/profit from an associated company/a joint venture (117 ) (119 ) 27 247 (504 )

Profit before income tax 19,898 17,654 13,037 9,732 2,922

Income tax expense (3,714 ) (2,960 ) (1,584 ) (1,176 ) (734 )

Net profit 16,184 14,694 11,453 8,556 2,188

Minority interests (772 ) (360 ) (178 ) (148 ) (49 )

Equity holders of the company 15,412 14,334 11,275 8,408 2,139

ANALYSIS (%)Year 2007 2006 2005 2004 2003

Gross profit margin 26.3 31.9 32.4 33.2 29.8

PBT margin 14.1 18.1 18.3 18.4 8.6

Turnover growth 44.5 36.6 34.6 55.7 27.5

Operating profit growth 12.6 36.6 37.2 176.9 216.9

Net profit growth 10.1 28.3 33.9 291.0 35.6



PER SHARE DATA(cents, unless otherwise stated)

2007 2006 2005 2004 2003

Net earnings (basic)1 4.28 4.02 3.42 2.66 0.68

Net earnings (fully diluted)2 4.22 3.87 3.30 2.42 0.63

Net Dividend 0.83 0.84 2.61 1.27 1.29

Net Dividend payout (times) 0.19 0.21 0.76 0.48 1.90

Net assets value3 21.17 16.78 15.40 14.23 13.06

Gross dividend 0.83 0.84 2.61 1.58 1.37

Gross dividend yield (%)4 3.86 3.57 11.35 5.56 4.89

1Number of shares used in the above computation 360.0 356.5 329.9 315.7 314.9 2Number of shares used in the above computation 365.2 371.4 346.2 346.8 340.3 3Number of shares used in the above computation 360.4 357.0 356.4 315.7 313.54Based on the closing share price as at the 21.5 23.5 23.0 28.5 28.0

last market day of the year

1.29

1.27

2.61

0.84

0.83

2003

2004

2005

2006

2007

Net Dividend Cents

0.68

2.66

3.42

4.02

4.28

2003

2004

2005

2006

2007

Earnings per share Cents

FINANCIAL RATIOS 2007 2006 2005 2004 2003

Current ratio (times) 1.06 1.28 1.49 1.70 2.19

Return on shareholder’s funds (%) 20.20 23.93 20.54 18.72 5.23

Return on assets employed (%) 9.91 11.54 13.24 12.75 3.60

Debt equity ratio 0.61 0.71 0.28 0.25 0.28

Debt interest cover ratio 0.90 1.05 2.00 3.16 1.53




China 47% ASEAN 26%

Singapore 27%

ASEAN 25%

Singapore 35%

Group Turnover By Geographical Regions

Year 2007 Year 2006

Group Turnover$’000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

40,000

30,000

20,000

0

Group Profit Before Tax$’000

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Year 2006 Year 2007

Year 2006 Year 2007

22,100

21,845

26,574 26,89928,435

35,25038,922 38,172

4,999

3,185

5,157

4,313

2,7252,205

6,992 7,976

China 40%

10,000



SEGMENT INFORMATIONBY BUSINESS SEGMENTS

Year Ended Manufacturing Services IT Distribution PCB Distribution Group ($’000) 2007 2006 2007 2006 2007 2006 2007 2006

Turnover

1st Quarter 10,706 11,232 16,234 8,663 1,495 2,205 28,435 22,100

2nd Quarter 11,404 10,386 21,782 9,503 2,064 1,956 35,250 21,845

3rd Quarter 16,934 12,620 20,521 11,917 1,467 2,037 38,922 26,574

4th Quarter 16,680 13,120 19,588 12,205 1,904 1,574 38,172 26,899

55,724 47,358 78,125 42,288 6,930 7,772 140,779 97,418

Year Ended Manufacturing Services IT Distribution PCB Distribution Group ($’000) 2007 2006 2007 2006 2007 2006 2007 2006

Segment results

1st Quarter 1,715 3,992 1,325 874 92 160 3,132 5,026

2nd Quarter 1,124 3,037 1,118 638 77 (343 ) 2,319 3,332

3rd Quarter 5,849 4,184 1,677 1,153 (637 ) 92 6,889 5,429

4th Quarter 4,791 2,401 3,156 1,164 (796 ) 370 7,151 3,935

13,479 13,614 7,276 3,829 (1,264 ) 279 19,491 17,722

BY GEOGRAPHICAL SEGMENTS

Year Ended Singapore China ASEAN Group ($’000) 2007 2006 2007 2006 2007 2006 2007 2006

Turnover

1st Quarter 10,635 9,284 9,557 7,216 9,519 5,600 29,711 22,100

2nd Quarter 8,510 8,351 17,293 8,986 10,850 4,508 36,653 21,845

3rd Quarter 8,549 8,438 20,759 11,127 6,934 7,009 36,242 26,574

4th Quarter 10,835 7,772 18,087 12,081 9,251 7,046 38,173 26,899

38,529 33,845 65,696 39,410 36,554 24,163 140,779 97,418


FINANCIAL REVIEW

REVENUEThe Group grew at a robust rate of 44.5% for the year ended 31 December 2007 (“FY2007”). This was an increase of $43.3M as revenue exceeded the $100M mark and hit $140.8M in FY2007, from $97.4M for the year ended 31 December 2006 (“FY2006”). Revenue for the three months ended 31 December 2007 (“4Q2007”) of $38.2M also show a strong increase by 41.9% or $11.3M over revenue of $26.9M achieved for the three months ended 31 December 2006 (“4Q2006”). The overall improvement in revenue performance was mainly due to the growth in the Group’s manufacturing service business in China and the IT distribution business.

Comparing to 3Q2007, the Group experienced a slow down in both the manufacturing business and the IT distribution business in 4Q2007. Despite the growth in the distribution of PCB-related materials in 4Q2007, revenue decreased marginally by 1.9% or $750,000 from $38.9M for the three months ended 30 September 2007 (“3Q2007”) to $38.2M in 4Q2007.

In FY2007, the manufacturing service business accounted for about 40% of Group revenue, while the distribution business, comprising the distribution of PCB-related materials and IT distribution, accounted for the remaining 60%.

Manufacturing Services DivisionRevenue in this Division grew by 17.7% or $8.4M, from $47.4M in FY2006 to $55.7M in FY2007. The year-on-year revenue growth was achieved due to the strong demand for both mechanical and laser drilling services in China and the Group having the additional capacity to meet this demand. Mechanical and laser drilling service revenue alone grew by $7.7M and accounted for nearly 92% of the revenue increase in this Division.

The strong growth for drilling services in China was mainly due to the pick up in demand for our services, a more diverse customer base in China, an increase in the Group’s mechanical drilling capacity from an average of 132 mechanical drilling machines in FY2006 to 207 in FY2007 as well as higher efficiency from more advanced machines. Mechanical drilling made up approximately 85% of the business in this Division.

The growth in the electronic sector also resulted in increase in demand for routing service. With an increase of the Group’s routing capacity from an average of 45 routing machines in FY2006 to 60 routing machines in FY2007, the Group’s routing business increased by 21.7% or $861,000 from $4.0M to $4.8M. The growth in the Group’s China manufacturing service business was not matched by its Singapore operations, which recorded a decrease in the revenue by 22.3% or $ 4.1M from $18.4M in FY2006 to $14.3M in FY2007.

In 4Q2007, performance of the manufacturing services business in Singapore weakened by 25.3% and 5.9% as compared to 4Q2006 and 3Q2007 respectively, mainly due to the lower demand for outsourced mechanical drilling services.

Despite the slow down in Singapore, this Division recorded revenue of $16.7M in 4Q2007, an increase of 27.1% or $3.6M from $13.1M in 4Q2006 due to the strong demand in both the mechanical and laser drilling business in China. Compared to 3Q2007, total manufacturing service revenue decreased marginally by 1.5% or $253,000 in 4Q2007, from $16.9M to $16.7M, as demand slowed down during the month of December 2007.


Distribution DivisionThe Group achieved a revenue growth of 69.9% or $35.0M, from $50.1M in FY2006 to $85.1M in FY2007 for the Distribution Division. On a quarterly basis, the Group achieved a revenue growth of 56.0% or $7.7M, from $13.8M in 4Q2006 to $21.5M in 4Q2007. The growth in this division was achieved mainly due to the strong IT business.

Comparing 4Q2007 to 3Q2007, revenue decreased marginally by 2.3% or $497,000 from $22.0M to $21.5M as the pick up in the distribution of PCB specialty chemicals and related products business did not fully offset the decrease in revenue from the IT business in 4Q2007.

PCBRevenue derived from the distribution of PCB specialty chemicals and related materials dropped by 10.8% from $7.8M in FY2006 to $6.9M in FY2007 mainly due to a weaker first half. The business picked up in 4Q2007 and compared to 4Q2006, this business achieved revenue of $1.9M, an increase of 20.9% or $329,000 from $1.6M in 4Q2006. Comparing 4Q2007 to 3Q2007, revenue increased by 29.6% or $434,000 from $1.5M to $1.9M. The performance of the PCB distribution business was pressured by continuing price reduction from customers since 2006 and weaker margin from rising material costs in a product line. The better performance in 4Q2007 from the increase in sales for one of the product lines did not fully offset the decrease in the previous quarters.

ITThe IT distribution business reported a significant increase in revenue of 84.7% or $35.8M, from $42.3M in FY2006 to $78.1M in FY2007. Comparing 4Q2007 to 4Q2006, revenue grew by 60.5% or $7.4M from $12.2M to $19.6M. The growth in this

business was largely due to the addition of several products and the expansion of the regional businesses. The addition to sales and pre-sales personnel and new products to the Group’s product portfolio also played a part in the revenue growth.

While Singapore remains the main market for the IT business in FY2007, the regional subsidiaries of the Company are as a whole becoming more significant through expansion. In FY2007, revenue from regional markets increased by 107% or $28.5M, from $26.0M in FY2006 to $54.5M in FY2007.

PROFIT BEFORE TAXThe Group achieved a PBT of $19.9M in FY2007, an increase of 12.7% or $2.2M over the PBT of $17.7M achieved in FY2006, largely in line with the higher revenue and gross profit. The increase was also due to an increase in gain on disposal of fixed assets from $715,000 in FY2006 to $926,000 in FY2007 from the sales of 19 mechanical drilling machines to external parties.

Gross profit margin decreased by 6 percentage points from the average of 32% in FY2006 to 26% in FY2007 mainly due to increase in depreciation charged on the additional 95 new machines purchased during the year, a decrease in the higher value Singapore manufacturing business, lower margin IT projects won in China and an increase in provision for inventory impairment from $654,000 in FY2006 to $1.1M in FY2007. The provision for inventory impairment relates to the IT stock, in line with the Group’s inventory provision policy.

The increase in PBT was also offset mainly by the following:-(1) An increase in payroll-related expenses

of $1.3M from $13.0M in FY2006 to $14.3M in FY2007 due mainly to higher headcount from the expansion of the

FINANCIAL REVIEW


regional businesses and provision for directors’ share of profits, as provided for in their respective service agreements; and

(2) An increase in interest in borrowings from $686,000 for loan drawn down in FY2006 to $1.6M in FY2007.

On a quarterly basis, Group PBT increased by 84.9% or $3.7M, from $4.3M in 4Q2006 to $8.0M in 4Q2007 due to the strong 4Q2007 revenues in both the China manufacturing service business and in the IT business. Comparing 4Q2007 to 3Q2007, Group PBT increased by 14.1% or $984,000, from $7.0M to $8.0M.

PROFIT AFTER TAXGroup PAT increased by 10.1% or $1.5M, from $14.7M in FY2006 to $16.2M in FY2007. Comparing 4Q2007 to 4Q2006, PAT increased by 109.3% or $3.6M, from $3.3M to $6.9M. On a sequential basis, Group PAT increased by $987,000 from $5.9M in 3Q2007 to $6.9M in 4Q2007. These were largely in line with the changes in Group PBT.

Provision for tax comprised mainly income tax and deferred tax of the Company and its subsidiaries. Multi-Chem Laser and Multi-Chem Kunshan currently enjoy tax-free status on profits while Multi-Chem Wuxi enjoys tax-free status on 50% of its profits.

BALANCE SHEET REVIEWBelow is a review of material changes in the key balance sheet items for the year period ended 31 December 2007.

Cash and cash equivalents at the Group level decreased from $17.2M to $10.7M. At the Company level, cash and cash equivalents

decreased from $10.2M to $522,000. The decreases at both the Group and Company level were mainly due to repayment of term loan, bills payable and income tax payment from higher profitability.

Trade and other receivables of the Group increased from $31.1M to $46.0M. The increase is in line with the increase in revenue in 4Q2007 as compared to 4Q2006. At the Company level, trade and other receivables increased from $18.3M to $34.4M mainly due to the sales of machinery to China subsidiaries for the expansion in China.

Inventories at the Group level increased from $7.3M to $9.7M mainly due to the increase in IT inventory resulting from the growth of the IT business in Singapore and regionally, offset by the provision for slow moving inventory of $1.1M. At the Company level, inventories which comprised mainly of PCB specialty chemicals and related materials increased from $1.1M to $1.5M which is in line with the increase in the PCB distribution business towards the end of the year.

Other current assets at the Group level increased from $677,000 to $1.4M. At the Company level, it increased from $250,000 to $609,000. The increase was mainly due to prepayment made for professional services rendered and for the supply of generator to the Group’s China plant.

Investment in an associated company decreased from $1.7M to $1.6M mainly due to the share of loss for the year. There is no change at the Company level as the investment is accounted for at cost, as opposed to the equity method at Group level.

FINANCIAL REVIEW


Property, plant and equipment increased from $66.0M to $85.6M at the Group level. At the Company level, it decreased from $19.7M to $14.6M. The changes are mainly due to the addition of 95 units of new CNC drilling machines, 10 new routing machines and 10 new laser drilling machine for the China operations, offset by the sale of 19 units of used CNC drilling machines in Singapore and China to third parties and the depreciation charged.

Trade and other payables increased marginally from $5.0M to $9.3M at the Company level and increased from $16.5M to $26.6M at the Group level. The increase was arising from the provision for directors’

share of profits, increase in payables to principals of the IT distribution business and increase in payables to suppliers for the Group’s China operations, resulting from the higher business volume.

Bills payable to banks increased from $14.4M to $22.9M at both the Group and the Company level. The increase was mainly due to additional bills payable amounting to $29.6M for financing the purchase of new machines, offset by repayment during the year.

Borrowings decreased at both the Group and Company levels mainly due to repayment of bank borrowings and finance leases.

FINANCIAL REVIEW

INDEBTEDNESS

The amount of Group’s borrowings is as set out below:

2007 2006

Due within 1 year:

Bills payable 22,925 14,438

Bank borrowings 10,252 7,503

Convertible notes [1] 2,434 2,920

Finance leases 231 202

35,842 25,063

Due after 1 year:

Bank borrowings 11,059 17,443 Finance leases 803 1,052

11,862 18,495

Total debt 47,704 43,558

Debt equity ratio 0.61 0.71

Debt interest cover 0.90 1.05

(1) The convertible notes of $2.434M was fully redeemed on 29 February 2008.


The Group generated a net cash of $19.6M from operating activities in FY2007, an increase of $804,000, from $18.8M in FY2006. This was mainly due to the higher profit after tax in FY2007, as well as the increase of trade and other payables, resulting from higher business volume. The increase was offset by the higher inventory holdings due to the expansion of the IT distribution business, increase in trade and other receivables due to increase in revenue and higher tax paid due to better profitability in the business. Comparing 4Q2007 to 4Q2006, the Group generated a marginal increase from net cash inflow of $5.8M in 4Q2007 and $5.6M in 4Q2006. The higher profit after tax recorded in 4Q2007 was offset fully by increase in trade and other receivables and higher tax paid from higher profitability.

Net cash of $31.1M was used in investing activities in FY2007, up from $26.2M in FY2006. This was due to $35.5M invested in

the purchase of machinery in FY2007, which was also partly financed by bills payable, offset by cash received from the disposal of property, plant and equipment (mainly the older productive equipment). Comparing 4Q2007 to 4Q2006, net cash used in investing activities decreased from $6.6M to $1.7M mainly due to the cash received from the disposal of 15 drilling machines in 4Q2007.

Net cash of $5.3M was generated from financing activities in FY2007, a decrease of $14.1M, from $19.4M in FY2006. The decreased was mainly due to repayment of borrowings, interest on loan and bills payable, offset by the proceeds from bills payable. The proceeds from borrowings amounted to $25.3M in FY2006, did not occur in FY2007.

Cash and cash equivalent stood at $10.7M as at end of 31 December 2007, down from $17.2M as at end of 31 December 2006.

CASH FLOW ANALYSIS

The movement in cash and cash equivalents is set out as follows: Year Ended ($’000) 2007 2006

Cash flows provided by operating activities 19,578 18,775

Cash flows used in investing activities (31,064 ) (26,162 )

Cash flows provided by financing activities 5,349 19,424

Net (decrease)/increase in cash and cash equivalents (6,137 ) 12,037

Cash and cash equivalents at beginning of the financial year 17,232 5,446

Effect of exchange rate changes on cash and cash equivalents (419 ) (251 )

Cash and cash equivalents at end of the financial year 10,676 17,232

FINANCIAL REVIEW


VALUE ADDED STATEMENT

Year Ended ($’000) 2007 2006

Sales 140,779 97,418

Purchase of goods & services (94,568 ) (60,136 )

Gross value added from operations 46,211 37,282

Other operating income 698 1,877

Share of results of associated company before tax (117 ) (119 )

Exchange gain 1,239 1,157

Total value added 48,031 40,197

Distribution:

To employees in salaries & other staff related costs 14,296 13,045

To government in corporate and other taxes 3,714 2,960

To providers of capital

- Finance costs 1,555 686

Retained in the business

- Depreciation 12,282 8,812

- Minority interests 772 360

- Retained earnings 15,412 14,334

Total distribution 48,031 40,197

Productivity Data

Average number of employees 1,443 892

Sales per employee ($’000) 98 109

Value added per employee ($’000) 33 45

Value added per $ employment cost 3.36 3.08

Value added per $ net sales 0.34 0.41


INVESTOR RELATIONS

Multi-Chem recognises the importance of good investor relations and has made positive strides in this area. The Company has been keeping shareholders and the investing community updated on the key developments of the Group through regular announcements on SGXNET. These announcements can also be found in Chinese under http://ir.zaobao.com/multichem in the Zaobao.com website.

Multi-Chem has always made efforts to announce our results early. To facilitate a better understanding of our results, plans and prospects, we held an analysts cum press meeting on 29 January 2008 to announce our full-year results for 2007. The presentation slides on our full year results and the investor on-line Q&A session with management were also made available in the Shareinvestor.com website. The Company continues to announce its quarterly results within the following month after each quarter to provide investors prompt quarterly updates of financial and business developments of the Group.

In October 2007, Multi-Chem was ranked 17th out of 672 companies in The Business Times Corporate Transparency index for companies announcing results by 29 August 2007, the sixth year running that the Company was ranked among the Top 20. In February 2008, the Company won the Best Annual Report (Gold) for companies with less than $500M in market capitalisation, under the Singapore Corporate Award 2008, organised by The Business Times and supported by The Singapore Exchange.

The Company has its own corporate website www.multichem.com.sg while its IT security arm has its own website www.mtechpro.com to provide information on its products and services.

In order to reach out to our existing and potential investors, the Company renewed its participation in the SGX-MAS Research Incentive Scheme for 2007 in which two research firms are assigned to furnish two results reports and two research reports for us. These reports are posted on the SGX website www.sgx.com/research for easy and free access by investors.

The Company registered as a corporate member of Investor Relations Professionals Associate (Singapore) (“IRPAS”) during the year. IRPAS provides a platform to promote awareness of and best practices in investor relations thereby adding value to the relationship between the Company and the investment community.

We will continue to place emphasis on good investor relations and make efforts on improving the information flow so that awareness about the Group and its business can be built.


INFORMATION ON EMPLOYEES

Human Resource is the single most important asset in the Group and the people we have determines the character of the Group.

Our employees are key resources and we aim to recognise and reward capable and dedicated staff. Rewards are linked directly to employee’s performance, contribution to the Company and responsibility level.

Promising employees are given the opportunity to work for a period in our overseas subsidiaries to further enhance their experience. Selected employees are also given the opportunity to attend local or overseas trade shows or vendors’ events to learn more about the products and to network.

The Group conducts yearly appraisal to evaluate the performance of staff and provides staff with a sense of self-awareness to undertake training that will improve their skills and abilities.

The Manufacturing Services Division is in a business which is capital intensive and that further requires our employees to have the necessary knowledge in operating the machinery and equipment. Selected employees are sent for training conducted by machine manufacturers to learn about the operations, capability and maintenance of the equipment.

In the Distribution Division, selected employees are sent for training by our vendors, as well as attached to our customers’ production lines in the region for on-the-job training. The employees of the M.Tech group are also given regular product updates and technical training both in-house and by our vendors. In 2007 a total of 12 long service award are given out to employees with a five years continuous employment record.

The amount spent on employees providing them with on-the-job training, in-house and external training amounted to approximately $192,000.



Managerial 3%Sales 4%Engineering 6%Administrative 8%Technical & Others 79%

Breakdown by Job Group Breakdown by Educational Qualification

INFORMATION ON EMPLOYEESAs at 31 December 2007

Degree & above 15%Diploma & equivalent 4%O’ & ‘A’ level & equivalent 34%Trade Cert & equivalent 34%Secondary & equivalent 13%

3% 4%6%

8%

79%

Breakdown by Years of Service

10 yrs & above 1%6 - 9 years + 1%3 - 5 years + 10%1 - 2 years + 27%below 1 year 61%

10%1%

61% 27%

1%

4%

34%

13% 15%

34%

Number of Employees

Singapore

84

China

1,082

Singapore

44

China

41

ASEAN

77

Other Countries

9Total

1337

Manufacturing Services Distribution

CORPORATE GOVERNANCE REPORT

Corporate governance refers to the processes and structure by which the business and affairs of the Company are directed and managed. The Board recognises that sound corporate governance is an essential part of good business practices and corporate accountability. Accordingly, the Company has adopted measures and practices set out in the Best Practices Guide issued by The Singapore Exchange and the Code of Corporate Governance 2005 issued (“Code”) by the Ministry of Finance on 14 July 2005.

Deviations from the Code if any is explained in the report below.

BOARD MATTERS The Board’s Conduct of Affairs The Board is responsible for setting the Group’s strategic vision, direction and long-term goal, management and internal control, approval of major projects and significant financing matters, and approval of the release of the quarterly reports.

The Board has adopted the recommendations of the internal auditors set out in the internal audit report. Additionally, Board approval has to be sought for transactions not in the ordinary course of business if such transaction exceeds $2.0M in value. To facilitate operational efficiency, the Board approval would not be required for day-to-day decisions and matters that are operational in nature, even though such single transaction may exceed $2.0M in value.

To facilitate effective management, certain functions of the Board have been delegated to various Board committee, namely AC, NC and RC. Further information regarding the Board’s function and details of terms of reference of the respective Board Committee are set out in the later part of the report.

Matters that are reserved for the Board include broad policy decisions, material acquisitions and disposals of assets, approve nomination of Directors, announceable matters to SGX, proposal of dividends, approval of Directors’ Report and Statement by Directors and audited financial statements, corporate or financial restructuring and other significant corporate actions. In lieu of physical meetings, written resolutions were also circulated for approval by the Directors.

The Company works closely with the professional corporate secretarial firm, Tricor Evatthouse Corporate Services, to provide the Board with regular updates of the latest governance and listing policies. The Board will also receive relevant training, if required, on changes in the business environment, relevant new laws, regulations and changing commercial risk.

Newly appointed Directors are given briefings on the business activities of the Group, its strategic directions, governance practices and Director’s duties and obligations. They are given the opportunity to visit the Group’s operational facilities to gain a better understanding of the Group’s business operations. They can also request the Company to provide accounting, legal and industry-specific knowledge if needed.



The Board meets regularly on a quarterly basis to coincide with the announcement of the Group’s quarterly results. When circumstances require, the Board will arrange for telephonic and videoconference meetings. Non-executive Directors are encouraged to meet regularly without management present.

The number of board meetings held in 2007 and the attendance of every board member at the Board and committees meetings are disclosed as follows:

Board Composition and GuidanceThe Board consists of six members out of which three are non-executive and independent Directors. The independence of each Director is reviewed annually by the NC which was formed on 2 December 2002. An independent Director shall notify the Company Secretary immediately of any change in circumstances that may result in him not being able to meet the criteria for independence. The Board may, after considering the change in circumstances, require the resignation of the Director.

The NC is of the view that Mr Wong Meng Yeng, Mr Chew Thiam Keng and Mr Lim Keng Jin are independent as at the date of this Annual Report and their experience in finance, business and law enables them to exercise objective judgement on corporate affairs independently. No individual or small group of individuals dominate the Board’s decision making process.

The Board is of the view that its size is appropriate for effective decision making taking into account the scope and the nature of the operations of the Company.

Chairman and Chief Executive OfficerMr Foo Suan Sai is both the Chairman and Chief Executive Officer. He is also an Executive Director.


Name Board AC NC RC

Foo Suan Sai 4 4 - - - 1 1 - - -

Han Juat Hoon 4 4 - - - - - - - - -

Ho Boon Chuan Wilson 4 4 - - - - - - - - -

Wong Meng Yeng 4 4 4 4 1 1 1 1

Chew Thiam Keng 4 4 4 4 1 1 1 1

Lim Keng Jin 4 4 4 4 1 1 1 1

Toshiaki Suzuki (1) 4 4 4 4 - - - 1 1

Num

ber

Hel

d

Num

ber

Att

ende

d

Mem

ber

Num

ber

Hel

d

Num

ber

Att

ende

d

Mem

ber

Num

ber

Hel

d

Num

ber

Att

ende

d

Mem

ber

Num

ber

Hel

d

Num

ber

Att

ende

d

(1) Mr Toshiaki Suzuki resigned as a Non-Executive Director on 31 December 2007.


As a principle of good corporate governance, the Board has set the condition that the Company should have separate persons as Chairman and Chief Executive Officer when the Group’s turnover exceeded S$100M. The NC is currently shortlisting candidates for the position of non-executive Chairman and will make the appropriate announcement on the appointment at the relevant time. Mr Foo Suan Sai will remain as the Chief Executive Officer.

The role of the Chairman pertaining to Board proceedings includes:• Scheduling of meetings that enables the Board to perform its duties while not interfering

with the flow of the Company’s operations;• Setting meeting agenda;• Exercising control over quality, quantity and timeliness of the flow of information between

management and the Board; • Assisting in ensuring compliance with the Company’s guidelines on corporate governance;

and• Encouraging constructive relations between executive Directors and non-executive Directors

and facilitating the effective contribution of non-executive Directors in particular.

BOARD COMMITTEESBoard MembershipBoard membership is under the purview of NC which comprises Mr Chew Thiam Keng as Chairman, Mr Foo Suan Sai, Mr Wong Meng Yeng and Mr Lim Keng Jin as members. A majority of the NC is independent.

The NC has a written terms of reference that describe its responsibilities, which include maintaining an effective Board and ensuring that only competent individuals capable of contributing to the success of the Company are appointed. Where new appointments are required, the NC will consider recommendations for new Directors, review their qualifications and meet with such candidates before a decision is made on a selection. The Company will send out/provide a formal letter setting out the Director’s roles and responsibilities for new Director appointed to the Board. The NC also promotes transparency in the selection and appointment of new Board members as well as their subsequent re-nomination/re-election.

A member who wishes to retire or resign should provide sufficient notice to the Company so that a replacement may be appointed before he leaves. In the event of any vacancy in the NC, the Company shall endeavour to fill the vacancy within two months, but in any case not later than three months.

In reviewing for re-nomination/re-election, NC has to consider criteria such as the Director’s contribution and performance, attendance, preparedness, participation and candour and if applicable, assessment of the Director’s independence. The Committee should also decide whether the Director under review has been adequately carrying out his/her duties as Director of the Company. All Directors have to submit themselves for re-nomination/ re-election at regular intervals or at least once every three years in accordance with the Company’s Articles of Association.



Key information regarding the Directors is disclosed as follows:

Present Directorships Past Directorships Other major Name in other listed in other listed appointments companies companies over last 3 years

Foo Suan Sai - - Managing Director, HPTec Singapore

Han Juat Hoon - - -

Ho Boon Chuan Challenger Technologies - - Wilson Limited

Wong Meng Yeng KS Energy Services Limited Rotol Singapore Ltd - Novena Holdings Limited Pan Asian Water Solutions Limited

Chew Thiam Keng China Dairy Group Ltd. Ban Joo & Company - Ezion Holdings Limited Limited

Pharmesis International Ltd. KS Energy Services Showy International Limited Limited Sim Siang Choon Ltd

Lim Keng Jin G.K. Goh Holdings Limited - -

Toshiaki Suzuki (1) - - -

As at 31 December 2007, the Directors of the Company are as follows:


Name Age Position Date of initial Date of last appointment re-election

Foo Suan Sai 54 Chairman 30 Sep 1988 -

Han Juat Hoon 51 Executive Director 16 May 1987 28 Apr 2006

Ho Boon Chuan Wilson 37 Executive Director 29 Apr 2005 28 Apr 2006

Wong Meng Yeng 49 Independent Director 5 Jan 2000 27 Apr 2007

Chew Thiam Keng 45 Independent Director 5 Jan 2000 27 Apr 2007

Lim Keng Jin 73 Independent Director 29 Apr 2005 27 Apr 2007 (1)

Toshiaki Suzuki (2) 74 Non-Executive Director 5 Jan 2000 27 Apr 2007 (1)

(1) Re-appointed as Directors pursuant to Section 153(6) of the Companies Act, Cap 50.(2) Mr Toshiaki Suzuki resigned as a Non-Executive Director on 31 December 2007 .

(1) Mr Toshiaki Suzuki resigned as a Non-Executive Director on 31 December 2007


Board PerformanceThe Board’s performance is ultimately reflected in the performance of the Group. The Board shall, at all times, act honestly and use reasonable diligence and care in the discharge of the duties of their office. They have to carry their duties in the best interests of the Company and its shareholders. Board members must attend at least 75% of all Board Meetings.

The NC has established an appraisal process to access the performance and effectiveness of the Board as a whole annually. It focuses on a set of performance criteria which includes the evaluation of the size and composition of the Board, the Board’s access to Information, Board process and accountibility, and the Board performance in relation to discharging its principal responsibilities.

Performance of Board members is also evaluated informally on a continual basis by the NC according to their contribution during meetings and also their input to the Company on e.g. corporate governance, legal or accounting matters, based on their individual expertise. The NC is of the opinion that the above performance evaluation criteria is currently adequate.

Access to InformationIn order to ensure that the Board is able to fulfil its responsibilities, the Company circulates the reports relating to operational and financial performance of the Group and Company prior to the Board meetings held quarterly. The reports are also available upon request. Where a physical meeting is not possible, timely communication with members of the Board is effected through electronic means which include electronic mail and teleconferencing.

The Directors have also been provided with the phone numbers and email particulars of the Company Secretary for separate and independent access. The Board will refer issues to the AC for opinion on whether any independent advice is necessary. Should any independent advice be required, the cost of such professional advice will be borne by the Company.

The role of the Company Secretary was clearly defined and reported to the Board on 6 January 2003. It includes responsibility for ensuring Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary shall attend all Board Meetings. The appointment and the removal of the Company Secretary is a matter for the Board as a whole.



REMUNERATION COMMITTEERemuneration MattersThe RC comprises three members, all are independent Directors. The RC is chaired by Mr Lim Keng Jin, an independent Director. And Mr Wong Meng Yeng and Mr Chew Thiam Keng are members. The RC meets at least once a year and is responsible for reviewing the performance of the Chief Executive Officer, the Chief Operating Officer and senior management, as well as reviewing and approving executive remuneration including but not limited to Director’s fees, salaries, allowances, bonuses and benefits. If necessary, the RC may seek expert advice inside and/or outside the Company on remuneration of all Directors.

Level and Mix of RemunerationThe executive Directors, Mr Foo Suan Sai and Mdm Han Juat Hoon, are also the substantial shareholders of the Company. Their interests are therefore in line with the Company’s interest. Remuneration of these executive Directors is in accordance with their service contracts.

Remuneration of non-executive Directors takes into account the effort and time spent, including the responsibilities of each Director. Non-executive Directors are paid Directors’ fees, subject to approval of the Shareholders at the Annual General Meeting (“AGM”).

The Company currently does not have any share option scheme in place.

Disclosure on RemunerationRemuneration is fixed in accordance with the experience of the person in question, the role performed, market comparison, the contribution of the individual and/or the performance of the Company.

The number of Directors whose remuneration falls within the following bands:


Remuneration Bands (in Singapore Dollars) 2007 2006

$2M to below $2.25M 1 - $1.75M to below $2M - 1 $1.25M to below $1.5M 1 1$500,000 to below $750,000 1 - $250,000 to below $500,000 - 1 Below $250,000 4 4 Total 7 7


The annual remuneration bands of the Directors and the Executive Officers (in Singapore Dollars) are set out below:

Base Variable Profit FY2007 Salary Bonus Sharing Benefits Fees Total % % % % % %

Directors $2M to below $2.25M Foo Suan Sai 37 - 62 1 - 100

$1.25M to below $1.5M Han Juat Hoon 35 - 64 1 - 100 $500,000 to below $750,000 Ho Boon Chuan Wilson 65 - 33 2 - 100 Below $250,000 Wong Meng Yeng - - - - 100 100 Chew Thiam Keng - - - - 100 100 Lim Keng Jin - - - - 100 100 Toshiaki Suzuki (1) - - - - 100 100 Executive Officers Below $250,000 Pui Boon Tiong Eugene 83 15 - 2 - 100 Koh Henry 86 14 - - - 100 Yang Wen Kuai 69 15 - 16 - 100 Lim San San 78 22 - - - 100(1) Mr Toshiaki Suzuki resigned as a Non-Executive Director on 31 December 2007.

Remuneration of Mr Foo Suan Sai and Mdm Han Juat Hoon is in accordance with their respective service contract with the Company, which is renewed annually unless terminated by either party giving not less than three months notice to the other. For Mr Ho Boon Chuan Wilson and the key Executives, the remuneration is based on their respective employment contract with the Company and fixed based on the above factors as well as negotiation between the parties concerned. Mr Ho Boon Chuan Wilson is also entitled to a profit sharing scheme tied to the M.Tech group’s performance, approved by the RC during the year. The profit sharing scheme pays out a certain percentage of the profit to those entitled when performance of certain entities within the Group exceeds the target.

The total remuneration of employees who are related to the substantial shareholders is subject to the annual review and majority approval of the RC. For FY2007, the total remuneration paid to these employees amounted to S$495,500 (2006: S$359,269).

An immediate family member of Mr Foo Suan Sai, the Chief Executive Officer, has an employment relationship with a subsidiary, and has received remuneration amounting to S$282,000 in that capacity during the financial year.



ACCOUNTABILITY AND AUDITAccountabilityThe Board is accountable to the shareholders and the management is accountable to the Board.

The Company has adopted quarterly results reporting since the third quarter of 2002. For its financial reporting, the Company will continue to provide a balanced and understandable assessment of the Group’s performance, position and prospects on a quarterly basis.

Audit CommitteeThe AC comprises three members, all are independent Directors. The AC is chaired by Mr Wong Meng Yeng, an independent Director. The other AC members, Mr Chew Thiam Keng and Mr Lim Keng Jin, the independent Directors have financial management expertise and experience.

The NC is of the view that the members of the AC have the necessary expertise and experience to discharge its functions.

The AC has a set of terms of reference defining its scope of authority which includes:• To review the scope and results of the audit, whether it is cost effective and the independence

and objectivity of the external auditors on an annual basis;• To make recommendations to the Board on the appointment, reappointment and removal

of the external auditor, and approving the remuneration and term of engagement of the external auditors;

• To review with the external auditors on their audit report, management letter and management’s response;

• To review the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the Company and any formal announcement relating to the Company financial performance;

• To review the quarterly, half-yearly and annual financial statements before submission to the Board;

• To review the assistance given by the management to the auditors;• To review the adequacy of the Company’s internal controls;• To review the scope and results of the internal audit procedures; and• To review interested party transactions periodically.

The AC is satisfied with the independence of the existing external auditors, Messrs PricewaterhouseCoopers (“PwC”), and there are no non-audit services provided to the Group by PwC during the year. However, the Company has proposed to change its external auditors from PwC to Messrs BDO Raffles for the financial year ending 31 December 2008. The rationale of the change is the Audit Committee believes that a periodic rotation of external auditors will serve to further enhance the independence and effectiveness of the external auditors and, in the process, further strengthen the corporate governance of the Group. Furthermore, the appointment of BDO Raffles for the Group audit will be more cost efficient.




The AC meets at least four times a year and, in addition to the members of the AC, such meetings are also attended by external auditors and appropriate members of the executive management by invitation. In FY2007, the AC has carried out the activities as set out above. The AC meets the auditors without the presence of management at least once annually. For FY2007, the AC met the external auditors via teleconferencing on 31 December 2007 and the internal auditors on 24 March 2008.

The Company has put in place a whistle-blowing framework, endorsed by the AC, where employees of the Company may, in confidence, raise their concerns over any wrongdoing within the Company relating to unlawful conduct, financial malpractice or dangers to the public or the environment. Details of the whistle-blowing policies and arrangements have been made available to all employees.

Other information pertaining to the AC is disclosed on page 38 of the annual report.

Internal ControlsThe Board is responsible for ensuring that the Company maintains a sound system of internal controls to safeguard shareholders’ interest and Company’s assets. The Board also oversees matters relating to management of risks.

The effectiveness of the Company’s material internal controls is reviewed annually by the AC. The Board is of the opinion that the Company has adequate internal controls, including financial, operational and compliance controls to safeguard shareholders’ investment and Company’s assets. In terms of risk management, the Board seeks to identify areas of significant risks and apply appropriate measures to control and mitigate these risks. It also monitors the implementation of such measures.

Internal AuditThe internal audit function is outsourced to a public accounting firm, Yang Lee & Associates. They conduct reviews of the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls, and risk management annually.

The internal auditors meet with the Board and AC at least twice a year, to present their audit plans initially and to report their audit findings subsequently. Management has to respond to the audit findings and take action, where necessary, to improve any internal control weaknesses.

The internal auditors’ primary reporting line is to the Chairman of the AC. Material non-compliance and internal control weaknesses noted during the audit are reported to the AC.

It is the responsibility of the AC, at least annually, to ensure the adequacy of the internal audit.


COMMUNICATION WITH SHAREHOLDERSThe Company aims to engage in regular, effective and fair communication with shareholders, and be as descriptive, detailed and forthcoming as possible.

Its financial results are disclosed on a quarterly basis through SGXNET within the mandatory period and the information is also available on the Company’s website, and investor relations sites, Zaobao.com and Shareinvestor.com. Information on the Company’s new initiatives or key developments are first disseminated via SGXNET and also made available on-line to shareholders. Price sensitive information is announced through SGXNET. However, any information that may be regarded as undisclosable material information about the Group will not be given.

Shareholder Participation All shareholders of the Company receive the annual report and notice of AGM. The notice is also advertised in the press and made available on the website. At AGM, the Company encourages shareholder participation and shareholders are given the opportunity to air their views and ask Directors or management questions regarding the Company.

The Company’s Articles of Associations allow a member of the Company to appoint one or two proxies to attend and vote instead of the member.

At every AGM, the chairpersons of the AC, NC and RC are present and available to address questions. The external auditors are also present to assist the Directors in addressing any relevant queries by shareholders and address shareholders’ queries about the conduct of audit and the preparation and content of the auditors’ report.

Each item of special business included in the notice of the meeting will be accompanied by a full explanation of the effects of a proposed resolution. Separate resolutions are proposed for substantially separate issues at the meeting and the Chairman declares the number of proxy votes received both for and against each separate resolution.

A summary of the discussion, which includes substantial comments or queries from shareholders and responses from the Board and management at the AGM will be made available to shareholders upon their request.




DEALINGS IN SECURITIESThe Group has set an internal guideline which is applicable to all its Directors and key employees in relation to dealing in the Company’s securities. Share trading guidelines, in particular, that Directors and key employees should not deal in the Company’s securities(a) when in possession of unpublished material price sensitive information;(b) on short term considerations; and (c) during the period commencing two weeks before the announcement of the Company’s

first three quarter results and one month before the announcement of the Company’s full year results and ending on the date of the particular announcement,

have been disseminated to Directors and key employees (including employees with access to price sensitive information in relation to the Company’s shares). In addition, the guidelines require key employees to disclose in writing to the executive Directors on their dealings in the Company’s securities.

INTERESTED PERSON TRANSACTIONS The Company monitors all its interested person transactions and ensures that all transactions with interested persons are reported in a timely manner for review by the AC. The AC reviewed the interested person transaction relating to the sale of the Company’s motor vehicle to Mdm Han Juat Hoon at the price of S$126,000. The transaction was conducted at arm’s length, based on normal commercial terms and not prejudicial to the shareholders. Other than the above, there was no other interested party transaction entered into with value more than S$100,000 during the financial year.

MATERIAL CONTRACTSThere were no material contracts entered into by the Company or any of its subsidiaries involving the interest of the Chief Executive Officer, any Director or controlling shareholder, either still subsisting at the end of FY2007 or entered into since the end of FY2006.

Foo Suan SaiGroup Chairman & Chief Executive Officer


CORPORATE DIRECTORY

Chairman & Chief Executive OfficerFoo Suan Sai

Chief Operating OfficerHan Juat Hoon

Chief Financial OfficerHo Boon Chuan Wilson

Finance, HR & AdministrationLim San SanLim Kok Soon Rayson

Distribution DivisionFoo Fang Song MaxGoh Tian Keong Winston

Purchasing & LogisticsFoo Suan OoiLoo Lay Yeo JennySiow Mee Lin

Manufacturing Services DivisionPui Boon Tiong EugeneKoh HenryYang Wen KuaiLee Thiam Huat Daniel

OFFICES IN SINGAPOREHEAD OFFICEMulti-Chem Limited11 Tuas Avenue 5Singapore 639337Main Line : (65) 6863 1318Main Fax : (65) 6863 1618

M.Tech Products Pte Ltd18 Boon Lay Way #06-111 TradeHub 21 Singapore 609966Main Line : (65) 6779 6755Main Fax : (65) 6779 6553

M.Tech Training Centre Pte. Ltd.18 Boon Lay Way #06-111 TradeHub 21 Singapore 609966Main Line : (65) 6779 6755Main Fax : (65) 6779 6553

SecureOneAsia Pte Ltd11 Tuas Avenue 5Singapore 639337Main Line : (65) 6863 1318Main Fax : (65) 6863 1618

ASSOCIATED COMPANYHawera Precision Tec Pte Ltd11 Tuas Avenue 5Singapore 639337Main Line : (65) 6863 1318Main Fax : (65) 6863 1618

MANUFACTURING SERVICES BUSINESS IN CHINA

Multi-Chem (Suzhou) Co., Ltd.No. 369, Jingmao Road North Area of Luofeng District Suzhou Industrial ParkJiangsu Province, P.R.C 215000Main Line : (86 512) 8818 8868Main Fax : (86 512) 8818 8869

Multi-Chem Electronics (Kunshan) Co., Ltd.No. 22 Zangji Road Kunshan E.T.D.Zone Kunshan 215301, Jiangsu, PRCMain Line : (86 512) 8617 6689Main Fax : (86 512) 8617 6832

Multi-Chem Electronics (Wuxi) Co., Ltd.No. 31 Tuanjie Road Xishan Economic Development ZoneWuxi, Jiangsu Province, PRC 214101Main Line : (86 510) 8826 0498Main Fax : (86 510) 8826 0428

Multi-Chem Laser Technology (Suzhou) Co., Ltd.No. 5 Xing Han Street Block F-Unit 02 Suzhou Industrial ParkJiangsu Province, PRC 215021Main Line : (86 512) 8818 8900Main Fax : (86 512) 8818 8898

Multi-Chem PCB (Kunshan) Co. ,Ltd.No.255 Nan Zi Road Kunshan Export Process Zone Jiangsu ChinaMain Line : (86 512) 8617 6689Main Fax : (86 512) 5792 3692


IT BUSINESS OVERSEASMALAYSIA OFFICE

M-SECURITY TECHNOLOGY SDN. BHD.16.03 & 16.04, Level 16, Menara Haw ParJalan Sultan IsmailKuala Lumpur50250 MalaysiaMain Line : (603) 2381 8588Main Fax : (603) 2381 8589

(PENANG OFFICE)8-4-6 Sunny Point ComplexJalan Batu Uban11700 GelugorPenangMain Line : (604) 660 2229

INDONESIA OFFICEPT. M.TECH PRODUCTSMenara DEA, 10th Fl. Suite 1010Kawasan Mega KuninganJl. Mega Kuningan Barat Kav. E.4.3. No. 1Jakarta 12950IndonesiaMain Line : (62 21) 576 1011Main Fax : (62 21) 576 1012

THAILAND OFFICEM-SOLUTIONS TECHNOLOGY (THAILAND) CO., LTD25 Bangkok Insurance Building, 21st Floor,Sathorn Road, Thungmahamek,Sathorn Bangkok 10120Main Line : (66) 2677 4161Main Fax : (66) 2677 4166

VIETNAM OFFICE M-SECURITY TECHNOLOGY INDOCHINA PTE LTD(HANOI REPRESENTATIVE OFFICE)5/F Unit 507 Tung Shing Square,2 Ngo Quyen Street, Hanoi, VietnamMain Line : (844) 935 0970 Main Fax : (844) 935 0971

(HO CHI MINH CITY REPRESENTATIVE OFFICE)Room 412 & 413, Saigon Software Park 123Truong Dinh Street, District 3,Ho Chi Minh City, VietnamMain Line : (848) 290 5418Main Fax : (848) 290 5420

PHILIPPINES OFFICEM.TECH PRODUCTS PHILIPPINES, INCUnit 1005, 88 Corporate Center,Valero corner Sedeno Streets,Salcedo Village, Makati City, 1227PhilippinesMain Line : (632) 729 8839/ 41/ 42Main Fax : (632) 7298837

TAIWAN OFFICEM.TECH PRODUCTS TW PTE. LTD(TAIWAN BRANCH)8F, 6-10, Lane 360, Neihu Road, Sec.1, Theta Business Centre Room 935, Taipei City, Taiwan 114 Main Line : (88 62) 2659 9119

CORPORATE DIRECTORY


CHINA OFFICEM.TECH (SHANGHAI) CO.,LTDRoom E, 4th Floor, Crystal Century Tower, No. 567 Weihai Road, Shanghai, P.R.C 200041Main Line : (86 21) 6288 6069Main Fax : (86 21) 6288 6080

(BEIJING BRANCH)Room 1507, Office Tower A,Horizon International Tower,No.6 Zhichun Road Haidian District,Beijing, P.R.C. 100088Main Line : (86 10) 82800 190Main Fax : (86 10) 8280 0180

(GUANGZHOU BRANCH)Room 802, New World Times Center,No.2191 Guangyuan Road East,Tianhe District, Guangzhou, P.R.C. 510500Main Line : (86 20) 8774 9390Main Fax : (86 20) 8774 9391

HONG KONG OFFICEM.TECH PRODUCTS (HK) PTE LIMITED1212, 12/F, Harbour Crystal Centre,100 Granville Road, Tsimshatsui East, Hong KongMain Line : (852) 2369 2678Main Fax : (852) 2369 2993

INDIA OFFICE M-VIRTUAL TECHNOLOGY INDIA PVT. LTD.(AHMEDABAD - HEAD OFFICE)102,Panlee Complex,Nr.Sardar Patel Seva Samaj,Navrangpura,Ahm-380009Main Line : (91 79) 2646 5303Main Fax : (91 79) 2640 8613

(BANGALORE OFFICE)405,West Minister Building,2nd Floor,Cunningham Road,Bangalore-560052Main Line : (91 80) 4152 6379Main Fax : (91 80) 3050 5693

(DELHI OFFICE)11/F, 11th Floor, Gopala Tower,25, Rajendra Place,New Delhi-110008Main Line : (91 11) 6609 6253Main Fax : (91 11) 6609 6254

(MUMBAI OFFICE)Wellington Bussiness Park,204,Andheri Kurla Road, Marol,Andheri(E)Mumbai-400059Main Line : (91 22) 4026 4950Main Fax : (91 22) 2851 1700

CORPORATE DIRECTORY


52 Directors’ Report

56 Statement by Directors

57 Independent Auditor’s Report To The Members of Multi-Chem Limited

59 Consolidated Income Statement

60 Balance Sheets

62 Consolidated Statement of Changes in Equity

64 Consolidated Cash Flow Statement

66 Notes to the Financial Statements

122 Additional Information for Shareholders

123 Analysis of Shareholdings

125 Notice of Annual General Meeting

129 Proxy Form

Financial contents


Directors’ reportFor the financial year ended 31 December 2007

The directors present their report to the members together with the audited financial statements of the Group for the financial year ended 31 December 2007 and the balance sheet of the Company at 31 December 2007.

Directors

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

Foo Suan SaiHan Juat HoonHo Boon Chuan WilsonWong Meng YengChew Thiam Keng Lim Keng Jin

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors’ interests in shares or debentures

(a) According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest in the share capital or debentures of the Company or its related corporations, except as follows:

Holdings registered in Holdings in which a name of director director is deemed to or nominee have an interest At At At At 31.12.2007 1.1.2007 31.12.2007 1.1.2007 The Company (Ordinary shares) Foo Suan Sai 134,469,500 134,469,500 97,899,500 97,899,500 Han Juat Hoon 97,899,500 97,899,500 134,469,500 134,469,500 Ho Boon Chuan Wilson 136,000 136,000 33,000 33,000 Wong Meng Yeng 34,000 34,000 - - Chew Thiam Keng 34,000 34,000 - -

Mr Foo Suan Sai and Mdm Han Juat Hoon are husband and wife and they are each deemed to be interested in the shares held by the other.



Directors’ interests in shares or debentures (continued)

(b) Mr Foo Suan Sai and Mdm Han Juat Hoon, who by virtue of each of their interest of not less than 20% of the issued capital of the Company, are deemed to have an interest in the whole of the share capital of the Company’s wholly-owned subsidiaries and in the shares held by the Group in the following subsidiaries that are not wholly-owned by the Group:

Number of shares At 31.12.2007 At 1.1.2007 M.Tech Products Pte Ltd - Ordinary shares 2,950,000 2,950,000 M-Solutions Technology (Thailand) Co., Ltd - Ordinary shares of Baht100 each 25,000 25,000 - Preference shares of Baht100 each 25,000 25,000 M.Tech Training Centre Pte Ltd - Ordinary shares 240,000 240,000

M-Virtual Technology Private Limited - Ordinary shares of Rs10 each 255,000 -

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

Directors’ contractual benefits

Since the end of the 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, and except that Mr Foo Suan Sai, Mdm Han Juat Hoon and Mr Ho Boon Chuan Wilson have employment relationships with the Company and certain subsidiaries, and have received remuneration in those capacities.

share options

There were no options granted, including any to controlling shareholders or their associates, directors and employees of the Company and its subsidiaries, during the financial year to subscribe for unissued shares of the Company or its subsidiaries.

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

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



convertible notes

On 16 May 2003, the Company issued convertible notes of nominal value US$2,000,000 to a fund managed by an independent third party fund manager. Between 1 July 2006 to 31 May 2007, US$500,000 convertible notes were converted into 4 million ordinary shares of the Company at S$0.20 per share. The remaining US$1,500,000 convertible notes were redeemed on 31 May 2007 and repayable by 29 February 2008. As at the date of this report, the Company has fully repaid the outstanding convertible notes.

Audit committee

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

Wong Meng Yeng (Chairman)Chew Thiam Keng Lim Keng Jin

All members of the Audit Committee are independent 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 reviewed:

(a) the audit plans and results of the external auditors’ examination and evaluation of the Group’s systems of internal accounting controls;

(b) the Group’s financial and operating results and accounting policies;

(c) the balance sheet of the Company and the consolidated financial statements of the Group before their submission to the directors of the Company and the external auditors’ report on those financial statements;

(d) the quarterly, half-yearly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group;

(e) the co-operation and assistance given by the management to the Group’s external auditors; and

(f) the appointment of the external auditors of the Group.



Audit committee (continued)

The Audit Committee has full access to and co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external auditors have unrestricted access to the Audit Committee.

On behalf of the directors

FOO SUAN SAI HAN JUAT HOONDirector Director

10 March 2008


stAteMeNt BY Directors

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 59 to 121 are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group at 31 December 2007 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.

On behalf of the directors

FOO SUAN SAI HAN JUAT HOONDirector Director

10 March 2008


iNDepeNDeNt AUDitor’s report to tHe MeMBers oF MULti-cHeM LiMiteD

We have audited the accompanying financial statements of Multi-Chem Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 59 to 121, which comprise the balance sheets of the Company and of the Group as at 31 December 2007, and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Directors’ Responsibility for the Financial Statements

The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act (Cap. 50) (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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 as to whether the financial statements are free from material misstatement.

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

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


iNDepeNDeNt AUDitor’s report to tHe MeMBers oF MULti-cHeM LiMiteD

Opinion

In our opinion,

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

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

PricewaterhouseCoopersCertified Public Accountants

Singapore, 10 March 2008


coNsoLiDAteD iNcoMe stAteMeNtFor the financial year ended 31 December 2007

Group 2007 2006 Note $’000 $’000 Sales 4 140,779 97,418Cost of sales (103,808) (66,380)

Gross profit 36,971 31,038 Other gains – net 7 698 1,877 Expenses - Distribution and marketing (2,802) (3,195) - Administrative (15,376) (11,998) Finance income - net 8 524 51 Share of loss of an associated company 16 (117) (119)

Profit before income tax 19,898 17,654 Income tax expense 9 (3,714) (2,960)

Net profit 16,184 14,694 Attributable to: Equity holders of the Company 15,412 14,334Minority interests 772 360

16,184 14,694 earnings per share attributable to equity holders of the company 10 - Basic 4.28 cents 4.02 cents - Diluted 4.22 cents 3.87 cents

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


BALANce sHeetsAs at 31 December 2007

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

Assets current assets Cash and cash equivalents 11 10,676 17,232 522 10,235Trade and other receivables 12 46,338 31,139 34,391 18,295Inventories 13 9,664 7,312 1,503 1,136Other current assets 14 1,384 677 609 250

68,062 56,360 37,025 29,916Non-current assets Other non-current assets 15 127 127 - -Investment in an associated company 16 1,618 1,735 1,050 1,050Investment in a joint venture 17 - - - -Investments in subsidiaries 18 - - 64,045 45,595Property, plant and equipment 19 85,639 65,982 14,601 19,711Deferred income tax assets 24 16 21 - -

87,400 67,865 79,696 66,356 total assets 155,462 124,225 116,721 96,272 LiABiLities current liabilities Trade and other payables 20 26,629 16,459 9,326 5,025Current income tax liabilities 9 2,029 2,390 609 1,282Borrowings 21 35,842 25,063 34,842 24,291

64,500 43,912 44,777 30,598



BALANce sHeetsAs at 31 December 2007

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

Non-current liabilities Borrowings 21 11,862 18,495 11,862 18,495Deferred income tax liabilities 24 546 502 527 502

12,408 18,997 12,389 18,997 total liabilities 76,908 62,909 57,166 49,595 Net Assets 78,554 61,316 59,555 46,677 eQUitY capital and reserves attributable to equity holders of the company Share capital and share premium 25 37,288 36,559 37,288 36,559Other reserves 26 (1,461) (1,534) - 221Retained earnings 27 40,465 24,881 22,267 9,897

76,292 59,906 59,555 46,677Minority interests 2,262 1,410 - -

total equity 78,554 61,316 59,555 46,677



coNsoLiDAteD stAteMeNt oF cHANGes iN eQUitYFor the financial year ended 31 December 2007

Attributable to equity Minority Total holders of the Company interests equity

Share capital and share Other Retained premium reserves earnings Total Note $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 January 2007 36,559 (1,534) 24,881 59,906 1,410 61,316 Net loss recognised directly in equity - Currency translation differences 26 - 294 - 294 - 294Net profit - - 15,412 15,412 772 16,184total recognised (losses)/gains - 294 15,412 15,706 772 16,478 Issue of shares pursuant to conversion of convertible notes 25, 26 729 (49) - 680 - 680Issue of shares to minority shareholder 18(a) - - - - 80 80Redemption of convertible notes 26 - (172) 172 - - -

Balance at 31 December 2007 37,288 (1,461) 40,465 76,292 2,262 78,554



coNsoLiDAteD stAteMeNt oF cHANGes iN eQUitYFor the financial year ended 31 December 2007

Attributable to equity Minority Total holders of the Company interests equity

Share capital and share Other Retained premium reserves earnings Total Note $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 January 2006 35,604 810 18,486 54,900 723 55,623 Net gain recognised directly in equity - Currency translation differences 26 - (1,454) - (1,454) - (1,454)Net profit - - 14,334 14,334 360 14,694total recognised (losses)/gains - (1,454) 14,334 12,880 360 13,240 Effect of Companies (Amendment) Act 2005 25, 26 826 (826) - - - -Issue of shares pursuant to conversion of convertible notes 25, 26 129 (9) - 120 - 120Issue of shares by a subsidiary to minority interests - - - - 850 850Dilution of minority interests’ equity interest in subsidiaries - - - - 7 7Transfer from other reserves to retained earnings upon expiry of unexercised warrants 26 - (55) 55 - - -Dividends paid 28 - - (7,994) (7,994) (530) (8,524)

Balance at 31 December 2006 36,559 (1,534) 24,881 59,906 1,410 61,316

An analysis of the movements in each category within “other reserves” is presented in Note 26.



coNsoLiDAteD cAsH FLoW stAteMeNtFor the financial year ended 31 December 2007

2007 2006 Note $’000 $’000

cash flows from operating activities Net profit 16,184 14,694Adjustments for: - Income tax 3,714 2,960 - Depreciation 12,282 8,812 - Interest expense 1,555 686 - Currency exchange gain on borrowings (2,079) (737) - Interest income (163) (370) - Gain on disposal of property, plant and equipment (925) (715) - Gain on dilution of interest in a subsidiary - 7 - Share of loss from an associated company 117 119 - Unrealised currency exchange losses – net 839 298

Operating cash flow before working capital changes 31,524 25,754

Change in operating assets and liabilities - Inventories (2,352) (3,179) - Trade and other receivables (15,199) (6,450) - Other current assets (706) (31) - Trade and other payables 10,170 4,589

Cash generated from operations 23,437 20,683Interest received 163 370Income tax paid (4,022) (2,278)

Net cash provided by operating activities 19,578 18,775 cash flows from investing activities Proceeds from disposals of property, plant and equipment 4,397 2,547Proceeds from dilution of interest in a subsidiary 80 850Purchases of property, plant and equipment (35,541) (29,789)Dividends received from an associated company - 230

Net cash used in investing activities (31,064) (26,162)



coNsoLiDAteD cAsH FLoW stAteMeNtFor the financial year ended 31 December 2007

2007 2006 Note $’000 $’000

cash flows from financing activities Proceeds from borrowings 2,656 25,334Proceeds from bills payable 29,559 24,787Repayments of borrowings (6,172) (1,956)Repayments of lease liabilities (221) (210)Repayments of bills payable (19,200) (19,371)Interest paid (1,273) (636)Dividends paid to equity holders of the Company - (7,994)Dividends paid to minority interests - (530)

Net cash provided by financing activities 5,349 19,424 Net (decrease)/increase in cash and cash equivalents (6,137) 12,037Cash and cash equivalents at beginning of financial year 17,232 5,446Effects of exchange rate changes on cash and cash equivalents (419) (251)

cash and cash equivalents at end of financial year 11 10,676 17,232



Notes to tHe FiNANciAL stAteMeNtsFor the financial year ended 31 December 2007

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

1. General information

Multi-Chem Limited (the “Company”) is incorporated and domiciled in Singapore. The address of its registered office is 11 Tuas Avenue 5, Singapore 639337.

The Company is listed on the Singapore Exchange.

The principal activities of the Company are the provision of value-added printed circuit board (“PCB”) manufacturing services, mainly in precision drilling, to PCB fabricators and the distribution of specialty chemicals and other PCB related products and equipment to PCB fabricators.

The principal activities of the subsidiaries are the provision of value-added PCB manufacturing services, mainly in precision drilling, to PCB fabricators, the distribution of specialty chemicals and other PCB related products and equipment to PCB fabricators, distribution of hardware and software relating to internet and network products, and provision of maintenance services for such products.

2. significant accounting policies

2.1 Basis of preparation

The 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 2007

On 1 January 2007, 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.



2. significant accounting policies (continued)

2.1 Basis of preparation (continued) interpretations and amendments to published standards effective in 2007 (continued)

The following are the new or amended FRS and INT FRS that are relevant to the Group:

Amendments to FRS 1 Presentation of Financial Statements – Capital Disclosures FRS 107 Financial Instruments: Disclosures INT FRS 110 Interim Financial Reporting and Impairment The adoption of the above FRS or INT FRS did not result in any substantial changes to the Group’s

accounting policies nor any significant impact on these financial statements. FRS 107 and the complementary amended FRS 1 introduce new disclosures relating to financial instruments and capital respectively.

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 value-added 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 future economic benefits will flow to the entity and when the specific criteria for each of the Group’s activities are met as follows:

(a) Sale of goods Revenue from the sale of goods is recognised when a Group entity has delivered the products

to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured.

(b) Rendering of services Revenue from the drilling services is recognised in the period in which the services are

rendered.

Revenue from provision of maintenance services for internet and network products is recognised in the period in which the services are rendered, using a straight-line basis over the term of the agreement.

(c) Interest income Interest income is recognised on a time-proportion basis using the effective interest

method.




2.3 Group accounting

(a) Subsidiaries

Subsidiaries are entities over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition, irrespective of the extent of any minority interest.

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 companies 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.

Minority interests are that part of the net results of operations and of net assets of a subsidiary attributable to interests which are not owned directly or indirectly by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the date of acquisition by the Group and the minorities’ share of changes in equity since the date of acquisition, except when the losses applicable to the minority interests in a subsidiary exceed the minority interests in the equity of that subsidiary. In such cases, the excess and further losses applicable to the minority interests are attributed to the equity holders of the Company, unless the minority interests have a binding obligation to, and are able to, make good the losses. When that subsidiary subsequently reports profits, the profits applicable to the minority interests are attributed to the equity holders of the Company until the minority interests’ share of losses previously absorbed by the equity holders of the Company have been recovered.




2.3 Group accounting (continued)

(a) Subsidiaries (continued)

Please refer to the paragraph “Investments in subsidiaries, joint ventures and associated companies” for the accounting policy on investments in subsidiaries in the separate financial statements of the Company.

(b) Transactions with minority interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests, which result in gains and losses for the Group, are recorded in the income statement. The difference between any consideration paid to minority interests for purchases of additional equity interest in a subsidiary and the incremental share of the carrying value of the net assets of the subsidiary is recognised as goodwill.

(c) Associated companies

Associated companies are entities over which the Group has significant influence, but not control, generally accompanying a shareholding of between and including 20% and 50% of the voting rights. Investments in associated companies are accounted for in the consolidated financial statements using the equity method of accounting.

Investments in associated companies are initially recognised at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

In applying the equity method of accounting, the Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the income statement and its share of post-acquisition movements in reserves is recognised in equity directly. These post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured non-current receivables, the Group does not recognise further losses, unless it has obligations or has made payments on behalf of the associated company.




2.3 Group accounting (continued)

(c) Associated companies (continued)

Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.

Please refer to the paragraph “Investment in subsidiaries, joint ventures and associated companies” for the accounting policy on investments in associated companies in the separate financial statements of the Company.

(d) Joint ventures

Joint ventures are entities over which the Group has contractual arrangements to jointly share the control over the economic activity of the entities with one or more parties. The Group’s interest in joint ventures is accounted for in the consolidated financial statements using the equity method of accounting.

Please refer to the paragraph “Investment in subsidiaries, joint ventures and associated companies” for the accounting policy on investments in joint ventures in the separate financial statements of the Company.

2.4 Property, plant and equipment

(a) Measurement

Property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.




2.4 Property, plant and equipment (continued)

(b) Depreciation Depreciation on 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

Leasehold properties Over the lease terms of 25 - 60 years Office plant and equipment 1 - 10 years Factory plant and machinery 5 - 10 years

The residual values and useful lives of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision of the residual values and useful lives are included in the income statement for the financial year in which 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 when it is probable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably. Other subsequent expenditure is recognised as repair and maintenance expense in the income statement during the financial year in which it is incurred.

(d) Disposal

On disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is taken to the income statement.

2.5 Investments in subsidiaries, joint ventures and associated companies

Investments in subsidiaries, joint ventures and associated companies are stated at cost less accumulated impairment losses in the Company’s balance sheet. On disposal of investments in subsidiaries, joint ventures and associated companies, the difference between net disposal proceeds and the carrying amounts of the investments are taken to the income statement.




2.6 Impairment of non-financial assets

Property, plant and equipment and investments in subsidiaries, associated companies and joint ventures are reviewed for impairment whenever there is any objective evidence or indication that these assets may be impaired. If any such indication exists, the recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) of the asset is estimated to determine the amount of impairment loss.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, 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.

The impairment loss is recognised in the income statement. 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 assets’ recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in the income statement.

2.7 Borrowing costs

Borrowing costs are recognised on a time-proportion basis in the income statement using the effective interest method.

2.8 Trade and other receivables Trade and other receivables are initially recognised at fair value plus transaction cost and

subsequently measured at amortised cost using the effective interest method.

Trade and other receivables are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred or received and the Group has transferred substantially all risks and rewards of ownership.

The Group assesses at each balance sheet date whether there is objective evidence that trade and other receivables are impaired.




2.8 Trade and other receivables (continued)

An allowance for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the allowance is recognised in the income statement within “Administrative expense”.

2.9 Borrowings

(a) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is taken to the income statement over the period of the borrowings using the effective interest method.

Borrowings which are due to be settled within twelve months after the balance sheet date are presented as current borrowings in the balance sheet. Other borrowings due to be settled more than twelve months after the balance sheet date are presented as non-current borrowings in the balance sheet.

(b) Convertible notes

When convertible bonds are issued, the liability component and the equity component are separately presented on the balance sheet. The liability component is recognised at its fair value, determined using a market interest rate for equivalent non-convertible bonds. It is subsequently carried at amortised cost until the liability is extinguished on conversion or redemption of the bonds.

The remainder of the proceeds of the bond issue is allocated to the conversion option (equity component), which is presented in shareholders’ equity, net of the deferred tax effect. The carrying amount of the conversion option is not changed in subsequent periods. When a conversion option is exercised, the carrying amount of the conversion option will be taken to share capital. When the conversion option is allowed to lapse, the carrying amount of the conversion option will be taken to retained earnings.




2.10 Trade and other payables

Trade and other payables are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest method.

2.11 Fair value estimation

The carrying amounts of current financial assets and liabilities, carried at amortised cost, are assumed to approximate their fair values.

The fair values of financial liabilities carried at amortised cost are estimated by discounting the future contractual cash flows at the current market interest rates that are available to the Group for similar financial liabilities.

2.12 Leases

When a group company is the lessee:

Finance leases

Leases of property, plant and equipment where the Group assumes substantially the risks and rewards of ownership are classified as finance leases.

The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the balance sheet as property, plant and equipment and borrowings respectively at the inception of the leases at the lower of the fair values of the leased assets and the present value of the minimum lease payments.

Each lease payment is apportioned between the finance charge and the reduction of the outstanding lease liability. The finance charge is recognised in the income statement and allocated to each period during the lease term so as to achieve a constant periodic rate of interest on the remaining balance of the finance lease liability.

Operating leases

Leases of property, plant and equipment where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the income statement on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place.




2.13 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 inventories comprises costs of purchase and other direct costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14 Income taxes

Current income tax liabilities (and assets) for current and prior periods are recognised at the amounts expected to be paid to (or recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date.

Deferred income tax assets/liabilities are recognised for all deductible/taxable 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 assets/liabilities arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting nor taxable profit or loss.

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.

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

Deferred income tax assets and liabilities are measured at:

(i) 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 substantially enacted by the balance sheet date; and

(ii) the tax consequence that would 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 tax are recognised as income or expenses in the income statement for the period.




2.15 Employee benefits

Defined contribution plans

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

2.16 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 consolidated financial statements are presented in Singapore Dollars, which is the Company’s functional currency.

(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 prevailing at the dates of the transactions. Currency translation gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except for currency translation differences on net investment in foreign operations, which are included in the currency translation reserve within equity in the consolidated financial statements.

(c) Translation of Group entities’ financial statements

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;




2.16 Currency translation (continued)

(c) Translation of Group entities’ financial statements (continued)

(ii) Income and expenses for each income statement are translated at average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rates at the dates of the transactions); and

(iii) All resulting exchange differences are taken to the foreign currency translation reserve within equity.

(d) Consolidation adjustments

On consolidation, currency translation differences arising from the net investment in foreign operations are taken to the currency translation reserve. When a foreign operation is disposed of, such currency translation differences recorded in the currency translation reserve are recognised in the income statement as part of the gain or loss on sale.

2.17 Segment reporting

A business segment is a distinguishable component of the Group engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments.

2.18 Cash and cash equivalents

Cash and cash equivalents are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. Cash and cash equivalents include cash at bank and on hand and deposits with financial institutions.

2.19 Share capital

Ordinary shares are classified as equity.




2.20 Dividends

Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the financial year in which the dividends are approved by the shareholders.

3. critical accounting estimates, assumptions and judgements

Estimates, 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.

Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting

estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.

(ii) Useful lives and residual values of property, plant and equipment TheGroupreviewstheappropriatenessoftheusefullivesandresidualvaluesofproperty,

plantandequipmentateachbalancesheetdate.Changesintheexpectedlevelofusageandtechnologicaladvancementscouldimpacttheeconomicusefullivesandresidualvaluesoftheseassets.Wherethereisamaterialchangeintheusefullivesandresidualvaluesofproperty,plantandequipment,suchachangewillimpactthefuturedepreciationchargesinthefinancialperiodinwhichthechangearises.



4. revenue

Group 2007 2006 $’000 $’000

Rendering of services 69,682 55,837 Sales of goods 71,097 41,581

total sales 140,779 97,418

5. expenses by nature

Group 2007 2006 $’000 $’000 Depreciation of property, plant and equipment (Note 19) 12,282 8,812 Employee compensation (Note 6) 14,296 13,045 Cost of inventories sold (Note 13) 77,715 46,803 Inventory write down (Note 13) 1,099 654 Allowance for impairment of trade receivables 79 158 Bad trade debts (recovered)/written off (70) 53 Rental on operating leases 1,245 1,192 Utilities 3,712 3,168 Other expenses 11,628 7,688 Total cost of sales, distribution and marketing expenses and administrative expenses 121,986 81,573

6. employee compensation

Group 2007 2006 $’000 $’000 Wages and salaries 12,520 11,929 Employer’s contribution to defined contribution plans including Central Provident Fund 1,587 971 Directors’ fees 189 145

14,296 13,045



7. other gains - net

Group 2007 2006 $’000 $’000 Currency exchange (loss)/gain – net (840) 420 Gain on disposal of property, plant and equipment 925 715 Gain on dilution of interest in a subsidiary - 7 Interest income 163 370 Scrap sales 175 274 Others 275 91

698 1,877

8. Finance income - net

Group 2007 2006 $’000 $’000 Interest expense: - Bank borrowings 1,193 579 - Convertible notes 281 50 - Finance lease liabilities 81 57

1,555 686 Currency exchange gain (2,079) (737)

Finance income – net (524) (51)



9. income taxes

(a) Income tax expense

Group 2007 2006 $’000 $’000 Tax expense attributable to profit is made up of: Current income tax - Singapore 1,548 1,234 - Foreign 2,117 1,607 3,665 2,841 Deferred income tax (Note 24) 49 (251)

3,714 2,590 Under provision in preceding financial years - 370

3,714 2,960

The Group’s and Company’s deferred tax liabilities have been computed based on the corporate tax rate and tax laws prevailing at balance sheet date.

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

Group 2007 2006 $’000 $’000 Profit before tax 19,898 17,654 Tax calculated at a tax rate of 18% (2006: 20%) 3,582 3,531 Effects of: - Different tax rates in other countries 231 76 - Overseas statutory income exemption (1) (1,354) (1,043) - Singapore step income exemption (92) (41) - Expenses not deductible for tax purposes 1,294 153 - Income not subject to tax - (112) - Tax benefits not recognised 53 26

Tax charge 3,714 2,590

(1) Pursuant to the Chinese income tax regulations, certain subsidiaries in the People’s Republic of China (“PRC”) are entitled to exemptions from PRC income tax for the first two years commencing from their first profit making year followed by 50% reduction in their income tax for the next three years. A profit-making year is defined as the first year for which an enterprise would need to pay income tax after absorption of any loss carried forward.



9. income taxes (continued)

(b) Movements in current income tax liabilities

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Beginning of financial year 2,390 1,457 1,282 957 Income tax paid (4,022) (2,278) (1,429) (865) Tax expense on profit for the current financial year 3,661 2,841 756 830 Under provision in preceding financial years - 370 - 360

End of financial year 2,029 2,390 609 1,282

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.

2007 2006 Net profit attributable to equity holders of the Company ($’000) 15,412 14,334 Weighted average number of ordinary shares in issue for basic earnings per share (’000) 359,962 356,534 Basic earnings per share (cents per share) 4.28 4.02



10. earnings per share (continued)

(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. In the previous financial year, the Company’s dilutive potential ordinary shares are convertible notes. The convertible notes are assumed to have been converted into ordinary shares and the net profit is adjusted to eliminate the interest expense. The conversion option has lapsed on 31 May 2007 and the dilutive effective on the current year earnings per share is insignificant.

Diluted earnings per share attributable to equity holders of the Company is calculated based on the following data:

2007 2006 Net profit attributable to equity holders of the Company ($’000) 15,412 14,334 Interest expense on convertible notes 18 50 Net profit used to determine diluted earnings per share 15,430 14,384 Weighted average number of ordinary shares in issue for basic earnings per share (’000) 359,962 356,534 Adjustments for - Assumed conversion of convertible notes 5,210 14,823

365,172 371,357 Diluted earnings per share (cents per share) 4.22 3.87



11. cash and cash equivalents

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Cash at bank and on hand 10,676 8,500 522 1,503 Short-term bank deposits - 8,732 - 8,732

10,676 17,232 522 10,235

At the balance sheet date, the carrying amounts of cash at bank and on hand and short-term bank deposits approximate their fair values.

Cash at bank and on hand and short-term bank deposits are denominated in the following currencies:

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Singapore Dollar 1,124 6,166 385 4,039 United States Dollar 3,037 7,906 131 6,093 Chinese Renminbi 4,828 2,689 - - Others 1,687 471 6 103

10,676 17,232 522 10,235

Short-term bank deposits at the balance sheet date have an average maturity of nil (2006: 1 month) from the end of the financial year with the following weighted average effective per annum interest rates:

Group Company 2007 2006 2007 2006 Singapore Dollar - 5.02% - 5.02% United States Dollar - 2.48% - 2.48% Hong Kong Dollar - 3.2% - 3.2%



12. trade and other receivables

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Trade receivables: - Non-related parties 46,014 30,965 9,581 8,596 - An associated company 32 77 32 77 46,046 31,042 9,613 8,673 Less: Allowance for impairment of receivables - non-related parties (243) (188) (16) (115)

Trade receivables – net 45,803 30,854 9,597 8,558 Non-trade receivables: - Non-related parties 514 274 39 - - Subsidiaries - - 25,484 10,476 - An associated company 21 11 21 11 535 285 25,544 10,487 Less: Allowance for impairment of receivables - Subsidiary - - (750) (750)

Non-trade receivables - net 535 285 24,794 9,737 46,338 31,139 34,391 18,295

The non-trade receivables from subsidiaries and an associated company are unsecured, interest-free and are repayable on demand.

At the balance sheet date, the carrying amounts of current trade and other receivables approximate their fair values.

During the financial year, impairment loss on trade receivables of $79,000 (2006: impairment loss of $158,000) was recognised as an expense and included in “Administrative expense” in the income statement.



12. trade and other receivables (continued)

Trade and other receivables are denominated in the following currencies:

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Singapore Dollar 12,117 7,190 8,403 8,079 United States Dollar 3,607 4,601 25,456 8,574 Chinese Renminbi 24,419 15,124 - 1,064 Thai Baht 2,956 2,326 - - Others 3,239 1,898 532 578

46,338 31,139 34,391 18,295

13. inventories

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Finished goods 9,664 7,312 1,503 1,136

The cost of inventories recognised as expense and included in “cost of sales” amounted to $77,715,000 (2006: $46,803,000).

During the financial year, the Group made an inventory write-down of $1,099,000 (2006: $654,000) recognised as expense and included in “cost of sales” in the income statement.

14. other current assets

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Deposits 368 345 127 177 Prepayments 1,016 332 482 73

1,384 677 609 250

The carrying amounts of deposits approximate their fair values.



15. other non-current assets

Group 2007 2006 $’000 $’000

Other non-current assets 127 127

Other non-current assets comprise memberships for golf clubs in the People’s Republic of China (“PRC”). There is no active market for the club memberships in PRC, and as such, it is not practicable to determine with sufficient reliability the fair value of the club memberships. However, the directors do not anticipate that the carrying amounts of club memberships will be significantly in excess of their fair values.

16. investment in an associated company

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Equity investment at cost 1,050 1,050 Beginning of financial year 1,735 2,084

Share of loss (117) (119) Dividends received - (230)

End of financial year 1,618 1,735

The summarised financial information of the associated company are as follows:

2007 2006 $’000 $’000 Assets 6,038 6,709 Liabilities 1,416 1,746 Revenue 7,830 7,504 Net loss (341) (340)



16. investment in an associated company (continued)

Details of the associated company are as follows:

Country of business/ Effective Name Principal activities incorporation equity holding

2007 2006 % %

Hawera Precision Tec Supply of precision Singapore 35 35 Pte Ltd drills and provision of regrinding services The associated company is audited by PricewaterhouseCoopers, Singapore.

17. investment in a joint venture

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Equity investment in a jointly controlled entity, at cost 1,161 1,161 Less: Accumulated impairment loss (1,161) (1,161)

- - Beginning and end of financial year - -

At 31 December 2007 and 31 December 2006, the joint venture is dormant and does not have any assets or liabilities. Details of the joint venture are as follows:


2007 2006 % %

Multi-Chem Precision Under members’ Philippines 50 50 Philippines Corporation voluntary liquidation The joint venture is not required to be audited in its country of incorporation as it is under members’

voluntary liquidation.



18. investments in subsidiaries

Company 2007 2006 $’000 $’000 Equity investments at cost 64,283 45,833 Less: Accumulated impairment losses (238) (238)

64,045 45,595

(a) Incorporation of subsidiaries

On 4 September 2007, the Company incorporated a wholly-owned subsidiary, Multi-Chem PCB Kunshan Co., Ltd, with a registered capital of US$2,500,000.

On 30 November 2007, the Company incorporated a wholly-owned subsidiary, M.Tech Products TW Pte Ltd with a registered capital of $230,000.

On 31 December 2007, SecureOneAsia Pte. Ltd., a wholly-owned subsidiary of the Company together with a third party individual injected INR5 million into M-Virtual Technology India Private Limited on 31 December 2007. The minority shareholder holds 49% of the shares in M-Virtual Technology India Private Limited.

(b) Capital injection in subsidiaries

In 2007, the Company injected US$2,600,000, US$1,500,000 and US$8,150,000 into Multi-Chem Laser Technology (Suzhou) Co., Ltd, Multi-Chem (Suzhou) Co., Ltd and Multi-Chem Electronics (Kunshan) Co., Ltd respectively to meet the respective capital commitments.

(c) Details of the subsidiaries are as follows: Country of

business/ Effective Name Principal activities incorporation equity holding

2007 2006 % % Held by the Company Multi-Chem (Suzhou) Provision of value-added People’s 100 100 Co., Ltd (c) PCB manufacturing Republic of

services, mainly in China precision drilling, to PCB fabricators



18. investments in subsidiaries (continued)


2007 2006 % % Held by the Company (continued)

Multi-Chem Electronics Provision of value-added People’s 100 100 (Wuxi) Co., Ltd (d) PCB manufacturing Republic of

services, mainly in China precision drilling, to PCB fabricators M.Tech Products Distribution of hardware Singapore 73.75 73.75 Pte Ltd (a) and software relating to internet and network products, and provision of maintenance services for such products M-Solutions Technology Distribution of hardware Thailand 49 49 (Thailand) and software relating to Co., Ltd (e), (f) internet and network products, and provision of maintenance service for such products M-Security Technology Distribution of information Malaysia 100 100 Sdn. Bhd. (b) technology products and related services SecureOneAsia Provision of internet Singapore 100 100 Pte. Ltd (a) security services and the operation and provision of internet and telecommunication services






M. Security Technology Distribution of hardware Singapore 100 100 Indochina Pte. Ltd (a) and software relating to internet and network products, and provision of maintenance services for such products M-Precision Tech Provision of value-added Malaysia 100 100 Sdn. Bhd. (k) PCB manufacturing services, mainly in precision drilling, to PCB fabricators. This subsidiary was inactive during the financial year Multi-Chem Laser Provision of value-added People’s 100 100 Technology (Suzhou) PCB manufacturing Republic of Co., Ltd (c) services, mainly in China precision drilling, to PCB fabricators M.Tech (Shanghai) Distribution of hardware People’s 100 100 Co., Ltd (g) and software relating Republic of to internet and network China products, and provision of maintenance services for such products






PT. M.Tech. Distribution of hardware Indonesia 99 99 Products (h) and software relating to internet and network products, and provision of maintenance services for such products M.Tech Products Distribution of hardware Philippines 100 100 Philippines, Inc (i) and software relating to internet and network products, and provision of maintenance services for such products Multi-Chem Electronics Provision of value-added People’s 100 100 (Kunshan) Co., Ltd (c) PCB manufacturing Republic of services, mainly in China

precision drilling, to PCB fabricators

M.Tech Products Distribution of hardware Hong Kong 100 100 (HK) Pte and software relating Limited (l) to internet and network products, and provision of maintenance services for such products Multi-Chem PCB Provision of value-added People’s 100 - (Kunshan) Co., Ltd (m) PCB manufacturing Republic of services, mainly in China precision drilling, to PCB fabricators






M. Tech Products Distribution of hardware Singapore 100 - TW Pte Ltd (m) and software relating to internet and network products, and provision of maintenance services for such products

Held by M.Tech Products Pte Ltd M.Tech Training Centre Provision of information Singapore 59 59 Pte Ltd (a) communication and information technology training programmes

Held by SecureOneAsia Pte Ltd M-Virtual Technology Distribution of hardware India 51 - India Private Limited (j) and software relating to internet and network products, and provision of maintenance services for such products

(a) Audited by PricewaterhouseCoopers, Singapore (b) Audited by Chartered Accountant BDO Binder, Malaysia (c) Audited by Jiangsu Huaxing Certified Public Accountants Co., Ltd, People’s Republic of China (d) Audited by Jiangsu Gong Zheng Certified Public Accountants Co., Ltd, People’s Republic of China (e) Audited by BDO Richfield Limited, Thailand (f) Deemed to be a subsidiary as the Company controls the voting rights and the financial and operating

policies of the entity (g) Audited by BDO Shanghai Zhonghai, Republic of China (h) Audited by Rama Wendra Registered Public Accountant, Indonesia (i) Audited by Mateo Pulido Ramos & Co., Philippines (j) Audited by Pradip R. Shah & Co., India (k) Audited by Horwath Wong & Co., Malaysia (l) Audited by PCP CPA Limited, Hong Kong (m) Not required to be audited under the laws of the country of incorporation



19. property, plant and equipment

Office Factory Leasehold plant and plant and properties equipment equipment Total $’000 $’000 $’000 $’000 Group 2007 Cost At 1 January 2007 4,292 3,564 92,758 100,614 Currency translation differences - - (197) (197) Additions 1,158 883 33,500 35,541 Disposals - (512) (4,564) (5,076)

At 31 December 2007 5,450 3,935 121,497 130,882 Accumulated depreciation At 1 January 2007 1,150 1,502 31,980 34,632 Currency translation differences - (3) (64) (67) Depreciation charge 175 590 11,517 12,282 Disposals - (374) (1,230) (1,604)

At 31 December 2007 1,325 1,715 42,203 45,243 Net book value At 31 December 2007 4,125 2,220 79,294 85,639 2006 Cost At 1 January 2006 4,292 3,021 68,221 75,534 Currency translation differences - (18) (1,407) (1,425) Additions - 1,355 28,434 29,789 Disposals - (794) (2,490) (3,284)

At 31 December 2006 4,292 3,564 92,758 100,614 Accumulated depreciation At 1 January 2006 976 1,614 24,925 27,515 Currency translation differences - (9) (234) (243) Depreciation charge 174 497 8,141 8,812 Disposals - (600) (852) (1,452)

At 31 December 2006 1,150 1,502 31,980 34,632 Net book value At 31 December 2006 3,142 2,062 60,778 65,982



19. property, plant and equipment (continued)

Office Factory Leasehold plant and plant and properties equipment equipment Total $’000 $’000 $’000 $’000 Company 2007 Cost At 1 January 2007 4,292 1,664 26,344 32,300 Additions - 389 92 481 Disposals - (427) (5,943) (6,370)

At 31 December 2007 4,292 1,626 20,493 26,411 Accumulated depreciation At 1 January 2007 1,150 878 10,561 12,589 Depreciation charge 174 239 536 949 Disposals - (337) (1,391) (1,728)

At 31 December 2007 1,324 780 9,706 11,810 Net book value At 31 December 2007 2,968 846 10,787 14,601

2006 Cost At 1 January 2006 4,292 1,637 22,694 28,623 Additions - 739 12,354 13,093 Disposals - (712) (8,704) (9,416)

At 31 December 2006 4,292 1,664 26,344 32,300 Accumulated depreciation At 1 January 2006 976 1,165 10,037 12,178 Depreciation charge 174 254 3,932 4,360 Disposals - (541) (3,408) (3,949)

At 31 December 2006 1,150 878 10,561 12,589 Net book value At 31 December 2006 3,142 786 15,783 19,711

The carrying amount of factory plant and equipment held under finance leases at 31 December 2007 amounted to $850,000 (2006: $982,000) for the Group and the Company.



20. trade and other payables

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Trade payables: - Non-related parties 14,018 8,402 2,394 824 - Subsidiary - - - 9 - An associated company 230 152 230 152 14,248 8,554 2,624 985 Non-trade payables: - Non-related parties 1,699 1,093 250 219 - Director 67 67 - - - Subsidiaries - - 1,372 977 - An associated company 2 2 2 2 1,768 1,162 1,624 1,198 Customers’ advances received 2,886 1,715 - - Other accrual for operating expenses 7,727 5,028 5,078 2,842

26,629 16,459 9,326 5,025

The non-trade payables to director, subsidiaries and an associated company are unsecured, interest-free and are repayable on demand.

At the balance sheet date, the carrying amounts of trade and other payables approximate their fair values.

Trade and other payables are denominated in the following currencies:

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Singapore Dollar 8,129 4,504 6,282 3,776 United States Dollar 9,841 5,606 2,596 871 Chinese Renminbi 6,989 5,209 105 103 Others 1,670 1,140 343 275

26,629 16,459 9,326 5,025



21. Borrowings

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Current Bills payable to banks (unsecured) 22,925 14,438 22,925 14,438 Bank borrowings (unsecured) 10,252 7,503 9,252 6,731 Convertible notes (Note 22) 2,434 2,920 2,434 2,920 Finance lease liabilities (Note 23) 231 202 231 202

35,842 25,063 34,842 24,291 Non-current Bank borrowings (unsecured) 11,059 17,443 11,059 17,443 Finance lease liabilities (Note 23) 803 1,052 803 1,052

11,862 18,495 11,862 18,495 Total borrowings 47,704 43,558 46,704 42,786

(a) Corporate guarantee from Multi-Chem Limited

Total borrowings include bank borrowings of Nil (2006: $772,000) of a subsidiary which is guaranteed by the Company.

(b) Secured finance lease liabilities Finance lease liabilities of the Group are secured by the rights to the leased factory plant and

equipment (Note 19), which would revert to the lessor in the event of default by the Group.

(c) Maturity of borrowings

The current borrowings (excluding finance lease liabilities) have an average maturity of 7 months (2006: 4 months) from the end of the financial year. The non-current borrowings [excluding finance lease liabilities (Note 23)] have the following maturity:

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Between two and five years 11,059 17,443 11,059 17,443



21. Borrowings (continued)

(d) Currency risk

The carrying amounts of total borrowings are denominated in the following currencies at the balance sheet date:

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Singapore Dollar 13,900 16,187 12,900 16,187 United States Dollar 33,804 26,280 33,804 25,508 Others - 1,091 - 1,091

47,704 43,558 46,704 42,786

(e) Interest rate risks

The weighted average effective per annum interest rates of total borrowings at the balance sheet date are as follows:

2007 2006 s$ Us$ S$ US$ Group Bank borrowings 3.3% 6.46% 4.8% 6.5% Convertible notes - 2.5% - 1.7% Finance lease liabilities 4.5% - 4.5% - Company Bank borrowings 3.33% 6.46% 4.8% 6.6% Convertible notes - 2.5% - 1.7% Finance lease liabilities 4.5% - 4.5% -



21. Borrowings (continued)

(f) Carrying amounts and fair values

The carrying amounts of current borrowings approximate their fair values.

The fair values of non-current borrowings are determined from the cash flows analyses, discounted at the borrowing rates which the directors expect to be available to the Group at the balance sheet date. The fair values of non-current borrowings at the balance sheet date approximate their carrying amounts except for the fair values of finance lease liabilities as follows:

Carrying amounts Fair values 2007 2006 2007 2006 $’000 $’000 $’000 $’000

Group and Company Finance lease liabilities 803 1,052 863 1,090

The fair value above are determined from the cash flow analyses, discounted at market borrowing rate of 4.5% (2006: 4.5%) per annum.

22. convertible notes

On 16 May 2003, the Company issued convertible notes of nominal value US$2 million to a fund managed by an independent third party fund manager. The notes are repayable on 31 May 2007 at their nominal value of US$2 million unless converted into the Company’s ordinary shares at the holder’s option at the exercise price of $0.20 during the exercise period from 1 July 2006 to 31 May 2007.

The fair value of the liability component, included in current borrowings, was calculated using a market interest rate for an equivalent non-convertible note at date of inception of convertible notes and subsequently carried at amortised cost until it extinguished on conversion or maturity of the notes. The residual amount, representing the value of the equity conversion component, is included in shareholders’ equity in other reserves (Note 26), net of deferred income taxes.



22. convertible notes (continued)

The convertible notes recognised on the balance sheet at 16 May 2003 and the carrying amount of the liability component of the convertible notes at the balance sheet date is as follows:

Group and Company 2007 2006 $’000 $’000 Face value of convertible notes issued on 16 May 2003 3,413 3,413 Equity conversion component (230) (230) Liability component on initial recognition at 16 May 2003 3,183 3,183 Liability component at the end of financial year (Note 21) 2,434 2,920

The carrying amount of the liability component of the convertible notes approximate its fair values.

Interest expense on the convertible notes was calculated on the effective interest basis by applying the interest rate of 1.7% per annum for an equivalent non-convertible notes at the date of issue of the convertible notes to the liability component of the convertible notes.

During the financial year, convertible notes amounting to $680,000 were converted into 3,400,000 ordinary shares at $0.20 per share. The equity component of $49,000 (Note 26) has been transferred to share capital upon the conversion of these convertible notes. The remaining balance of the equity component of $172,000 has been transferred to retained earnings when the conversion option lapsed on 31 May 2007.

The remaining convertible notes including interest of 2.5% per annum, amounting to $2,434,000 will be payable to the holders within nine months from end of conversion date on 31 May 2007.



23. Finance lease liabilities

The Group leases factory plant and machinery (Note 19) from an associated company under non-cancellable finance lease agreements with purchase options at the end of the lease period. The future aggregate minimum lease payments under non-cancellable finance leases recognised as liabilities are as follows:

Group and Company 2007 2006 $’000 $’000 Minimum lease payments due to an associated company: - Not later than one year 231 221 - Between two and five years 803 988 - Later than five years - 45

Present value of finance lease liabilities 1,034 1,254

The present value of finance lease liabilities may be analysed as follows:

Group and Company 2007 2006 $’000 $’000 Not later than one year (Note 21) 231 202 Later than one year (Note 21): - Between two and five years 803 1,007 - Later than five years - 45 803 1,052

1,034 1,254



24. Deferred income taxes

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off 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 sheets as follows:

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Deferred income tax assets - To be settled within one year (16) (21) - - Deferred income tax liabilities - To be settled within one year 146 45 127 45 - To be settled after one year 400 457 400 457

546 502 527 502

530 481 527 502

The movement in the deferred income tax assets and liabilities (prior to offsetting of balances within the same tax jurisdiction) and the deferred income tax account during the financial year is as follows:

Group Company Deferred Deferred Deferred income tax income tax income tax liabilities assets total liabilities Accelerated Accelerated tax tax tax depreciation losses depreciation $’000 $’000 $’000 $’000

2007 Beginning of financial year 502 (21) 481 502 Credited to income statement 44 5 49 25

end of financial year 546 (16) 530 527 2006 Beginning of financial year 732 - 732 725 Credited to income statement (230) (21) (251) (223)

End of financial year 502 (21) 481 502



24. Deferred income taxes (continued)

Deferred income tax assets are recognised for tax losses carried forward and deductible temporary differences to the extent that realisation of the related tax benefits through future taxable profits are probable. The Group has unrecognised tax losses of $635,000 (2006: $359,000) and deductible temporary differences of $68,000 (2006: $39,000) at the balance sheet date which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax losses in their respective countries of incorporation.

25. share capital and share premium

Numberofshares Amount Totalshare Authorised Authorised capitaland

share Issued share Share Share share capital shares capital capital premium premium ’000 ’000 $’000 $’000 $’000 $’000

2007 Beginning of financial year - 356,981 - 36,559 - 36,559

Share issue pursuant to conversion of convertible notes (Note 22) - 3,400 - 729 - 729

end of financial year - 360,381 - 37,288 - 37,288

2006 Beginning of

financial year 600,000 356,381 30,000 17,819 17,785 35,604 Effect of Companies (Amendment) Act 2005 - Abolishment of authorised share capital (600,000) - (30,000) - - - - Transfer of share premium to share capital - - - 17,785 (17,785) - - Transfer of capital redemption reserve to share capital [Note 26(b)] - - - 826 - 826 Share issue pursuant to conversion of convertible notes (Note 22) - 600 - 129 - 129

End of financial year - 356,981 - 36,559 - 36,559



25. share capital and share premium (continued)

Under the Companies (Amendment) Act 2005 that came into effect on 30 January 2006, the concepts of par value and authorised share capital were abolished and the amount in the share premium account and capital redemption reserve as at 30 January 2006 became part of the Company’s share capital.

The newly issue shares rank pari passu in all respects with previously issued shares.

26. other reserves

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

(a) Composition Capital redemption reserve - - - - Currency translation reserve (1,461) (1,755) - - Capital reserve - - - - Equity component of convertible notes - 221 - 221

(1,461) (1,534) - 221 (b) Movements capital redemption reserve Beginning of financial year - 826 - 826 Effect of Companies (Amendment) Act 2005 (Note 25) - (826) - (826)

End of financial year - - - - currency translation reserve Beginning of financial year (1,755) (301) - - Net currency translation differences on financial statements of foreign subsidiaries 294 (1,454) - -

End of financial year (1,461) (1,755) - -



26. other reserves (continued)

(b) Movements (continued)

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

capital reserve Beginning of financial year - 55 - 55 Transfer to retained earnings upon expiry of unexercised warrants (Note 27) - (55) - (55)

End of financial year - - - - equity component of convertible notes Beginning of financial year 221 230 221 230 Transfer to share capital pursuant to conversion of convertible notes (49) (9) (49) (9) Transfer to retained earnings upon redemption of convertible notes (Note 27) (172) - (172) -

End of financial year - 221 - 221

The currency translation reserve and equity component of convertible notes are non-distributable.

27. retained earnings

(a) Retained profits of the Group and the Company are distributable except for accumulated retained profits of an associated company amounting to $568,000 (2006: $685,000) which are included in the Group’s retained earnings.



27. retained earnings (continued)

(b) Movements in retained earnings for the Company is as follows:

Company 2007 2006 $’000 $’000 Beginning of financial year 9,897 7,414 Net profit 12,198 10,422 Dividends paid (Note 28) - (7,994) Transfer from capital reserve upon expiry of unexercised warrants (Note 26) - 55 Redemption of convertible notes (Note 26) 172 -

End of financial year 22,267 9,897

Movement in retained earnings for the Group is shown in the Consolidated Statement of Changes in Equity.

28. Dividends

Group and Company 2007 2006 $’000 $’000 Ordinary dividends paid or proposed Final exempt (one-tier) dividend of nil cents (2006: final taxable dividend of 1.403 cents) per share paid in respect of the previous financial year - 5,000 Interim exempt (one-tier) dividend of nil cents (2006: 0.84 cents) per share paid in respect of the current financial year - 2,994

- 7,994

At the Annual General Meeting on 22 April 2008, a final exempt (one-tier) dividend of 0.83 cents per share amounting to a total of $3,000,000 will be recommended. These financial statements do not reflect this dividend, which will be accounted for in shareholders’ equity as an appropriation of retained earnings in the financial year ending 31 December 2008.



29. commitments

(a) Commitments to inject share capital in subsidiaries

At the balance sheet date, the Company has outstanding commitments amounting to approximately $2,948,000 (US$2,025,000) [2006: $31,724,000 (US$20,600,000)] in respect of commitments to inject share capital into its foreign subsidiaries.

(b) Operating lease commitments

The Group leases various properties, plant and machinery under non-cancellable operating lease agreements. These leases have varying terms, escalation rights and renewal rights. The future aggregate minimum lease payments under non-cancellable operating leases contracted for at the balance sheet date but not recognised as liabilities, are as follows:

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Not later than one year 1,478 1,145 125 125 Between two and five years 2,815 3,010 501 501 Later than five years 2,702 3,163 1,492 1,617

6,995 7,318 2,118 2,243

30. Financial risk management

The Group’s overall risk management programme seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out under policies approved by the Board of Directors.

(a) Market risk

(i) Currency risk

The Group operates in Asia with dominant operations in Singapore, the People’s Republic of China and other South-East Asia countries. Entities in the Group regularly transact in currencies other than their respective functional currencies (“foreign currencies”) such as the Singapore Dollar (“SGD”), United States Dollar (“USD”) and Chinese Yuan or Renminbi (“RMB”). Currency risk arises when transactions are denominated in foreign currencies. These risks are managed through monitoring currency exchange rates closely and minimising the amounts of net foreign currency exposures whenever possible.



30. Financial risk management (continued)

(a) Market risk (continued)

(i) Currency risk (continued)

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

SGD USD RMB Other Total $’000 $’000 $’000 $’000 $’000

At 31 December 2007 Financial assets Cash and cash equivalents 1,124 3,037 4,828 1,687 10,676 Trade and other receivables 12,117 3,607 24,419 6,195 46,338

13,241 6,644 29,247 7,882 57,014 Financial liabilities Borrowings (13,900) (33,804) - - (47,704) Trade and other payables (8,129) (9,841) (6,989) (1,670) (26,629)

(22,029) (43,645) (6,989) (1,670) (74,333)

Net financial (liabilities)/assets (8,788) (37,001) 22,258 6,212 (17,319) Less: Net financial liabilities/(assets) denominated in the respective entities’ functional currency 8,788 859 (22,258) (6,016) Add: Firm commitments and highly probable forecast transactions in foreign currencies - 36,451 - -

currency exposure - 309 - 196






SGD USD RMB Other Total $’000 $’000 $’000 $’000 $’000

At 31 December 2006 Financial assets Cash and cash equivalents 6,166 7,906 2,689 471 17,232 Trade and other receivables 7,190 4,601 15,124 4,224 31,139

13,356 12,507 17,813 4,695 48,371 Financial liabilities Borrowings (16,187) (26,280) - (1,091) (43,558) Trade and other payables (4,504) (5,606) (5,209) (1,140) (16,459)

(20,691) (31,886) (5,209) (2,231) (60,017)

Net financial (liabilities)/assets (7,335) (19,379) 12,604 2,464 (11,646)

Less: Net financial liabilities/(assets) denominated in the respective entities’ functional currencies 7,335 114 (12,604) (3,148)

Add: Firm commitments and highly probable forecast transactions in foreign currencies - 17,888 - -

currency exposure - (1,377) - (684)






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

SGD USD Other Total $’000 $’000 $’000 $’000

At 31 December 2007 Financial assets Cash and cash equivalents 385 131 6 522 Trade and other receivables 8,403 25,456 532 34,391

8,788 25,587 538 34,913 Financial liabilities Borrowings (12,900) (33,804) - (46,704) Trade and other payables (6,282) (2,596) (448) (9,326)

(19,182) (36,400) (448) (56,030)

Net financial (liabilities)/assets (10,394) (10,813) 90 (21,117)

Add: Firm commitments - 10,813 -

(10,394) - 90 At 31 December 2006 Financial assets Cash and cash equivalents 4,039 6,093 103 10,235 Trade and other receivables 8,079 8,574 1,642 18,295

12,118 14,667 1,745 28,530 Financial liabilities Borrowings (16,187) (25,508) - (41,695) Trade and other payables (3,776) (871) (378) (5,025)

(19,963) (26,379) (378) (46,720)

Net financial (liabilities)/assets (7,845) (11,712) 1,367 (18,190)

Add: Firm commitments - 11,712 -

(7,845) - 1,367






If the USD and RMB change against the SGD by 5% (2006: 7%) and 1% (2006: 4%) respectively with all other variables including tax rate being held constant, the effects arising from the net financial liability/asset position will be as follows:

2007 2006 increase /(decrease) profit Profit after tax after tax

$’000 $’000

Group USD against SGD - strengthened (1,851) (1,356) - weakened 1,851 1,356 RMB against SGD - strengthened 223 461 - weakened (223) (461) Company USD against SGD - strengthened (541) (820) - weakened 541 820

(ii) Price risk

The Group is not exposed to any equity securities market risk because it does not have any quoted equity investments.





(iii) Cash flow and fair value interest rate risk

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 value of a financial instrument will fluctuate due to changes in market interest rates. The Group’s interest rate risk mainly arises from cash and cash equivalents and borrowings. Cash and cash equivalents and borrowings at variable rates expose the Group to cash flow interest rate risk. Cash and cash equivalents and borrowings at fixed rates expose the Group to fair value interest rate risk.

The tables below set out the Group and the Company’s exposure to interest rate risks. Included in the tables are cash and cash equivalents and borrowings at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.

Variablerates Less Over Non- 6to12 1to5 than6 6to12 1to5 5 interest months years months months years years bearing Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

The Group

At 31 December 2007

Cash and cash equivalents 10,676 - - - - - - 10,676 Borrowings 10,252 11,059 2,549 116 803 - 22,925 47,704

At 31 December 2006

Cash and cash equivalents 8,500 - 8,732 - - - - 17,232 Borrowings 7,503 17,443 3,021 101 1,007 45 14,438 43,558

Fixedrates





(iii) Cash flow and fair value interest rate risk (continued)

Variablerates Less Over Non- 6to12 1to5 than6 6to12 1to5 5 interest months years months months years years bearing Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

The Company

At 31 December 2007

Cash and cash equivalents 522 - - - - - - 522 Borrowings 9,252 11,059 2,549 116 803 - 22,925 46,704

At 31 December 2006

Cash and cash equivalents 1,503 - 8,732 - - - - 10,235 Borrowings 6,731 17,443 3,021 101 948 104 14,438 42,786

The Group’s and Company’s borrowings at variable rates on which effective hedges have not been entered into, are denominated mainly in SGD and USD. If the SGD interest rates increase/decrease by 0.5% (2006: 1.5%) with all other variables including tax rate being held constant, the profit after tax will be lower/higher by $69,000 (2006: $145,000) as a result of higher/lower interest expense on borrowings. If the USD interest rates increase/decrease by 0.5% (2006: 0.5%) with all other variables including tax rate being held constant, the profit after tax will be lower/higher by $46,000 (2006: $13,000) as a result of higher/lower interest expense on borrowings.

(b) Credit risk

The Group has no significant concentration of credit risk. The Group has policies in place to ensure that the sales of products and services are made to customers with an appropriate credit history. Cash and fixed deposits are held with credit-worthy financial institutions.

As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet.

Fixedrates



(b) Credit risk (continued)

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

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

By geographical areas Singapore 9,820 7,759 4,446 4,967 People’s Republic of China 25,280 17,419 1,127 2,476 Other countries 10,703 5,676 4,024 1,115

45,803 30,854 9,597 8,558

The Group’s and Company’s major classes of financial assets are bank deposits and trade receivables.

(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 acceptable 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’s and Company’s trade receivables not past due amount to $30,846,000 (2006: $18,033,000) and $6,338,000 (2006: $3,436,000) respectively.




(b) Credit risk (continued)

(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.

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

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Past due 0 to 1 months 7,886 7,517 1,203 2,362 Past due 1 to 2 months 3,469 2,744 888 1,315 Past due 2 to 3 months 1,615 1,104 411 797 Past due over 3 months 1,987 1,456 757 648

14,957 12,821 3,259 5,122

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

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Gross amount 243 188 16 115 Less: Allowance for impairment (243) (188) (16) (115)

- - - - Beginning of financial year 188 36 115 - Currency translation difference 7 (6) - - Allowance made 178 163 - 115 Allowance written back (99) (5) (99) - Allowance utilised (31) - - -

End of financial year 243 188 16 115





(c) Liquidity risk

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

Between Lessthan 2and5 Over5 1year years years $’000 $’000 $’000

Group At 31 December 2007 Trade and other payables (26,629) - - Borrowings (36,588) (12,450) -

(63,217) (12,450) - At 31 December 2006 Trade and other payables (16,459) - - Borrowings (22,796) (20,487) (45)

(39,255) (20,487) (45) Company At 31 December 2007 Trade and other payables (9,326) - - Borrowings (35,562) (12,450) -

(44,888) (12,450) - At 31 December 2006 Trade and other payables (5,025) - - Borrowings (21,995) (20,487) (45)

(27,020) (20,487) (45)

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




(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.

Management monitors capital based on a gearing ratio. The Group and the Company are also required by the bank to maintain a gearing ratio of not exceeding 120% (2006: 100%).

The gearing ratio is calculated as total liabilities to tangible shareholders’ fund.

Group Company 2007 2006 2007 2006 $’000 $’000 $’000 $’000 Total liabilities 76,908 62,909 57,166 49,595 Total equity excluding minority interest 76,292 59,906 59,555 46,677

Gearing ratio 101% 105% 96% 106%

The Group and the Company are in compliance with all externally imposed capital requirements for the financial year ended 31 December 2006 and 2007.

31. related party transactions

In addition to the related party information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties during the financial year:

(a) Sales and purchases of goods and services

Group 2007 2006 $’000 $’000 Sales of goods/services to an associated company 201 467 Purchases of goods/services from an associated company 598 810 Interest paid/payable to an associated company - finance leases 52 57 Finance lease payments made to an associated company 220 210

Sale of motor vehicle to a director 126 -



31. related party transactions (continued)

(b) Key management personnel compensation

Key management personnel compensation is analysed as follows:

Group 2007 2006 $’000 $’000 Salaries and other short-term employee benefits 5,036 4,362 Post-employment benefits - contribution to CPF 112 116 Directors’ fees 189 145

5,337 4,623

Included in above is total compensation to directors of the Company amounting to $4,244,000.(2006: $3,710,000).

32. segment information

Primary reporting format - business segments

Manufacturing IT PCB services distribution distribution Group $’000 $’000 $’000 $’000 Financial year ended 31 December 2007 Sales - External sales 55,724 78,125 6,930 140,779 segment result 11,724 7,371 (302) 18,793 Other gains - net 1,755 (95) (962) 698

19,491 Finance income - net 524 Share of loss of an associated company (117) (117)

Profit before income tax 19,898 Income tax expense (3,714)

Net profit 16,184



32. segment information (continued)

Primary reporting format - business segments (continued)

Manufacturing IT PCB services distribution distribution Group $’000 $’000 $’000 $’000 segment assets 113,969 33,220 5,485 152,674 Investment in an associated company 1,618 1,618 Unallocated assets 1,170

Consolidated total assets 155,462

segment liabilities 32,743 14,380 434 47,557 Unallocated liabilities 29,351

Consolidated total liabilities 76,908

other segment items Capital expenditure - property, plant and equipment 33,722 1,624 195 35,541 Depreciation 11,806 314 162 12,282

Financial year ended 31 December 2006 Sales - External sales 47,358 42,288 7,772 97,418

Segment result 12,144 3,607 94 15,845 Other gains - net 1,470 222 185 1,877

17,722 Finance income 51 Share of loss of an associated company - - (119) (119)

Profit before income tax 17,654 Income tax expense (2,960)

Net profit 14,694

segment assets 84,318 22,183 5,483 111,984 Investment in an associated company - - 1,735 1,735 Unallocated assets 10,506

Consolidated total assets 124,225

segment liabilities 21,770 8,758 403 30,931 Unallocated liabilities 31,978

Consolidated total liabilities 62,909

other segment items Capital expenditure - property, plant and equipment 29,043 376 370 29,789 Depreciation 8,474 169 169 8,812




Primary reporting format - business segments (continued)

As at 31 December 2007, the Group is organised into three business segments - manufacturing services, IT distribution and PCB distribution. These business segments are the basis on which the Group reports its primary segment information. The manufacturing services segment provides precision drilling services to PCB fabricators. The IT distribution segment relates to the distribution of hardware and software relating to internet and network products and the provision of maintenance services for such products. The PCB distribution segment relates to the distribution of specialty chemicals and other PCB-related products and equipment to PCB fabricators.

Unallocated costs represent corporate expenses. Segment assets consist primarily of property, plant and equipment, inventories, receivables and operating cash, and exclude deferred tax assets, short-term bank deposits and club memberships. Segment liabilities comprise operating liabilities and exclude items such as tax liabilities, bank borrowings and convertible notes. Capital expenditure comprises additions to property, plant and equipment.

Secondary reporting format - geographical segments

The Group’s three business segments operate in three main geographical areas:

• Singapore - the Company is headquartered and has operations in Singapore. The operations in this area are principally manufacturing services and distribution of PCB-related chemicals and IT security products;

• ASEAN - distribution of PCB-related chemicals and IT security products; and • People’s Republic of China - the operations in this area are principally manufacturing

services and distribution of PCB-related chemicals and IT security products.

With the exception of Singapore and the People’s Republic of China, no other individual country contributed more than 10% of consolidated sales and assets. Sales are based on the country in which the customer is located. Total assets and capital expenditure are shown by the geographical area where the assets are located.




Sales Totalassets Capitalexpenditure 2007 2006 2007 2006 2007 2006 $’000 $’000 $’000 $’000 $’000 $’000

Singapore 38,529 33,845 40,536 40,933 1,919 11,339 ASEAN 36,554 24,162 13,200 7,622 366 297 People’s Republic of China 65,696 39,411 100,556 65,164 33,256 18,153

140,779 97,418 154,292 113,719 35,541 29,789

Unallocated assets 1,170 10,506

155,462 124,225

33. New accounting standards and Frs interpretations

Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2008 or later periods which the Group has not earlier adopted. The Group’s assessment of the impact of adopting those standards, amendments and interpretations that are relevant to the Group is set out below:

FRS 108 Operating Segments (effective for annual periods beginning on or after 1 January 2009)

FRS 108 supersedes FRS 14 Segment Reporting and requires the Group to report the financial performance of its operating segments based on the information used internally by management for evaluating segment performance and deciding on allocation of resources. Such information may be different from the information included in the financial statements, and the basis of its preparation and reconciliation to the amounts recognised in the financial statements shall be disclosed.

The Group will apply FRS 108 from 1 January 2009 and provide comparative information that conforms to the requirements of FRS 108. The Group does not expect the new operating segments to be significantly different from business segments currently disclosed.

34. Authorisation of financial statements

These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of Multi-Chem Limited on 10 March 2008.


ADDitioNAL iNForMAtioN For sHAreHoLDers

In 2007 As at Highest Lowest Average 11 March 2008

Share Price (S$) 0.295 0.185 0.229 0.195

Share Volume 3,544,000 1,000 293,000 –

share price chart

0.30

0.25

0.20

0.15

0.10

0.05

0.00

s$

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2007


ANALYsis oF sHAreHoLDiNGsAs at 11 March 2008

Class of Shares - Ordinary sharesVoting Rights - One Vote per share

DistriBUtioN oF sHAreHoLDers BY siZe oF sHAreHoLDiNGs

range of Number of Number of shareholdings shareholders % shares %

1 - 999 210 3.19 96,352 0.03

1,000 - 10,000 5,421 82.44 15,036,944 4.17

10,001 - 1,000,000 935 14.22 45,685,105 12.68

1,000,001 and above 10 0.15 299,562,749 83.12

totAL 6,576 100.00 360,381,150 100.00

List oF tWeNtY LArGest sHAreHoLDers(as shown in the Register of Members)

No Name of shareholder Number of % shares Held of shareholdings

1 FOO SUAN SAI 133,247,000 36.97 2 HAN JUAT HOON 96,969,500 26.91 3 YAOWALAK PHOOWARACHAI 42,672,000 11.84 4 UNITED OVERSEAS BANK NOMINEES PTE LTD 7,408,000 2.05 5 RAFFLES NOMINEES PTE LTD 6,402,500 1.78 6 KIM ENG SECURITIES PTE LTD 4,649,500 1.29 7 DBS VICKERS SECURITIES (S) PTE LTD 2,547,500 0.71 8 DMG & PARTNERS SECURITIES PTE LTD 2,350,000 0.65 9 DBS NOMINEES PTE LTD 1,933,749 0.54 10 CITIBANK NOMINEES SINGAPORE PTE LTD 1,383,000 0.38 11 OCBC SECURITIES PRIVATE LTD 787,500 0.22 12 PHILLIP SECURITIES PTE LTD 684,000 0.19 13 NEO THUA TEE 633,000 0.17 14 KWAN CHOON YING or LOKE KWAN YING 610,000 0.17 15 FOO CHIK HEE 580,000 0.16 16 HERMAN HALIM 534,000 0.15 17 GADGETSTUFF PTE LTD 525,000 0.15 18 HOO LEN YUH 502,000 0.14 19 OCBC NOMINEES SINGAPORE PTE LTD 500,000 0.14 20 SUZUKI TOSHIAKI 500,000 0.14

305,418,249 84.75


sUBstANtiAL sHAreHoLDersAs at 11 March 2008 (as shown in the Register of Substantial Shareholders)

Direct interest Deemed interestNo. Name of shareholder No. of shares % No. of shares % 1. Foo Suan Sai 134,469,500 37.31 97,899,500 27.17

2. Han Juat Hoon 97,899,500 27.17 134,469,500 37.31

3. Yaowalak Phoowarachai 42,672,000 11.84 - -

Notes :

Mr Foo Suan Sai and Mdm Han Juat Hoon are husband and wife and they are each deemed to be interested in the shares held by the other.

coMpLiANce WitH rULe 723 oF tHe sGX-st ListiNG MANUAL

As at 11 March 2008, based on the registers of shareholders and to the best knowledge of the Company, the percentage of shareholding held in the hands of the public is 23.42%. The Company is therefore in compliance with Rule 723 of the SGX-ST Listing Manual.


Notice oF ANNUAL GeNerAL MeetiNG

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Company will be held at 11 Tuas Avenue 5, Singapore 639337 on Tuesday, 22 April 2008 at 11.30 a.m., for the purpose of transacting the following businesses:

As ordinary Business

1. To receive and adopt the Audited Financial Statements of the Company for the financial year ended 31 December 2007 together with the Directors’ Report and

the Auditors’ Report thereon.

2. To declare a final tax exempt (one-tier) dividend of 0.83 cents per ordinary share for the financial year ended 31 December 2007.

3. To re-elect the following directors, who retires by rotation in accordance with Article 106 of the Articles of Association of the Company:

(a) Mdm Han Juat Hoon; and (resolution 3) (b) Mr Ho Boon Chuan Wilson. (resolution 4)

4. To approve the payment of Directors’ fees of S$165,000 for the financial year ended 31 December 2007.

5. To appoint Messrs BDO Raffles as Auditors of the Company, in place of Messrs PricewaterhouseCoopers who is retiring, to hold office until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their

remuneration. (See Explanatory Note 1)

As special Business

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

6. re-appointment of directors under section 153(6) of the companies Act, cap. 50

“That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Lim Keng

Jin be re-appointed as a Director of the Company to hold office until the next annual general meeting of the Company, (See Explanatory Note 2)

(resolution 1)

(resolution 2)

(resolution 5)

(resolution 6)

(resolution 7)



7. Authority to issue shares

“That pursuant to Section 161 of the Companies Act, Cap. 50 and in accordance with Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), approval be and is hereby given to the Directors to issue:-

(a) shares in the Company (whether by way of bonus, rights or otherwise); or

(b) convertible securities; or

(c) additional convertible securities arising from adjustments made to the number of convertible securities previously issued in the event of rights, bonus or capitalisation issues; or

(d) shares arising from the conversion of convertible securities,

at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that :-

(i) the aggregate number of shares and convertible securities that may be issued shall not be more than 50% of the total number of issued shares excluding treasury shares, in the capital of the Company or such other limit as may be prescribed by the SGX-ST as at the date the general mandate is passed;

(ii) the aggregate number of shares and convertible securities to be issued other than on a pro-rata basis to existing shareholders shall not be more than 20% of the total number of issued shares excluding treasury shares in the capital of the Company or such other limit as may be prescribed by the SGX-ST as at the date the general mandate is passed;

(iii) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraphs (i) and (ii) above, the total number of issued shares excluding treasury shares shall be calculated based on the total number of issued shares excluding treasury shares in the capital of the Company as at the date the general mandate is passed after adjusting for new shares arising from the conversion or exercise of any convertible securities or employee stock options in issue as at the date the general mandate is passed and any subsequent bonus issue, consolidation or subdivision of the Company’s shares; and

(iv) unless earlier revoked or varied by the Company in general meeting, such authority shall continue in force until the next Annual General Meeting or the date by which the next Annual General Meeting is required by law to

be held, whichever is earlier”. (See Explanatory Note 3)

(resolution 8)



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

BY orDer oF tHe BoArD

Ho Boon Chuan Wilson Lawrence KwanCompany Secretaries

Singapore, 7 April 2008

explanatory Notes on Businesses to be transacted

1. Please refer to the Letter to Shareholders dated 7 April 2008.

2. Mr Lim Keng Jin, if re-appointed, will remain as a member of the Audit Committee and will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited. He will also remain as Chairman of the Remuneration Committee and member of the Nominating Committee.

3. The Ordinary Resolution no. 8 is to authorise the Directors of the Company from the date of the above Meeting until the next Annual General Meeting to issue shares and/or convertible securities in the Company up to an amount not exceeding in aggregate 50 percent of the total number of issued shares excluding treasury shares of which the total number of shares and convertible securities issued other than on a pro-rata basis to existing shareholders shall not exceed 20 percent of the total number of issued shares excluding treasury shares of the Company at the time the resolution is passed, for such purposes as they consider would be in the interests of the Company. This authority will, unless revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company.


Notice oF BooKs cLosUre

NOTICE IS HEREBY GIVEN THAT the Register of Members and Share Transfer Books of the Company will be closed on 12 May 2008 to determine Members’ entitlement to the final dividend to be proposed at the Annual General Meeting of the Company to be held on 22 April 2008 (the “proposed Final Dividend”).

Duly completed and stamped transfers received by the Company’s Share Registrar, M & C Services Private Limited, 138 Robinson Road, #17-00 The Corporate Office, Singapore 068906 up to 5.00 p.m. on 9 May 2008 will be registered to determine Members’ entitlements to the Proposed Final Dividend.

Members whose securities accounts with The Central Depository (Pte) Limited are credited with shares of the Company as at 5.00 p.m. on 9 May 2008 will be entitled to the Proposed Final Dividend.

The Proposed Final Dividend, if approved at the Annual General Meeting, will be paid on 23 May 2008.

BY orDer oF tHe BoArD

Ho Boon Chuan Wilson Lawrence KwanCompany Secretaries

Singapore, 7 April 2008

Notes

i. A member entitled to attend and vote at this meeting and may appoint not more than two proxies to attend and vote in his stead.

ii. Where a member appoints two proxies, he/she should specify the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy and if no percentage is specified, the first named proxy shall be treated as representing 100 per cent of the shareholding and the second named proxy shall be deemed to be an alternate to the first named.

iii. A proxy need not be a member of the Company.

iv. A corporation which is a member of the Company 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.

v. The instrument appointing a proxy must be deposited at the registered office of the Company at 11 Tuas Avenue 5, Singapore 639337 not less than 48 hours before the time appointed for holding the meeting.



proXY ForM

✁MULTI-CHEM LIMITED(Company Registration No.: 198500318Z) (Incorporated in Singapore)

iMportANt

1. For investors who have used their CPF monies to buy shares of Multi-Chem Limited, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent For iNForMAtioN oNLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

total Number of shares Held

*I/We

of being *a member/members of Multi-Chem Limited (the “Company”), hereby appoint

proportion of Nric/passport shareholdings to be Name Address Number represented by proxy(%)

*and/or

as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of the Company to be held at 11 Tuas Avenue 5, Singapore 639337 on Tuesday, 22 April 2008 at 11.30 a.m. and at any adjournment thereof.

*I/we direct *my/our *proxy/proxies to vote for or against the Ordinary Resolutions to be proposed at the Annual General Meeting as indicated with an “X” in the spaces provided hereunder. If no specified directions as to voting are given, the *proxy/proxies will vote or abstain from voting at *his/their discretion.

No. ordinary resolutions For Against

1. To receive and adopt the Audited Financial Statements, Directors’ Report and Auditors’ Report for the financial year ended 31 December 2007.

2. To declare a final tax exempt (one-tier) dividend of 0.83 cents per ordinary share for the financial year ended 31 December 2007.

3. To re-elect Mdm Han Juat Hoon as Director.4. To re-elect Mr Ho Boon Chuan Wilson as Director.5. To approve the payment of Directors’ fees.6. To appoint Messrs BDO Raffles as Auditors, in place of Messrs

PricewaterhouseCoopers who is retiring, and to authorise the Directors to fix their remuneration.

7. To re-appoint Mr Lim Keng Jin as Director to hold office until next Annual General Meeting.

8. To authorise Directors to issue shares pursuant to Section 161 of the Companies Act, Cap. 50.

Dated this day of 2008

Signature(s) of Member(s)/Common Seal

* Delete accordingly iMportANt. please read notes overleaf


proXY ForM

FOLD ALONG THIS LINE

The Company SecretaryMULti-cHeM LiMiteD

11 Tuas Avenue 5Singapore 639337

FOLD ALONG THIS LINE

AFFiX

stAMp

Notes:

1. A member entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. Where a member appoints more than one proxy, he should specify the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy and if no percentage is specified, the first named proxy shall be treated as representing 100 per cent of the shareholding and the second named proxy shall be deemed to be an alternate to the first named.

3. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert the number of shares. If the member has shares entered against his name in the Depository Register and shares registered in his name in the Register of Members of the Company, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by the member of the Company.

4. The instrument appointing proxy or proxies must be deposited at the registered office of the Company at 11 Tuas Avenue 5, Singapore 639337 not later than 48 hours before the time set for the Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or under the hand of its attorney or duly authorised officer.

6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy and deposited at the registered office of the Company at 11 Tuas Avenue 5, Singapore 639337 not later than 48 hours before the time set for the Meeting, failing which the instrument may be treated as invalid.

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

8. 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 members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register 48 hours before the time appointed for holding the Meeting as certified by The Central Depository (Pte) Limited to the Company.

iMportANt

1. For investors who have used their CPF monies to buy shares of Multi-Chem Limited, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported

to be used by them.


Multi-Chem LimitedCompany’s Registration No. 198500318Z

www.multichem.com.sg

11 Tuas Avenue 5 Singapore 639337Tel: (65) 6863 1318 Fax: (65) 6863 1618

technology solution growth 2007 annual report · “m.tech malaysia” • m-security technology...

Documents