MIRA INFORM REPORT

Report Date :

28.08.2007

IDENTIFICATION DETAILS

Name :	SECO TOOLS (S.E.A.) PTE LTD
Registered Office :	^2 Aljunied Avenue^1, #04-01, Singapore – 389977
Country :	Singapore
Financials (as on) :	31.12.2005
Date of Incorporation :	^06/06/1991
Com. Reg. No.:	^199102673H
Legal Form :	^Pte Ltd
Line of Business :	Distribution of Metal Cutting Tools in Asia and Investment Holding

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	Regular
Litigation :	Clear

Subject Company

SECO TOOLS (S.E.A.) PTE LTD

Line Of Business 

DISTRIBUTION OF METAL CUTTING TOOLS IN ASIA AND INVESTMENT HOLDING

Parent Company

SECO TOOLS AB

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2005

COMPANY

Sales : S$13,777,312

Networth : S$3,587,782

Paid-Up Capital : S$250,000

Net result : S$1,324,893

Net Margin(%) : 9.62

Return on Equity(%) : 36.93

Leverage Ratio : 0.85

COMPANY IDENTIFICATION

^{Subject Company: SECO TOOLS (S.E.A.) PTE LTD}

^{Former Name: -}

^{Business Address: 2 ALJUNIED AVENUE 1}

^#04-01

^{Town: SINGAPORE}

^{Postcode: 389977}

^{County: -}

^{Country: Singapore}

^{Telephone: 6841 2802}

^{Fax: 6841 2801}

^{ROC Number: 199102673H}

^{Reg. Town: -}

SUMMARY

^{All amounts in this report are in: SGD unless otherwise stated}

^{Legal Form: Pte Ltd}

^{Date Inc.: 06/06/1991}

^{Previous Legal Form: -}

^{Summary year: 31/12/2005}

^{Sales: 13,777,312}

^{Net worth: 3,587,782}

^{Capital: -}

^{Paid-Up Capital: 250,000}

^{Employees: 16}

^{Net result: 1,324,893}

^{Share value: -}

^{Auditor: PRICEWATERHOUSECOOPERS}

REFERENCES

^{Litigation: No}

^{Company status: TRADING}

^{Started: 06/06/1991}

PRINCIPAL(S)

^{LEIF LARSSON G5730011L Managing Director}

DIRECTOR(S)

^{LEIF LARSSON G5730011L Director}

^{Appointed on: 12/10/1992}

^{Street: 25 CLAYMORE ROAD}

^#19-01

^{THE CLAYMORE}

^{Town: SINGAPORE}

^{Postcode: 229543}

^{Country: Singapore}

^{LEIF LARSSON G5730011L Managing Director}

^{Appointed on: 31/08/2006}

^{Street: 25 CLAYMORE ROAD}

^#19-01

^{THE CLAYMORE}

^{Town: SINGAPORE}

^{Postcode: 229543}

^{Country: Singapore}

^{BARKMAN BJORN KENNETH F5645714M Director}

^{Appointed on: 31/08/2006}

^{Street: 5A RIDLEY PARK}

^#07-01

^{Town: SINGAPORE}

^{Postcode: 248477}

^{Country: Singapore}

^{TEO CHIN KEE S2622115C Company Secretary}

^{Appointed on: 01/09/2004}

^{Street: 21 ELIAS ROAD}

^#02-01

^{RIS GRANDEUR}

^{Town: SINGAPORE}

^{Postcode: 519929}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{BJORN ERIC BENGTSSON S2573987F}

^{ARTHUR NILS VIKTOR TEODOR DP209749}

^{BERG OLLE SIGURD DP215758}

^{JAN-ERIK FORSGREN DP112658}

ACTIVITY(IES)

^{OFFICE BUILDINGS Code:15140}

^{MACHINE TOOLS Code:13245}

^{BASED ON ACRA'S RECORD AS AT 23/08/2007}

^{1) HEAD/REGIONAL OFFICES OF ENTERPRISES OPERATING ABROAD}

^{2) WHOLESALE OF MACHINERY AND EQUIPMENT;}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

BANKERS

No Banker Information In Our Database

SHAREHOLDERS(S)

^{SECO TOOLS AB 250,000 Company}

^{Street: S-737 82 FAGERSTA}

^{Town: -}

^{Postcode: -}

^{Country: Sweden}

FORMER SHAREHOLDER(S)

^{BJORN ERIC BENGTSSON 1}

^{CHEONG LAI TING 1}

HOLDING COMPANY

^{SECO TOOLS AB UF07757R %: 100}

SUBSIDIARY(IES)

^{SECO TOOLS SDN BHD}

^{SECO TOOLS (THAILAND) CO., LTD}

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity: SUFFICIENT}

^{Payments: REGULAR}

^{Trend: DOWNWARD}

^{Financial Situation: AVERAGE}

LITIGATION(S)

No Litigation In Our Database

FINANCIAL ELEMENTS

^{All amounts in this report are in: SGD unless otherwise stated}

^{Audit Qualification: UNQUALIFIED (CLEAN) UNQUALIFIED (CLEAN)}

^{Date Account Lodged: 29/09/2006}

^{Balance Sheet Date: 31/12/2005 31/12/2004}

^{Number of weeks: 52 52}

^{Consolidation Code: COMPANY COMPANY}

^{--- ASSETS}

^{Tangible Fixed Assets: 1,243,863 664,760}

^{Investments 228,210 228,210}

^{Total Fixed Assets: 1,472,073 892,970}

^{Inventories: 532,969 767,865}

^{Receivables: 2,962,694 3,321,637}

^{Cash,Banks,Securities: 1,400,988 489,646}

^{Other current assets: 257,394 316,902}

^{Total Current Assets: 5,154,045 4,896,050}

^{TOTAL ASSETS: 6,626,118 5,789,020}

^{--- LIABILITIES}

^{Equity capital: 250,000 250,000}

^{Profit & loss Account: 3,369,858 3,044,965}

^{Other: -32,076 -}

^{Total Equity: 3,587,782 3,294,965}

^{Reserve for pensions: 34,642}

^{L/T deferred taxes: 108,266 29,699}

^{Other long term Liab.: 133,828 67,411}

^{Total L/T Liabilities: 276,736 97,110}

^{Trade Creditors: 2,203,510 1,567,612}

^{Prepay. & Def. charges: 230,974 285,592}

^{Short term liabilities: 43,419 11,750}

^{Due to Bank: 200,000 150,000}

^{Provisions: 80,539 381,991}

^{Other Short term Liab.: 3,158 -}

^{Total short term Liab.: 2,761,600 2,396,945}

^{TOTAL LIABILITIES: 3,038,336 2,494,055}

^{PROFIT & LOSS ACCOUNT}

^{Net Sales 13,777,312 13,190,028}

^{Purchases,Sces & Other Goods: 8,120,599 7,734,070}

^{Gross Profit: 5,656,713 5,455,958}

^{NET RESULT BEFORE TAX: 1,740,056 2,116,204}

^{Tax: 415,163 478,421}

^{Net income/loss year: 1,324,893 1,637,783}

^{Interest Paid: 12,092 5,555}

^{Depreciation: 327,043 236,444}

^{Dividends: 1,000,000 600,000}

^{Directors Emoluments: 990,959 901,594}

^{Wages and Salaries: 2,809,676 2,486,293}

RATIOS

^{31/12/2005 31/12/2004}

^{Turnover per employee: 861082.00 824376.75}

^{Net result / Turnover(%): 0.10 0.12}

^{Stock / Turnover(%): 0.04 0.06}

^{Net Margin(%): 9.62 12.42}

^{Return on Equity(%): 36.93 49.71}

^{Return on Assets(%): 20.00 28.29}

^{Dividends Coverage: 1.32 2.73}

^{Net Working capital: 2392445.00 2499105.00}

^{Cash Ratio: 0.51 0.20}

^{Quick Ratio: 1.58 1.59}

^{Current ratio: 1.87 2.04}

^{Receivables Turnover: 77.41 90.66}

^{Leverage Ratio: 0.85 0.76}

^{Net Margin: (100*Net income loss year)/Net sales}

^{Return on Equity: (100*Net income loss year)/Total equity}

^{Return on Assets: (100*Net income loss year)/Total fixed assets}

^{Dividends Coverage: Net income loss year/Dividends}

^{Net Working capital: (Total current assets-Total short term liabilities)}

^{Cash Ratio: Cash Bank securities/Total short term liabilities}

^{Quick Ratio: (Cash Bank securities+Receivables)/Total Short term liabilities}

^{Current ratio: Total current assets/Total short term liabilities}

^{Inventory Turnover: (360*Inventories)/Net sales}

^{Receivables Turnover: (Receivable*360)/Net sales}

^{Leverage Ratio: Total liabilities/(Total equity-Intangible assets)}

FINANCIAL COMMENTS

^{THE FINANCIAL CONDITION OF THE COMPANY WAS SEEN TO BE FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED PASSABLE WITH NET WORTH IMPROVED BY 8.89% FROM S$3,294,965 IN 2004 TO S$3,587,782 IN 2005.}

^{THIS WAS DUE TO HIGHER RETAINED PROFITS OF S$3,369,858 (2004: S$3,044,965); A RISE OF 10.67% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 79.79% (2004: 65.40%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$2,203,510 (2004: S$1,567,612). THE BREAKDOWN IS AS FOLLOWS:}

^{-IMMEDIATE HOLDING CORPORATION - 2005: S$2,203,370 (2004: S$1,567,093)}

^{-RELATED CORPORATIONS - 2005: S$140 (2004: S$519)}

^{AMOUNTS DUE TO BANKS, WHICH CONSIST OF A BANK LOAN, ROSE BY 33.33% TO S$200,000 (2004: S$150,000).}

^{SUBJECT'S LONG TERM LIABILITIES ROSE SHARPLY BY 1.85 TIMES TO S$276,736 (2004: S$97,110), AND CONSIST OF THE FOLLOWING:}

^{-BORROWINGS - 2005: S$133,828 (2004: S$67,411)}

^{-PROVISION FOR STAFF RETIREMENT BENEFITS - 2005: S$34,642 (2004: - )}

^{-DEFERRED INCOME TAX LIABILITIES - 2005: S$108,266 (2004: S$29,699)}

^{IN ALL, LEVERAGE RATIO ROSE FROM 0.76 TIMES TO 0.85 TIMES AS A RESULT OF A MORE THAN PROPORTIONATE RISE IN TOTAL LIABILITIES AS COMPARED TO THE RISE IN TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE EVEN THOUGH NET WORKING CAPITAL FELL BY 4.27% TO S$2,392,445 (2004: S$2,499,105).}

^{CURRENT RATIO FELL TO 1.87 TIMES, DOWN FROM 2.04 TIMES AND QUICK RATIO DECREASED TO 1.58 TIMES FROM 1.59 TIMES IN 2004.}

^{HOWEVER, CASH AND CASH EQUIVALENTS ROSE BY 1.86 TIMES TO S$1,400,988 (2004: S$489,646).}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 4.45% FROM S$13,190,028 IN 2004 TO S$13,777,312 BUT NET PROFIT DROPPED BY 19.10% TO S$1,324,893 (2004: S$ 1,637,783).}

^{HENCE, NET MARGIN FELL TO 9.62% (2004: 12.42%).}

^{DEBT SERVICING:}

^{DEBT SERVICING PROBLEMS MIGHT NOT BE EXPECTED IF REVENUE AND EARNINGS CAN BE MAINTAINED AND PAYMENT BY TRADE DEBTORS ARE FORTHCOMING. IN ADDITION, ITS INTEREST COVERAGE WAS HEALTHY AS SHOWN BY ITS INTEREST COVERAGE RATIO OF 144.90 TIMES (2005: 381.95 TIMES).}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^BORROWINGS

^{BANK LOANS}

^{REVOLVING UNSECURED SHORT TERM LOAN FACILITY OF UP TO $350,000 (2004: $200,000) IS REPAYABLE WITHIN PERIODS OF UP TO 1,2,3 AND 6 MONTHS FROM THE DATE OF LOAN DRAWDOWN OR ANY OTHER PERIOD APPROVED BY THE BANK AT THE COMPANY'S OPTION. THERE IS A TOTAL OF $200,00 (2004: $150,000) OF LOAN DRAWDOWN AS AT 31 DECEMBER 2005.}

^{THE REVOLVING SHORT TERM LOAN FACILITY IS UNSECURED BUT SUPPORTED BY SHAREHOLDER GUARANTEES FROM THE IMMEDIATE HOLDING CORPORATION. THE REVOLVING SHORT TERM LOAN IS DENOMINATED IN SINGAPORE DOLLAR.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 06/06/1991 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER THE PRESENT NAMESTYLE OF "SECO TOOLS (S.E.A.) PTE LTD".}

^{AS AT 23/08/2007, THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 250,000 SHARES, OF A VALUE OF S$250,000.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED WITH THE ACCOUNTING AND CORPORATE REGULATORY AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) HEAD/REGIONAL OFFICES OF ENTERPRISES OPERATING ABROAD}

^{2) WHOLESALE OF MACHINERY AND EQUIPMENT; DISTRIBUTION OF METAL CUTTING TOOLS IN ASIA}

^{DURING THE FINANCIAL YEAR (S) UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY ARE THOSE RELATING TO THE DISTRIBUTION OF METAL CUTTING TOOLS IN ASIA AND INVESTMENT HOLDING. THE TAIWAN BRANCH ACTIVITIES IS THE TRADING OF METAL CUTTING TOOLS IN TAIWAN.}

^{FROM THE RESEARCH DONE, THE FOLLOWING INFORMATION WAS GATHERED:}

^ACTIVITIES

^{- TRADING IN METAL CUTTING TOOLS FOR MILLING/TURNING/DRILLING}

^{NUMBER OF EMPLOYEES}

^{- ABOUT 16}

^PRODUCTS

^{- MILLING CUTTERS AND INSERTS}

^{- COATED AND UNCOATED TURNING INSERTS}

^{- SOLID CARBIDE DRILLS}

^{- BRAZED CARBIDE TIPPED DRILLS}

^{- INDEXABLE DRILLS}

^{TRADE NAMES}

^{- SECOMAX}

^{- SECO}

^{- FEEDMAX}

^{- SECO CROWNLOC}

^{- PERFOMAX}

^{MARKET PRESENCE}

^{- SINGAPORE, MALAYSIA, THAILAND, CHINA, TAIWAN AND INDONESIA}

^{SUBJECT IS A MEMBER OF THE FOLLOWING ENTITY}

^{- SWEDISH BUSINESS ASSOCIATION OF SINGAPORE}

^{ACCORDING TO THE TELE-INTERVIEW CONDUCTED ON 28/08/2007, THE FOLLOWING INFORMATION WAS GATHERED:}

^{SUBJECT'S PERSONNEL CONFIRMED THE BUSINESS ADDRESS AND CONTACT NUMBERS OF THE COMPANY, BUT DECLINED TO PROVIDE MORE INFORMATION, HENCE NO OTHER TRADE INFORMATION WAS MADE AVAILABLE VIA THE TELE-INTERVIEW.}

^{THE COMPANY'S IMMEDIATE HOLDING CORPORATION IS SECO TOOLS AB. THE ULTIMATE HOLDING CORPORATION IS SANDVIK AB. BOTH CORPORATIONS ARE INCORPORATED IN SWEDEN.}

^{NUMBER OF EMPLOYEES (31 DECEMBER)}

^{- COMPANY - 2005: NOT AVAILABLE (2004: NOT AVAILABLE)}

^{REGISTERED AND BUSINESS ADDRESS:}

^{2 ALJUNIED AVENUE 1}

^#04-01

^{SINGAPORE 389977}

^{DATE OF CHANGE OF ADDRESS: 16/08/2003}

^WEBSITE:

^{http://www.secotools.com}

^EMAIL:

^{singapore.sales@secotools.com}

MANAGEMENT

^{THE DIRECTORS AT THE TIME OF THIS REPORT ARE:}

^{1) BARKMAN BJORN KENNETH, A SWEDISH}

^{- BASED IN SINGAPORE}

^{2) LEIF LARSSON, A SWEDISH}

^{- BASED IN SINGAPORE}

SINGAPORE’S COUNTRY RATING 2007

^{INVESTMENT GRADE}

^{IN SINGAPORE, THE POLITICAL SITUATION REMAINS STABLE.}

^{SINGAPORE BOASTS THE BEST GOVERNANCE IN ASIA, WITH AN EFFECTIVE LEGAL SYSTEM FACILITATING DEBT COLLECTION AND TO A HIGH DEGREE OF FINANCIAL TRANSPARENCY.}

^{EXTERNAL ACCOUNTS HAVE REMAINED SUBSTANTIALLY IN SURPLUS, CONTRIBUTED TO THE DYNAMISM OF THE ELECTRONICS AND PHARMACEUTICALS SECTORS AND TO REPATRIATION OF PROFITS FROM SINGAPORE INVESTMENTS. THE FINANCIAL AND TOURISM SECTORS HAVE ALSO CONTRIBUTED TO THE LARGE CURRENT ACCOUNT SURPLUS.}

^{SINGAPORE CONTINUES TO KEENLY WELCOME FOREIGN INVESTMENT AND OFFERS A VERY OPEN AND WELL-PLANNED ECONOMIC AND POLITICAL ENVIRONMENT. IT HAS BEEN IMPLEMENTING AMBITIOUS DIVERSIFICATION STRATEGY, FOCUSED PARTICULARLY ON THE CHEMICALS AND PHARMACEUTICAL SECTORS.}

^{THE GOVERNMENT USES FOREIGN DIRECT INVESTMENT TO DEVELOP PRIORITY SECTORS (ELECTRONICS, CHEMICALS, BIOTECHNOLOGY). THE AIM IS TO ENCOURAGE THE GROWTH OF HIGH ADDED-VALUE ACTIVITIES AND TURN SINGAPORE INTO A REGIONAL HUB FOR FOREIGN INVESTORS INTERESTED IN ASIA.}

^{CERTAIN SECTORS (MEDIA, LEGAL AND FINANCIAL SERVICES) ARE HOWEVER ONLY PARTIALLY OPEN TO FOREIGN INVESTMENT. THESE SECTORS ARE SLOWLY OPENING UP, BUT THE PROGRESS IS SLOW. AFTER HIGH GROWTH IN 2006, BUOYED BY THE DYNAMISM OF BOTH EXPORTS AND HOUSEHOLD CONSUMPTION, A SLOWDOWN IS EXPECTED IN 2007.}

^ASSETS

^{" MAJOR EXPORTER OF CAPITAL IN ASIA, NOTABLY VIA THE STATE-OWNED TEMASEK HOLDING}

^COMPANY.

^{" HIGH QUALITY COMPETITIVENESS IN ASIA}

^{" EXCELLENT BUSINESS CLIMATE}

^{" POLITICAL STABILITY.}

^WEAKNESSES

^{" SKILLED MANPOWER HAS BEEN LACKING IN THE SECTORS TARGETED FOR DEVELOPMENT.}

^{" AN AGEING POPULATION COULD, ULTIMATELY, AFFECT ECONOMIC PERFORMANCE.}

^{" GROWING INEQUALITY AND THE EMERGENCE OF LONG-TERM UNEMPLOYMENT AMONG THE LEAST}

^{SKILLED COULD GENERATE SOCIAL TENSIONS.}

^{" BEING THE WORLD'S MOST OPEN ECONOMY, IT HAS BEEN VULNERABLE TO WORLD ECONOMIC}

^DOWNTURNS.

OVERVIEW OF SINGAPORE

PAST PERFORMANCE

SINGAPORE’S ECONOMY GREW BY 6.1% IN QUARTER 1 OF 2007 AFTER A 6.6% GROWTH IN QUARTER 4 OF 2006. THE GROWTH MOMENTUM EASED SLIGHTLY TO 7.6% IN 1Q 2007, COMPARED WITH 7.9% A QUARTER EARLIER. GROWTH IN QUARTER 1 WAS LED BY THE FINANCIAL SERVICES AND CONSTRUCTION SECTORS. THE MANUFACTURING SECTOR CONTINUED TO EXPERIENCE A MODERATION IN GROWTH.

THE FINANCIAL SERVICES SECTOR SIGNIFICANTLY INCREASED BY 13% IN 1Q 2007 ON THE HEELS OF THE 11% GROWTH A QUARTER AGO. THE STRONG PERFORMANCE WAS ACROSS ALL MAJOR FINANCIAL SEGMENTS, PARTICULARLY IN THE CAPITAL AND MONEY MARKETS. FUND MANAGEMENT ACTIVITIES REMAINED BOUYANT, IN LINE WITH THE CONTINUED STRENGTH IN ECONOMIC CLIMATE. SIMILARLY, BANKS SAW STRONG GROWTH, BOUYED BY SUSTAINED RESILIENCE IN THE ASIA DOLLAR MARKET AS WELL AS A STEADY INCREASE IN DOMESTIC LENDING ACTIVITY.

THE CONSTRUCTION SECTOR GREW BY 9.7% IN 1Q 2007, ITS STRONGEST GROWTH IN 9 YEARS. CERTIFIED PAYMENTS INCREASE BY 9.5% IN 1Q 2007, SUPPORTED BY STRONG GROWTH IN THE PRIVATE RESIDENTIAL, COMMERCIAL AND INDUSTRIAL SEGMENTS AS WELL AS PUBLIC RESIDENTIAL SEGMENT. HOWEVER, CONTRACTS AWARDED FELL BY 11% IN 1Q 2007, DUE MAINLY TO THE DROP IN THE PRIVATE COMMERCIAL AND PUBLIC INSTITUTIONAL SEGMENTS.

MANUFACTURING SECTOR INCREASED BY 4.3% IN 1Q 2007, DOWN FROM 7.7% IN THE PREVIOUS QUARTER. BOTH BIOMEDICAL MANUFACTURING (-5.0%) AND PRECISION ENGINEERING (-0.7%) CLUSTERS SAW LOWER PRODUCTION DURING THE QUARTER. THE ELECTRONICS CLUSTER, HOWEVER, RECOVERED FROM A 4.1% CONTRACTION IN 4Q 2006 TO REGISTER AN INCREASE OF 2.6% IN 1Q 2007. THE TRANSPORT ENGINEERING CLUSTER CONTINUED TO EXPAND STRONGLY AT 23%, FOLLOWING A 25% INCREASE IN 4Q 2006.

THE WHOLESALE AND RETAIL TRADE SECTOR EXPANDED 6.7% IN 1Q 2007 AFTER A 6.9 GROWTH IN 4Q 2006. RETAIL SALES GROWTH EASED FROM 7.9% IN THE PREVIOUS QUARTER TO 6.1% IN 1Q 2007, MAINLY DUE TO A DECELERATION IN MOTOR VEHICLES SALES. EXCLUDING MOTOR VEHICLES, RETAIL SALES ROSE BY 5.9%, UP FROM 4.2% IN 4Q 2006. IN THE WHOLESALE SEGMENT, GROWTH OF NON-OIL RE-EXPORTS REMAINED FIRM AT 5.9%, SLOWER THAN 6.3% IN 4Q 2006.

THE TRANSPORT AND STORAGE SECTOR GREW 4.4% IN 1Q 2007, UP FROM 4.0% A QUARTER EARLIER. THE AIR SEGMENT SAW A SLOWDOWN DUE TO A MODERATION IN AIR PASSENGER TRAFFIC GROWTH AND A DECLINE IN AIR CARGO. STRONGER ACTIVITY WAS RECORDED IN THE SEA SEGMENT ON THE BACK OF BETTER PERFORMANCE IN SEA CARGO HANDLED AND CONTAINER THROUGHPUT.

THE HOTELS AND RESTAURANTS SECTOR REGISTERED A SLOWER GROWTH OF 4.7% IN 1Q 2007, DOWN FROM 6.1% 4Q 2006. VISITOR ARRIVALS GREW AT A MORE MODEST PACE OF 4.1% COMPARED TO 8.4% IN THE PREVIOUS QUARTER. THE INCREASE IN HOTEL ROOM REVENUE MODERATED FROM THE 21% GAIN IN 4Q 2006 TO 14% IN 1Q 2007. HOWEVER, THE AVERAGE OCCUPANCY RATE OF HOTELS REMAINED HIGH AT 87%, A 4.3% POINTS INCREASE OVER THE CORRESPONDING PERIOD LAST YEAR.

THE INFORMATION AND COMMUNICATIONS SECTOR GREW 6.6% IN 1Q 2007, UP FROM 6.0% IN THE PREVIOUS QUARTER. WHILE THE IT SEGMENT SAW SOME MODERATION IN ACTIVITIES, THE TELECOMMUNICATIONS SEGMENT PERFORMED BETTER. INTERNATIONAL TELEPHONE CALL DURATION WENT UP SHARPLY BY 19%, UP FROM 11% IN 4Q 2006. GROWTH IN THE NUMBER OF MOBILE SUBSCRIBERS AND BROADBAND SUBSCRIBERS ALSO REMAINED STRONG DURING THE QUARTER.

BUSINESS SERVICES SECTOR EXPANDED BY 6.6% IN 1Q 2007, BETTER THAN THE 5.4% POSTED IN 4Q 2006. ROBUST PERFORMANCE WAS SEEN IN THE REAL ESTATE SEGMENT ON THE BACK OF CONTINUED STRENGTH IN THE LUXURY PROPERTY MARKET. THE SECTOR WAS ALSO WELL SUPPORTED BY THE OTHER SEGMENTS, PARTICULARLY BUSINESS REPRESENTATIVE OFFICES, AND BUSINESS & MANAGEMENT CONSULTANCY ACTIVITIES.

OUTLOOK

THE ECONOMIC OUTLOOK IS GENERALLY POSITIVE BUT SOME DOWNSIDE RISKS REMAIN. THESE INCLUDE A SLOWDOWN IN THE US ECONOMY, VULNERABILITY OF OIL PRICES TO SUPPLY SHOCKS AND A DISORDERLY UNWINDING OF GLOBAL UNBALANCES. BARRING THESE UNCERTAINTIES, ECONOMIC GROWTH IS EXPECTED TO REMAIN HEALTHY IN 2007.

BUSINESS SENTIMENTS ARE GENERALLY POSITIVE IN THE FINANCIAL SERVICES INDUSTRY. BANKS AND FINANCE COMPANIES, FUND MANAGEMENT FIRMS AND INSURANCE COMPANIES EXPECT AN IMPROVEMENT IN THE BUSINESS CLIMATE IN THE COMING MONTHS.

AN OVERALL NET WEIGHTED BALANCE OF 61% OF FIRMS IN THE REAL ESTATE INDUSTRY EXPECTS BETTER BUSINESS CONDITIONS FOR THE NEXT 6 MONTHS. WITHIN THE INDUSTRY, REAL ESTATE DEVELOPERS AND AGENTS FORESEE BRISK BUSINESS ACTIVITY AHEAD.

MANUFACTURING SECTORS ARE MORE OPTIMISTIC IN THE NEXT 6 MONTHS COMPARED TO THE FIRST QUARTER OF THE YEAR. OVERALL, A WEIGHTED 30% OF MANUFACTURERS FORESEE AN IMPROVED OUTLOOK, WHILE 4% PREDICT DETERIORATION. THIS RESULTS IN A NET WEIGHTED BALANCE OF 26% OF MANUFACTURERS EXPECTING BUSINESS CONDITIONS TO IMPROVE, WHICH IS HIGHER THAN 7% RECORDED A QUARTER AGO.

WHOLESALERS EXPECT TO DO WELL FOR THE NEXT 6 MONTHS, WITH A POSITIVE NET WEIGHTED BALANCE OF 17%. DEALERS OF FOOD AND BEVERAGES, TROPICAL PRODUCE, TEXTILES & LEATHER GOODS AND HOUSEHOLD ELECTRICAL APPLIANCE & EQUIPMENT ARE AMONG THOSE WHO ARE OPTIMISTIC ABOUT THE BUSINESS OUTLOOK AHEAD.

FIRMS IN THE RETAIL TRADE FORESEE BUSINESS TO BE LESS BRISK. IN PARTICULAR, DEPARTMENT STORES, SUPERMARKETS AND RETAILERS OF MOTOR VEHICLES EXPECT SLOWER BUSINESS IN THE COMING MONTHS.

WITHIN THE TRANSPORT AND STORAGE INDUSTRY, A NET WEIGHTED BALANCE OF 18% OF FIRMS FORECASTS IMPROVED BUSINESS PROSPECTS FOR THE NEXT 6 MONTHS. IN PARTICULAR, FIRMS IN THE WATER TRANSPORT AND SUPPORTING SERVICES EXPECT HIGHER LEVEL OF BUSINESS ACTIVITY.

HOTELIERS PROJECT A FAVOURABLE BUSINESS OUTLOOK, WHICH IS IN TANDEM WITH THE POSITIVE SENTIMENTS IN THE TOURISM MARKET. FOR THE CATERING TRADE INDUSTRY, BUSINESS OUTLOOK IN THE COMING MONTHS REMAINS THE SAME.

FIRMS IN THE INFORMATION AND COMMUNICATION INDUSTRY ANTICIPATES A HIGHER LEVEL OF BUSINESS ACTIVITY, WITH A POSITIVE NET WEIGHTED BALANCE OF 12%.

IN THE BUSINESS SERVICES INDUSTRY, AN OVERALL NET WEIGHTED BALANCE OF 24% OF FIRMS EXPRESSES POSITIVE SENTIMENTS. THESE INCLUDE FIRM ENGAGED IN RENTING OF CONSTRUCTION & INDUSTRIAL MACHINERY, ARCHITECTURAL & ENGINEERING, SPECIALISED DESIGN AND LABOUR RECRUITMENT SERVICES.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

CHANNELNEWS ASIA

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions