MIRA INFORM REPORT

Report Date :

28.08.2007

IDENTIFICATION DETAILS

Name :	DEUTZ POWER SYSTEMS ASIA-PACIFIC PTE. LTD.
Registered Office :	^11 Kian Teck Road^, Jurong Industrial Estate, Singapore – 628768
Country :	Singapore
Financials (as on) :	31.12.2006
Date of Incorporation :	^09/12/1970
Com. Reg. No.:	^197001130C
Legal Form :	^Pte Ltd
Line of Business :	Sales and Servicing of Marine / Stationary Diesel Engines, Generating Sets and the Sale of related parts.

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

DEUTZ POWER SYSTEMS ASIA-PACIFIC PTE. LTD.

Line Of Business 

SALES AND SERVICING OF MARINE/STATIONARY DIESEL ENGINES, GENERATING SETS AND THE SALE OF RELATED PARTS

Parent Company

DEUTZ AG

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2006

COMPANY

Sales : S$107,856,000

Networth : S$9,237,000

Paid-Up Capital : S$10,000,000

Net result : S$1,683,000

Net Margin(%) : 1.56

Return on Equity(%) : 18.22

Leverage Ratio : 4.64

COMPANY IDENTIFICATION

^{Subject Company: DEUTZ POWER SYSTEMS ASIA-PACIFIC PTE. LTD.}

^{Former Name: DEUTZ ASIA-PACIFIC (PTE) LTD}

^{Business Address: 11 KIAN TECK ROAD}

^{JURONG INDUSTRIAL ESTATE}

^{Town: SINGAPORE}

^{Postcode: 628768}

^{County: -}

^{Country: Singapore}

^{Telephone: 6268 5311}

^{Fax: 6264 1779}

^{ROC Number: 197001130C}

^{Reg. Town: -}

PREVIOUS IDENTIFICATION

^{DEUTZ ASIA-PACIFIC (PTE) LTD DATE OF CHANGE OF NAME: 26/06/2007}

SUMMARY

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

^{Legal Form: Pte Ltd}

^{Date Inc.: 09/12/1970}

^{Previous Legal Form: -}

^{Summary year: 31/12/2006}

^{Sales: 107,856,000}

^{Net worth: 9,237,000}

^{Capital: -}

^{Paid-Up Capital: 10,000,000}

^{Employees: 70}

^{Net result: 1,683,000}

^{Share value: -}

^{Auditor: PRICEWATERHOUSECOOPERS}

REFERENCES

^{Litigation: No}

^{Company status: TRADING}

^{Started: 09/12/1970}

PRINCIPAL(S)

^{DR HIRDESH KANWAL KHANNA G5946717X Managing Director}

DIRECTOR(S)

^{ALEXANDER STEPHEN STADTLER L1366985 Director}

^{Appointed on: 30/04/2001}

^{Street: AUF DER HALDEL 13}

⁵¹⁴²⁹

^BENSBERG

^{Town: -}

^{Postcode: -}

^{Country: Germany}

^{KOK THIAM FAH PERCIVAL S1180773I Company Secretary}

^{Appointed on: 01/06/2001}

^{Street: 44 MARINE CRESCENT}

^#16-14

^{Town: SINGAPORE}

^{Postcode: 440044}

^{Country: Singapore}

^{DR HIRDESH KANWAL KHANNA G5946717X Director}

^{Appointed on: 13/04/2007}

^{Street: 11 KIAN TECK ROAD}

^{Town: SINGAPORE}

^{Postcode: 628768}

^{Country: Singapore}

^{DR HIRDESH KANWAL KHANNA G5946717X Managing Director}

^{Appointed on: 13/04/2007}

^{Street: 11 KIAN TECK ROAD}

^{Town: SINGAPORE}

^{Postcode: 628768}

^{Country: Singapore}

^{HELMUT MEYER Director}

^{Appointed on: 01/07/2005}

^{Street: BERGISCHE LANDSTRABE 229}

^{Town: DUSSELDORF}

^{Postcode: 40629}

^{Country: Germany}

^{GORDON RISKE Director}

^{Appointed on: 01/07/2005}

^{Street: ROBERTSTRABE.7A}

^{Town: KOLN}

^{Postcode: 51149}

^{Country: Germany}

FORMER DIRECTOR(S)

^{STEFAN BERND SCHULTE 4150276126}

^{BERNHARD ROMAHN S2710061I}

^{WILHELM BOYEMANN}

^{THORSTEN VAN DER TUUK}

ACTIVITY(IES)

^{MACHINERY REBUILDING And REPAIRING Code:13290}

^{AIRCRAFT EQUIPMENT, PARTS And SUPPLIES Code:600}

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

^{1) WHOLESALE OF INDUSTRIAL MACHINERY AND EQUIPMENT; WHOLESALE OF MEDIUM AND LARGE-SIZED ENGINES MANUFACTURE AND REPAIR OF MEDIUM AND LARGE-SIZED ENGINES}

CHARGES

^{Date: 13/11/1996}

^{Comments: CHARGE NO: 9606851 / 9606852 (DISCHARGED)}

^{SECURED: 0.00 ALL MONIES OWING}

^{CHARGEE(S): OVERSEAS UNION BANK LIMITED}

^{Date: 17/01/1997}

^{Comments: CHARGE NO: 9700409 / 9700410 (DISCHARGED)}

^{SECURED: 0.00 AND ALL MONIES OWING}

^{CHARGEE(S): THE DEVELOPMENT BANK OF SINGAPORE LIMITED}

^{Date: 08/04/1997}

^{Comments: CHARGE NO: 199702030 (DISCHARGED)}

^{SECURED: 0.00 ALL MONIES OWING}

^{CHARGEE(S): ECICS-COFACE GUARANTEE COMPANY (SINGAPORE) LTD}

^{Date: 12/04/1997}

^{Comments: CHARGE NO: 199702155 (DISCHARGED)}

^{SECURED: 0.00 ALL MONIES OWING}

^{CHARGEE(S): ECICS-COFACE GUARANTEE COMPANY (SINGAPORE) LTD}

PREMISES/PROPERTY INFORMATIONS

^{Date: 28/08/2007 Tax rate: 10}

^{Site Address: 11 KIAN TECK ROAD}

^{JURONG INDUSTRIAL ESTATE}

^{Town: SINGAPORE}

^{County: - Postcode: 628768}

^{Country: Singapore}

^{Annual Value: 268,000}

*TAX RATE OF 4% MEANS THE ADDRESS (I.E RESIDENTIAL PROPERTY) IS OWNER OCCUPIED.

*TAX RATE OF 10% MEANS THE ADDRESS (I.E RESIDENTIAL PROPERTY) IS PARTIALLY OR

FULLY RENTED OUT BY THE OWNER/OWNED BY COMPANY.

*FOR PROPERTIES OTHER THAN RESIDENTIAL PROPERTIES REGARDLESS RENTED OUT OR NOT,

THE TAX RATE IS 10% (IE INDUSTRIAL AND COMMERCIAL PROPERTY).

*ANNUAL VALUE IS THE ESTIMATED ANNUAL RENT THE PROPERTY CAN FETCH IF IT WERE

RENTED OUT. THE ANNUAL VALUE IS DETERMINED IN THE SAME MANNER REGARDLESS OF

WHETHER THE PROPERTY IS LET-OUT, OWNER-OCCUPIED OR VACANT.

BANKERS

^{DBS BANK LTD.}

^{DEUTSCHE BANK AG}

SHAREHOLDERS(S)

^{DEUTZ AG 10,000,000 Company}

^{Street: OTTOSTRASSE 1}

^{Town: COLOGNE}

^{Postcode: D-51149}

^{Country: Germany}

HOLDING COMPANY

^{DEUTZ AG UF20561R %: 100}

SUBSIDIARY(IES)

^{DEUTZ BANGLADESH LTD}

^{DEUTZ CHINA LTD}

PAYMENT HISTORY AND EXPERIENCES

Trade Morality: AVERAGE

^{Liquidity: SUFFICIENT}

^{Payments: REGULAR}

^{Trend: UPWARD}

^{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: 29/06/2007}

^{Balance Sheet Date: 31/12/2006 31/12/2005}

^{Number of weeks: 52 52}

^{Consolidation Code: COMPANY COMPANY}

^{--- ASSETS}

^{Preliminary Exp 3,852,000 4,106,000}

^{Tangible Fixed Assets: 3,008,000 3,167,000}

^{Total Fixed Assets: 6,860,000 7,273,000}

^{Inventories: 12,424,000 20,077,000}

^{Receivables: 28,230,000 16,206,000}

^{Cash,Banks,Securities: 414,000 499,000}

^{Other current assets: 4,153,000 3,314,000}

^{Total Current Assets: 45,221,000 40,096,000}

^{TOTAL ASSETS: 52,081,000 47,369,000}

^{--- LIABILITIES}

^{Equity capital: 10,000,000 10,000,000}

^{Profit & loss Account: -763,000 -2,446,000}

^{Total Equity: 9,237,000 7,554,000}

^{L/T deferred taxes: 35,000 -}

^{Other long term Liab.: 15,134,000 14,802,000}

^{Total L/T Liabilities: 15,169,000 14,802,000}

^{Trade Creditors: 16,330,000 17,537,000}

^{Prepay. & Def. charges: 5,331,000 5,672,000}

^{Due to Bank: 2,419,000 906,000}

^{Provisions: 1,160,000 531,000}

^{Other Short term Liab.: 2,435,000 367,000}

^{Total short term Liab.: 27,675,000 25,013,000}

^{TOTAL LIABILITIES: 42,844,000 39,815,000}

^{PROFIT & LOSS ACCOUNT}

^{Net Sales 107,856,000 98,063,000}

^{Purchases,Sces & Other Goods: 95,125,000 86,424,000}

^{Gross Profit: 12,731,000 11,639,000}

^{NET RESULT BEFORE TAX: 2,347,000 1,744,000}

^{Tax: 664,000 400,000}

^{Net income/loss year: 1,683,000 1,344,000}

^{Interest Paid: 785,000 829,000}

^{Depreciation: 180,000 208,000}

^{Directors Emoluments: 387,710 375,000}

^{Wages and Salaries: 5,637,000 6,032,000}

^{Financial Income: 199,000 168,000}

RATIOS

^{31/12/2006 31/12/2005}

^{Turnover per employee: 1540800.00 1400900.00}

^{Net result / Turnover(%): 0.02 0.01}

^{Fin. Charges / Turnover(%): 0.01 0.01}

^{Stock / Turnover(%): 0.12 0.20}

^{Net Margin(%): 1.56 1.37}

^{Return on Equity(%): 18.22 17.79}

^{Return on Assets(%): 3.23 2.84}

^{Net Working capital: 17546000.00 15083000.00}

^{Cash Ratio: 0.01 0.02}

^{Quick Ratio: 1.04 0.67}

^{Current ratio: 1.63 1.60}

^{Receivables Turnover: 94.23 59.49}

^{Leverage Ratio: 4.64 5.27}

^{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}

^{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 LIMITED TO FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED PASSABLE WITH NET WORTH IMPROVED BY 22.28% FROM S$7,554,000 IN 2005 TO S$9,237,000 IN 2006.}

^{THIS WAS DUE TO LOWER ACCUMULATED LOSSES OF S$763,000}

^{(2005: ACCUMULATED LOSSES OF S$2,446,000); A FALL OF 68.81% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 59.01% (2005: 70.11%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$16,330,000 (2005: S$17,537,000). THE BREAKDOWN IS AS FOLLOWS:}

^{-THIRD PARTIES - 2006: S$7,226,000 (2005: S$7,593,000)}

^{-RELATED CORPORATIONS - 2006: S$1,741,000 (2005: S$7,406,000)}

^{-SUBSIDIARY CORPORATIONS - 2006: S$30,000 (2005: S$944,000)}

^{-HOLDING CORPORATION - 2006: S$7,333,000 (2005: S$1,594,000)}

^{AMOUNTS DUE TO BANKS ROSE BY 1.67 TIMES TO S$2,419,000 (2005: S$906,000).}

^{SUBJECT'S LONG TERM LIABILITIES ROSE BY 2.48% TO S$15,169,000 (2005: S$14,802,000), AND CONSIST OF THE FOLLOWING:}

^{-LOAN FROM HOLDING CORPORATION - 2006: S$15,134,000 (2005: S$14,802,000)}

^{-DEFERRED INCOME TAX LIABILITIES - 2006: S$35,000 (2005: - )}

^{IN ALL, LEVERAGE RATIO FELL FROM 5.27 TIMES TO 4.64 TIMES AS A RESULT OF A MORE THAN PROPORTIONATE RISE IN TOTAL EQUITY AS COMPARED TO THE RISE IN TOTAL LIABILITIES.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE RISE IN NET WORKING CAPITAL BY 16.33% TO S$17,546,000 (2005: S$15,083,000).}

^{CURRENT RATIO ROSE TO 1.63 TIMES, UP FROM 1.60 TIMES AND QUICK RATIO IMPROVED TO 1.04 TIMES FROM 0.67 TIMES IN 2005.}

^{PROFITABILITY:}

^{REVENUE POSTED AN INCREASE OF 9.99% FROM S$98,063,000 IN 2005 TO S$107,856,000 AND NET PROFIT ROSE BY 25.22% TO S$1,683,000 (2005: S$1,344,000).}

^{HENCE, NET MARGIN ROSE TO 1.56% (2005: 1.37%).}

^REVENUE:

^{-SALE OF PRODUCTS - 2006: S$106,693,000 (2005: S$96,293,000)}

^{-RENDERING OF SERVICES - 2006: S$1,163,000 (2005: S$1,770,000)}

^{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 3.99 TIMES}

^{(2005: 3.10 TIMES).}

^{NON-CURRENT ASSETS:}

^{THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY:}

^{-OTHER RECIEVABLES - 2006: S$3,852,000 (2005: S$4,106,000)}

^{NOTES TO THE FINANCIAL STATEMENTS:}

^BORROWINGS

^{SECURITY GRANTED}

^{THE COMPANY'S TRADE BILLS DISCOUNTED ARE GUARANTEED BY THE ULTIMATE HOLDING CORPORATION AND SECURED BY FIXED AND FLOATING CHARGE ON ALL OF THE COMPANY'S ASSETS INCLUDING A MORTGAGE OVER ITS LEASEHOLD BUILDING.}

^{THE LOAN FROM THE HOLDING CORPORATION OF $15,134,000 (2005: $14,802,000) IS SUBORDINATED TO THE BANKING FACILITIES EXTENDED BY BANKS AND CANNOT BE REPAID WITHOUT PRIOR CONSENT OF THE BANKS AS LONG AS BANKING FACILITIES REMAIN OUTSTANDING.}

^{MATURITY OF BORROWINGS}

^{THE CURRENT BORROWINGS HAVE AN AVERAGE MATURITY OF 1.5 MONTHS (2005: 6 MONTHS) FROM THE END OF THE FINANCIAL YEAR.}

^{CONTINGENT LIABILITIES}

^{THERE WERE UNSECURED CONTINGENT LIABILITIES NOT PROVIDED FOR IN THE FINANCIAL STATEMENTS ARISING FROM:}

^{CORPORATE GUARANTEE - 2006: S$15,000 (2005: S$15,000)}

^{PERFORMANCE BONDS - 2006: S$3,495,000 (2005: S$5,276,000)}

^{THE CORPORATE GUARANTEE REPRESENTS A GUARANTEE OF $15,000 (2005: $15,000) GIVEN TO A CORPORATION TO COVER ITS INTEREST HELD IN A COMPANY IN THE EVENT OF A DISSOLUTION OF THAT COMPANY.}

^{THE PERFORMANCE BONDS REPRESENT GUARANTEES GIVEN IN THE NORMAL COURSE OF BUSINESS TO THE CUSTOMERS OF THE COMPANY FOR THE FULFILLMENT OF CONTRACTUAL PERFORMANCE.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 09/12/1970 AS A LIMITED PRIVATE COMPANY UNDER THE NAMESTYLE OF "DEUTZ MWM FAR EAST (PTE) LTD". ON 26/08/1994, IT CHANGED TO THE NAMESTYLE OF "DEUTZ MWM ASIA-PACIFIC (PTE) LTD", AND "DEUTZ ASIA-PACIFIC (PTE) LTD" ON 29/01/1997.}

^{SUBSEQUENTLY ON 26/06/2007, THE COMPANY CHANGED TO ITS PRESENT NAMESTYLE OF "DEUTZ POWER SYSTEMS ASIA-PACIFIC PTE. LTD.".}

^{AS AT 23/08/2007, THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 10,000,000 SHARES, OF A VALUE OF S$10,000,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) WHOLESALE OF INDUSTRIAL MACHINERY AND EQUIPMENT; WHOLESALE OF MEDIUM AND LARGE-SIZED ENGINES}

^{2) MANUFACTURING AND REPAIR OF EINGINES AND TURBINES EXP AIRCRAFT, VEHICLE AND}

^{CYCLE ENGINES; MANUFACTURE AND REPAIR OF MEDIUM AND LARGE-SIZED ENGINES}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, THE PRINCIPAL ACTIVITIES OF THE COMPANY ARE THE SALES AND SERVICING OF MARINE/STATIONARY DIESEL ENGINES, GENERATING SETS AND THE SALE OF RELATED PARTS.}

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

^ACTIVITIES

^{- SALE AND SERVICING OF DEUTZ AND DEUTZ MWM MARINE/STATIONARY DIESEL ENGINES AND}

^{GENERATING SETS AND SALE OF RELATED SPARE PARTS}

^{NUMBER OF EMPLOYEES}

^{- ABOUT 70}

^{PRODUCTS & SERVICES}

^{- TURBINES, ENGINES, STEAM MACHINES, PUMPS, PNEUMATIC AND HYDRAULIC EQUIPMENT, ETC}

^{- SHIP AND HARBOUR EQUIPMENT}

^{- MARINE ENGINES}

^BRANDS

^{- DEUTZ}

^{- DEUTZ MWM}

^{TRADE NAMES}

^{- DEUTZ (MARINE/ STATIONARY ENGINES, ETC.)}

^{- DEUTZ MWM (MARINE/ STATIONARY ENGINES, ETC.)}

^{IMPORT COUNTRIES}

^{- GERMANY, ETC.}

^{EXPORT COUNTRIES}

^{- ASIA REGION; HONG KONG, GERMANY, ETC}

^{SUBJECT IS A MEMBER OF FOLLOWING ENTITIES}

^{- SINGAPORE GERMAN CHAMBER}

^{- ASSOCIATION OF SINGAPORE MARITIME INDUSTRIES (ASMI)}

^{- SINGAPORE INTERNATIONAL CHAMBERS OF COMMERCE (SICC)}

^{NO OTHER TRADE INFORMATION WAS MADE AVAILABLE AS TELE-INTERVIEW WAS NOT GRANTED ON 28/08/2007.}

^{SUBJECT IS A WHOLLY-OWNED SUBSIDIARY COMPANY OF DEUTZ AG, INCORPORATED IN GERMANY, IS THE REGIONAL SALES, SERVICING AND TRAINING CENTRE FOR ASIA.}

^{NUMBER OF EMPLOYEES (31 DECEMBER)}

^{- COMPANY - 2006: NOT AVAILABLE (2005: NOT AVAILABLE)}

^{REGISTERED AND BUSINESS ADDRESS:}

^{11 KIAN TECK ROAD}

^{JURONG INDUSTRIAL ESTATE}

^{SINGAPORE 628768}

^{DATE OF CHANGE OF ADDRESS: -}

^{- OWNED PREMISE}

^EMAIL:

^{lee.a@deutz.de}

^WEBSITE:

^{http://www.deutz.de (HOLDING COMPANY'S)}

MANAGEMENT

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

^{(1) HELMUT MEYER, A GERMAN}

^{- BASED IN GERMANY}

^{(2) GORDON RISKE, A GERMAN}

^{- BASED IN GERMANY}

^{(3) DR HIRDESH KANWAL KHANNA, A GERMAN}

^{- BASED IN SINGAPORE}

^{(4) ALEXANDER STEPHEN STADTLER, A GERMAN}

^{- BASED IN GERMANY}

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.

WHOLESALE AND RETAIL TRADE SECTOR

PAST PERFORMANCE

DOMESTIC WHOLESALE TRADE INDEX

THE OVERALL DOMESTIC WHOLESALE TRADE DECLINED BY 7.5% IN Q1 2007. EXCLUDING PETROLEUM, DOMESTIC SALES FELL BY 7.4%. SECTORS OF ELECTRONIC COMPONENTS, SHIP CHANDLERS AND BUNKERING, INDUSTRIAL AND CONSTRUCTION MACHINERY REPORTED DECLINES OF 11.6% TO 23.8%.

HOWEVER, WHOLESALERS OF FOOD, BEVERAGES AND TOBACCO REGISTERED HIGHER TURNOVER OF 5.4%.

FOREIGN WHOLESALE TRADE INDEX

THE OVERALL FOREIGN WHOLESALE TRADE IN QUARTER 1 2007 FELL BY 7.6%. EXCLUDING PETROLEUM, FOREIGN SALES DECLINED BY 8.0%. MOST WHOLESALE SECTORS REPORTED LOWER OVERSEAS RECEIPTS IN QUARTER 1 2007 COMPARED TO THE PREVIOUS QUARTER, EXCEPT HOUSEHOLD EQUIPMENT AND FURNITURE SECTOR. SHIP CHANDLERS & BUNKERING REPORTED THE LARGEST DECLINE OF 18.3% IN QUARTER 1 2007, FOLLOWED BY FOOD BEVERAGES & TOBACCO SECTOR OF 17.7%.

RETAIL TRADE

THE OVERALL RETAIL SALES ROSE MARGINALLY BY 0.7% IN QUARTER 2 2007, COMPARED TO QUARTER 2 2006. EXCLUDING MOTOR VEHICLES, RETAIL SALES ROSE BY 5.1%. SALES OF OPTICAL GOODS & BOOKS, FURNITURE & HOUSEHOLD EQUIPMENT AND SUPERMARKETS ENJOYED STRONG GROWTHS OVER A YEAR AGO. PROVISION & SUNDRY SHOPS, WATCHES AND JEWELLERY, DEPARTMENT STORES AND WEARING APPAREL & FOOTWEAR SECTORS ALSO REPORTED HIGHER SALES OF 4.35 TO 5.9% RESPECTIVELY.

HOWEVER, RETAILERS OF MOTOR VEHICLES, FOOD & BEVERAGES, TELECOMMUNICATIONS APPARATUS & COMPUTERS AND PETROL SERVICES STATIONS REPORTED LOWER SALES.

OUTLOOK

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

RETAIL TRADE FIRMS ANTICIPATE BUSINESS TO BE LESS BRISK FOR THE NEXT 6 MONTHS. IN PARTICULAR, DEPARTMENT STORES, SUPERMARKETS AND RETAILERS OF MOTOR VEHICLES EXPECT SLOWER BUSINESS IN THE COMING MONTHS.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

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