MIRA INFORM REPORT

Report Date :

15.01.2008

IDENTIFICATION DETAILS

Name :	ZF SOUTH EAST ASIA PTE LTD
Registered Office :	1 Marina Boulevard, #28-00 One Marina Boulevard
Country :	Singapore
Financials (as on) :	31.12.2006
Date of Incorporation :	17/08/1987
Com. Reg. No.:	198702489N
Legal Form :	Pte Ltd
Line of Business :	Automobile Supplier in Driving System and Chassis Technology

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	EUR200,000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Exists

Subject Company

ZF SOUTH EAST ASIA PTE LTD

Line Of Business

AUTOMOBILE SUPPLIER IN DRIVING SYSTEM AND CHASSIS TECHNOLOGY

Parent Company

ZF FRIEDRICHSHAFEN

(PERCENTAGE OF SHAREHOLDING: 100%)

Financial Elements

FY 2006

COMPANY

^{Sales : S$68,093,000}

^{Networth : S$37,848,000}

^{Paid-Up Capital : S$15,440,000}

^{Net result : S$3,222,000}

^{Net Margin(%) : 4.73}

^{Return on Equity(%) : 8.51}

^{Leverage Ratio : 0.33}

Rating

Credit Requested : EUR200,000

Credit Rating : LOW RISK

Credit Opinion : RECOMMEND ON EUR200,000

COMPANY IDENTIFICATION

^{Subject Company : ZF SOUTH EAST ASIA PTE LTD}

^{Business Address: 1 MARINA BOULEVARD}

^{#28-00 ONE MARINA BOULEVARD}

^{Town: SINGAPORE}

^{Postcode: 018989}

^County:

^{Country: Singapore}

^{Telephone: 6424 8787/8775}

^{Fax: 6424 8788/8776}

^{ROC Number: 198702489N}

^{Reg. Town:}

SUMMARY

^{All amounts in this report are in: SGD}

^{Legal Form: Pte Ltd}

^{Date Inc.: 17/08/1987}

^{Summary year : 31/12/2006}

^{Sales: 68,093,000}

^{Networth : 37,848,000}

^{Capital: 2,600,000}

^{Paid-Up Capital: 15,440,000}

^Employees:

^{Net result : 3,222,000}

^{Share value:}

^{AUDITOR: ERNST & YOUNG}

REFERENCES

^{Credit Requested : EUR200,000}

^{Credit Opinion : RECOMMEND ON EUR200,000}

^{Credit Rating : LOW RISK}

^{Litigation : Yes}

^{Company status : TRADING}

^{Started : 17/08/1987}

PRINCIPAL(S)

^{FRANCISCUS XAVIERUS LAUBSCHER F2314728U Managing Director}

DIRECTOR(S)

^{ALOIS JOSEF LUDWIG 5362044040 Director}

^{Appointed on : 01/01/2005}

^{Street : NESSHOVEN 2 D-53804}

^MUCH

^Town:

^Postcode:

^{Country: Germany}

^{MATHIAS BENZ Director}

^{Appointed on : 01/01/2008}

^{Street : BLEICHWEG 20/3}

^{Town: LANGENARGEN}

^{Postcode: 88085}

^{Country: Germany}

^{FRANCISCUS XAVIERUS LAUBSCHER F2314728U Director}

^{Appointed on :01/04/1995}

^{Street : 7B BALMORAL ROAD}

^#04-01

^{PINE SPRINGS}

^{Town: SINGAPORE}

^{Postcode: 259788}

^{Country: Singapore}

^{FRANCISCUS XAVIERUS LAUBSCHER F2314728U Managing Director}

^{Appointed on :01/04/1995}

^{Street : 7B BALMORAL ROAD}

^#04-01

^{PINE SPRINGS}

^{Town: SINGAPORE}

^{Postcode: 259788}

^{Country: Singapore}

^{CHAN MENG YOOK CHRISTINE S1238658C Company Secretary}

^{Appointed on : 19/08/1987}

^{Street : 11C SWISS CLUB ROAD}

^{SWISS CLUB PARK}

^{Town: SINGAPORE}

^{Postcode: 288103}

^{Country: Singapore}

^{JEAN WAN YEN-PING S7722537D Company Secretary}

^{Appointed on : 01/12/2003}

^{Street : 10C BRADDELL HILL}

^#12-12

^{BRADDELL VIEW}

^{Town: SINGAPORE}

^{Postcode: 579722}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{JOCKERS GERHARD WILLI SH4911729}

ACTIVITY (IES)

^{TRANSMISSIONS - TRUCK, TRACTORS, ETC Code:22291}

^{BASED ON ACRA'S RECORD AS AT 09/01/2008}

^{1) OTHER SUPPORT ACTIVITIES; TRADING AND AFTER SALES SERVICE OF ZF DRIVE SYSTEMS, TRANSMISSION}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

SHAREHOLDERS(S)

^{ZF FRIEDRICHSHAFEN 15,440,000 Company}

^{Street : ALLMANNSWEILERSTRASSE 25}

^{Town: FRIEDRICHSHAFEN}

^{Postcode: D88046}

^{Country: Germany}

FORMER SHAREHOLDER(S)

^{ZAHNRADFABRIK FRIEDRICHSHAFEN AKTIE 2,600,000}

HOLDING COMPANY

^{ZF FRIEDRICHSHAFEN % : 100}

SUBSIDIARY(IES)

^{ZF (THAILAND) LTD}

^{ZF SALES AND SERVICE (MALAYSIA) SDN BHD}

^{ZF PHILIPPINES INC.}

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality: AVERAGE}

^{Liquidity : SUFFICIENT}

^{Payments : REGULAR}

^{Trend : LEVEL}

^{Financial Situation: AVERAGE}

LITIGATION(S)

^{Type Of Case: Filling Of Court Winding Up}

^{Case Number: HCW00037/94}

Plaintiff ZF SOUTH EAST ASIA PTE LTD ROC # : 198702489N

Defendant HARVEST TECHNOLOGY PTE LTD ROC # : 198905133W

FINANCIAL ELEMENTS

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

^{Date Account Lodged: 23/05/2007}

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

^{Number of weeks: 52 52}

^{Consolidation Code: CONSOLIDATED CONSOLIDATED}

^{--- ASSETS ---}

^{Preliminary Exp 307,000 1,047,000}

^{Tangible Fixed Assets: 5,847,000 5,803,000}

^{Investments 183,000 183,000}

^{Total Fixed Assets: 6,337,000 7,033,000}

^{Inventories: 19,888,000 20,869,000}

^{Receivables: 11,147,000 10,468,000}

^{Cash,Banks, Securitis: 12,559,000 5,506,000}

^{Other current assets: 545,000 614,000}

^{Total Current Assets: 44,139,000 37,457,000}

^{TOTAL ASSETS: 50,476,000 44,490,000}

^{--- LIABILITIES ---}

^{Equity capital: 15,440,000 15,440,000}

^{Reserves: 9,000 -119,000}

^{Profit & lost Account: 21,609,000 18,848,000}

^{Other: 790,000 700,000}

^{Total Equity: 37,848,000 34,869,000}

^{L/T deffered taxes: 176,000 24,000}

^{Total L/T Liabilities: 176,000 24,000}

^{Trade Creditors: 9,437,000 7,320,000}

^{Prepay. & Def. charges: 1,372,000 716,000}

^{Provisions: 806,000 569,000}

^{Other Short term Liab.: 837,000 992,000}

^{Total short term Liab.: 12,452,000 9,597,000}

^{TOTAL LIABILITIES: 12,628,000 9,621,000}

PROFIT & LOSS ACCOUNT

^{Net Sales 68,093,000 70,612,000}

^{Purchases,Sces & Other Goods: 52,520,000 54,425,000}

^{Gross Profit: 15,573,000 16,187,000}

^{NET RESULT BEFORE TAX: 3,878,000 2,131,000}

^{Tax : 656,000 389,000}

^{Net income/loss year: 3,222,000 1,742,000}

^{Depreciation: 697,000 319,000}

^{Dividends: 400,000}

^{Wages and Salaries: 6,479,000 5,223,000}

^{Financial Income: 143,000 40,000}

RATIOS

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

^{Net result / Turnover(%): 0.05 0.02}

^{Stock / Turnover(%): 0.29 0.30}

^{Net Margin(%): 4.73 2.47}

^{Return on Equity(%): 8.51 5.00}

^{Return on Assets(%): 6.38 3.92}

^{Dividends Coverage: 8.05 8.05}

^{Net Working capital: 31687000.00 27860000.00}

^{Cash Ratio: 1.01 0.57}

^{Quick Ratio: 1.90 1.66}

^{Current ratio: 3.54 3.90}

^{Receivables Turnover: 58.93 53.37}

^{Leverage Ratio: 0.33 0.28}

^{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)/1000}

^{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 GROUP WAS SEEN TO BE STABLE TO FAIR IN VIEW OF THE FOLLOWING:}

^{NET WORTH:}

^{THE BALANCE SHEET WAS CONSIDERED SOUND WITH NET WORTH IMPROVED BY 8.54% FROM S$34,869,000 IN FY 2005 TO S$37,848,000 IN FY 2006. THIS WAS DUE TO HIGHER ACCUMULATED PROFIT OF S$21,609,000 (2005: S $18,848,000); A RISE OF 14.65% FROM THE PRIOR FINANCIAL YEAR.}

^LEVERAGE:

^{IN THE SHORT-TERM, SUBJECT WAS LARGELY FINANCED BY TRADE CREDITORS WHICH MADE UP 75.78% (2005: 76.27%) OF THE TOTAL CURRENT LIABILITIES AND AMOUNTED TO S$9,437,000 (2005: S$7,320,000). THE BREAKDOWN IS AS FOLLOWS:}

^{-TRADE CREDITOR- 2006: S$1,247,000 (2005: S$743,000)}

^{-DUE TO ULTIMATE HOLDING COMPANY- 2006: S$1,914,000 (2005: S $1,497,000)}

^{-DUE FROM RELATED COMPANY- 2006: S$6,276,000 (2005: S$5,080,000)}

^{IN ALL, LEVERAGE RATIO ROSE FROM 0.28 TIMES TO 0.33 TIMES AS A RESULT OF A GREATER RISE IN TOTAL LIABILITIES THAN TOTAL EQUITY.}

^LIQUIDITY:

^{IN GENERAL, SUBJECT'S LIQUIDITY SITUATION WAS PASSABLE AS SEEN FROM THE RISE IN NET WORKING CAPITAL AND LIQUIDITY RATIOS. CURRENT RATIO ROSE TO 2.08 TIMES, FROM 2.00 TIMES AND QUICK RATIO IMPROVED TO 1.29 TIMES FROM 0.95 TIMES IN FY 2005.}

^{SIMILARLY, NET WORKING CAPITAL IMPROVED BY 10.99% FROM S$3,337,000 IN FY 2005 TO S$3,704,000.}

^{PROFITABILITY:}

^{REVENUE POSTED A DECLINE OF 3.56% FROM S$70,612,000 IN FY 2005 TO S $68,093,000 BUT NET PROFIT ROSE BY 84.96% TO S$3,222,000 (2005: S $1,742,000). THIS COULD BE DUE TO LOWER GENERAL AND ADMINSTRATIVE EXPENSES OF S$12,661,000 (2005: S$14,881,000). HENCE, NET MARGIN FELL TO 2.19% (2005: 2.66%).}

^{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, SUBJECT DID NOT INCUR ANY INTEREST EXPENSE FOR THE FINANCIAL YEARS UNDER REVIEW.}

^{NON-CURRENT ASSETS:}

^{THE FOLLOWING ITEMS ARE CLASSIFIED UNDER PRELIMINARY:}

^{-LOAN TO A RELATED COMPANY- 2006: NIL (2005: S$984,000)}

^{-LOAN TO A RELATED COMPANY- 2006: S$107,000 (2005: NIL)}

^{-LOAN TO A RELATED COMPANY- 2006: S$3,000 (2005: NIL)}

^{-LOAN TO A RELATED COMPANY- 2006: S$197,000 (2005: S$63,000)}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 17/08/1987 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS PRESENT NAMESTYLE AS "ZF SOUTH EAST ASIA PTE LTD".}

^{THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 15,440,000 SHARES, OF A VALUE OF S$15,440,000.}

^{PRINCIPAL ACTIVITIES:}

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

^{1) OTHER SUPPORT ACTIVITIES; TRADING AND AFTER SALES SERVICE OF ZF DRIVE SYSTEMS, TRANSMISSION AND STEERING}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S PRINCIPAL ACTIVITIES ARE:}

^{A) SALES PROMOTION, MARKETING, ARRANGING OF SLAES FOR ZF GROUP MEMBER COMPANIES, SALES ON OWN ACCOUNT;}

^{B) DEVELOPEING OF BUSINESS OPPORTUNITIES FOR ZF GROUP COMPANIES INCLUDING INTIATING OF TECHINICAL CO-OPERATION AGREEMENTS ON LICENSE OR JOINT VENTURE BASIS BETWEEN ZF GROUP MEMBERS AND REGIONAL PARTNERS;}

^{C) COORDINATING AND SUPERVISING JOINT AND MARKETING ACTIVITIES FOR ZF GROUP MEMBERS}

^{D) PREPARATION OF AND PARTICIPATING IN FEASIBILITY STUDIES FOR REGIONAL MANUFACTURING OF ZF COMPONENTS;}

^{E) MARKETING OF ENGINEERING KNOW-HOW, PROPERTY AND PARENT RIGHTS FOR}

^{ZF PRODUCTS;}

^{F) PERFORMING AFTER SALES SERVICE AND WORKSHOP OVERHAUL FOR ZF PRODUCTS;}

^{G) RESEARCHING FOR, INDENTIFYING AND DEVELOPING LOW COST PROCUREMENT SOURCES OF GOOD QUALITY FOR MATERIAL AND COMPNENETS, NEEDED BY ZF GROUP; AND}

^{H) PERFORMING MARKET ANALYSIS FOR SPECIFIC ZF PRODUCT APPLICATION SECTORS.}

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

^BACKGROUND:

^{ZF, A CORPORATE GROUP WITH AROUND 55,000 EMPLOYEES AT 120 LOCATIONS IN 25 COUNTRIES, IS A WORLD WIDE LEADING AUTOMOBILE SUPPLIER IN DRIVING SYSTEM AND CHASSIS TECHNOLOGY. ZF REACHED A TOTAL REVENUE OF 11.7 BILLION EURO IN 2006. WITH THAT, ZF RANKS THIRD AMONG GERMANY'S LARGEST AUTOMOBILE CORPORATE GROUPS AND 15TH WORLDWIDE. . IN ORDER TO}

^{CONTINUE TO BE SUCCESSFUL WITH INNOVATIVE PRODUCTS, ZF ANNUALLY INVESTS FIVE PERCENT OF ITS SALES (2006: EUR 600 MILLION OF EUR 11.7 BILLION) IN RESEARCH AND DEVELOPMENT.}

^PRODUCTS:

^{* ZF MARINE GEARS (THIS APPLIES TO SOUTH EAST ASIA ONLY)}

^{* AUTOMATIC TRANSMISSIONS FOR BUSES AND SPECIAL VEHICLES}

^{* POWERSHIFT TRANSMISSIONS}

^{* AXLES FOR OFF-HIGHWAY VEHICLES/CONSTRUCTION MACHINERY}

^{* TRANSITMIXER-GEARBOXES}

^{* POWERSTEERING GEARS}

^{* MACHINE-TOOL GEARBOXES}

^{* ELECTROMAGNETIC CLUTCHES}

^{* OTHER ZF TRANSMISSION PRODUCTS.}

^{* SACHS (SHOCK ABSORBERS AND CLUTCHES)}

^{* LEMFÖRDER (STEERING AND SUSPENSION COMPONENTS)}

^{* BOGE (SHOCK ABSORBERS AND RUBBER METAL COMPONENTS)}

^{* ZF PARTS (STEERING GEARS AND STEERING PUMPS)}

^BRANDS:

^{* LEMFOERDER}

^{* BOGE}

^{* SACHS}

^{* ZF}

^{NO OTHER TRADE INFORMATION IS AVAILABLE AS TELE-INTERVIEW WAS NOT GRANTED BY SUBJECT'S PERSONNEL .}

^{REGISTERED ADDRESS:}

^{1 MARINA BOULEVARD}

^{#28-00 ONE MARINA BOULEVARD}

^{SINGAPORE 018989}

^{DATE OF CHANGE OF ADDRESS: 19/04/2004}

^{BUSINESS ADDRESS:}

^{11 TUAS DRIVE 1}

^{SINGAPORE 638678}

^WEBSITE:

^{http://www.zf-seasia.com}

^EMAIL:

^{singapore@zf-seasia.com}

MANAGEMENT

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

^{1) ALOIS JOSEF LUDWIG, A GERMAN}

^{- BASED IN GERMANY}

^{2) MATHIAS BENZ, A GERMAN}

^{- BASED IN GERMANY}

^{3) FRANCISCUS XAVIERUS, A SOUTH AFRICAN}

^{- 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 OPENTO 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