MIRA INFORM REPORT

Report Date :

13.05.2008

IDENTIFICATION DETAILS

Name :	METSO AUTOMATION PTE LTD
Formerly Known As :	^NELES AUTOMATION PTE LTD
Registered Office :	^238A Thomson Road #25-09 ^Novena Square
Country :	Singapore
Financials (as on) :	31.12.2005
Date of Incorporation :	^05.12.1983
Com. Reg. No.:	^198305744G
Legal Form :	^Pte Ltd
Line of Business :	^Trading of Valves, Parts and related Metal Engineering Products

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small

Status :	Small Company
Payment Behaviour :	Regular
Litigation :	Clear

Subject Company

METSO AUTOMATION PTE LTD

Line Of Business 

^{TRADING OF VALVES, PARTS AND RELATED METAL ENGINEERING PRODUCTS.}

Parent Company

^{METSO AUTOMATION INC}

(PERCENTAGE OF SHAREHOLDING: 100.00%)

Financial Elements

FY 2005

COMPANY

Sales : S$54,034,955

Networth : S$ 5,828,716

Paid-Up Capital : S$ 500,000

Net result : S$ 7,437,654

Net Margin(%) : 13.76

Return on Equity(%) : 127.60

Leverage Ratio : 1.87

COMPANY IDENTIFICATION

^{Subject Company : METSO AUTOMATION PTE LTD}

^{Former Name :NELES AUTOMATION PTE LTD}

^{Business Address : 238A THOMSON ROAD}

^#25-09

^{NOVENA SQUARE}

^{Town : SINGAPORE}

^{Postcode : 307684}

^{County :}

^{Country : Singapore}

^{Telephone : 6511 1011}

^{Fax : 6250 0830}

^{ROC Number : 198305744G}

^{Reg. Town:}

PREVIOUS IDENTIFICATION

^{NELES AUTOMATION PTE LTD DATE OF CHANGE: 30/01/2001 NELES}

SUMMARY

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

^{Legal Form : Pte Ltd}

^{Date Inc. : 05/12/1983}

^{Previous Legal Form : -}

^{Summary year : 31/12/2005}

^{Sales : 54,034,955}

^{Networth : 5,828,716}

^{Capital : 500,000}

^{Paid-Up Capital : 500,000}

^{Employees : 20}

^{Net result : 7,437,654}

^{Share value : -}

^{Auditor : PRICEWATERHOUSECOOPERS}

^{BASED ON ACRA'S RECORD}

^{NO OF SHARES CURRENCY AMOUNT}

^{ISSUED ORDINARY 500,000 SGD 500,000.00}

^{PAID-UP ORDINARY - SGD 500,000.00}

REFERENCES

^{Litigation : No}

^{Company status : TRADING}

^{Started : 05/12/1983}

PRINCIPAL(S)

^{LAU SEE HOE S1789554J Director}

DIRECTOR(S)

^{LAU SEE HOE S1789554J Director}

^{Appointed on : 23/03/2007}

^{Street : 1 FORT ROAD}

^#11-03

^{ONE FORT}

^{Town: SINGAPORE}

^{Postcode: 439069}

^{Country: Singapore}

^{ANTTI KALERVO KUISMA 14500956 Director}

^{Appointed on : 31/05/2005}

^{Street : RITOKALLIONTIE 8-16 H}

^FI-00330

^{Town: HELSINKI}

^Postcode:

^{Country: Finland}

^{EEVA LIISA VIRKKUNEN 16085934 Director}

^{Appointed on : 13/03/2006}

^{Street : MUSEOKATU 7 B 19 FIN-00100}

^{Town: HELSINKI}

^Postcode:

^{Country: Finland}

^{YAP PECK KHIM S7505725C Company Secretary}

^{Appointed on : 31/05/2007}

^{Street : 142 MARSILING ROAD}

^#08-2088

^{Town: SINGAPORE}

^{Postcode: 730142}

^{Country: Singapore}

FORMER DIRECTOR(S)

^{GOH HWEE CHENG S0012535J}

^{JANSSON HANS GORAN 1523712}

^{MOREY RUSSELL G C006373D}

^{KOSKINEN JOUKO P123865}

^{SCHONK ANTONIUS MARTINUS M Z148436}

ACTIVITY(IES)

^{AUTOMATION SYSTEMS And EQUIPMENT Code:1260}

^{MACHINERY Code:13260}

^{BASED ON ACRA'S RECORD AS AT 08/05/2008}

^{1) OTHER SERVICE ACTIVITIES; AUTOMATION SYSTEMS}

^{2) WHOLESALE OF INDUSTRIAL MACHINERY AND EQUIPMENT}

CHARGES

No Charges On Premises/Property In Our Database

PREMISES/PROPERTY INFORMATIONS

No Premises/Property Information In Our Databases

SHAREHOLDERS(S)

^{METSO AUTOMATION INC. 500,000 Company}

^{Street : TULPPATIE 1B, FIN-00880}

^{Town: HELSINKI}

^Postcode:

^{Country: Finland}

FORMER SHAREHOLDER(S)

^{NELES INTERNATIONAL B V 500,000}

^{GOH HWEE CHENG 1}

^{TONG BEOW HUA 1}

HOLDING COMPANY

^{METSO AUTOMATION INC. UF30952K % : 100}

SUBSIDIARY(IES)

^{PT METSO AUTOMATION}

PAYMENT HISTORY AND EXPERIENCES

^{Trade Morality : AVERAGE}

^{Liquidity : UNKNOWN}

^{Payments : UNKNOWN}

^{Trend : UNKNOWN}

^{Financial Situation : UNKNOWN}

FINANCIAL ELEMENTS

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

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

^{Date Account Lodged: 30/06/2006}

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

^{Number of weeks: 52 52}

^{Consolidation Code: COMPANY COMPANY}

^{--- ASSETS ---}

^{Tangible Fixed Assets: 283,936 306,129}

^{Investments 299,970 299,970}

^{Total Fixed Assets: 583,906 606,099}

^{Inventories: 2,026,956 1,204,136}

^{Receivables: 8,883,964 5,433,294}

^{Cash,Banks, Securitis: 4,802,023 3,699,799}

^{Other current assets: 438,166 436,364}

^{Total Current Assets: 16,151,109 10,773,593}

^{TOTAL ASSETS: 16,735,015 11,379,692}

^{--- LIABILITIES ---}

^{Equity capital: 500,000 500,000}

^{Profit & lost Account: 5,328,716 4,891,062}

^{Total Equity: 5,828,716 5,391,062}

^{L/T deffered taxes: 10,645 5,816}

^{Other long term Liab.: 1,337}

^{Total L/T Liabilities: 10,645 7,153}

^{Trade Creditors: 7,251,352 4,403,889}

^{Short term liabilities: 1,316 1,158}

^{Due to Bank: 1,850,168 609,618}

^{Provisions: 1,666,878 871,002}

^{Other Short term Liab.: 125,940 95,810}

^{Total short term Liab.: 10,895,654 5,981,477}

^{TOTAL LIABILITIES: 10,906,299 5,988,630}

^{--- PROFIT & LOSS ACCOUNT ---}

^{Net Sales 54,034,955 36,854,847}

^{Purchases,Sces & Other Goods: 39,650,582 27,722,433}

^{Gross Profit: 14,384,373 9,132,414}

^{NET RESULT BEFORE TAX: 9,155,887 3,998,155}

^{Tax : 1,718,233 829,007}

^{Net income/loss year: 7,437,654 3,169,148}

^{Interest Paid: 16,624 14,951}

^{Depreciation: 129,121 165,731}

^{Dividends: 7,000,000 800,000}

^{Directors Emoluments: 164,614 146,996}

^{Wages and Salaries: 1,887,394 1,637,488}

^{Financial Income: 53,006 17,066}

RATIOS

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

^{Turnover per employee: 2701747.75 1842742.35}

^{Net result / Turnover(%): 0.14 0.09}

^{Stock / Turnover(%): 0.04 0.03}

^{Net Margin(%): 13.76 8.60}

^{Return on Equity(%): 127.60 58.79}

^{Return on Assets(%): 44.44 27.85}

^{Dividends Coverage: 1.06 3.96}

^{Net Working capital: 5255455.00 4792116.00}

^{Cash Ratio: 0.44 0.62}

^{Quick Ratio: 1.26 1.53}

^{Current ratio: 1.48 1.80}

^{Receivables Turnover: 59.19 53.07}

^{Leverage Ratio: 1.87 1.11}

^{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

^{NOTE: THE FINANCIAL STATEMENT IN THIS REPORT IS THOSE OF 2005 AND IS CONSIDERED OUTDATED. HENCE, FINANCIAL ANALYSIS IS NOT CONDUCTED. THE FINANCIAL STATEMENT SERVES AS A REFERENCE ONLY. IN REPLACEMENT, ADVERSE CHECK ON ITS LOCAL DIRECTORS IS MADE.}

BACKGROUND/OPERATION

^{THE COMPANY WAS INCORPORATED IN THE REPUBLIC OF SINGAPORE ON 05/12/1983 AS A LIMITED PRIVATE COMPANY AND IS TRADING UNDER ITS NAMESTYLE AS "NELES CONTROLS PTE LTD".}

^{ON 18/08/1999, SUBJECT CHANGED TO NAMESTYLE OF "NELES AUTOMATION PTE LTD".}

^{SUBSEQUENTLY ON 30/01/2001, SUBJECT CHANGED TO ITS PRESENT NAMESTYLE OF "METSO AUTOMATION PTE LTD".}

^{THE COMPANY HAS AN ISSUED AND PAID-UP CAPITAL OF 500,000 SHARES, OF A VALUE OF S$500,000.}

^{PRINCIPAL ACTIVITIES:}

^{SUBJECT IS REGISTERED WITH THE ACCOUNTING AND CORPORATE REGULATORY}

^{AUTHORITY (ACRA) TO BE PRINCIPALLY ENGAGED IN THE BUSINESS OF:}

^{1) OTHER SERVICE ACTIVITIES; AUTOMATION SYSTEMS}

^{2) WHOLESALE OF INDUSTRIAL MACHINERY AND EQUIPMENT}

^{THE COMPANY WAS LISTED IN THE SINGAPORE LOCAL DIRECTORIES UNDER THE CLASSIFICATION OF: VALVES}

^{DURING THE FINANCIAL YEAR(S), UNDER REVIEW, SUBJECT'S PRINCIPAL ACTIVITY IS THE TRADING OF VALVES, PARTS AND RELATED METAL ENGINEERING PRODUCTS.}

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

^BACKGROUND:

^{IN THE BEGINNING OF THE YEAR 2001, METSO CORPORATION'S AUTOMATION AND CONTROL TECHNOLOGY BUSINESS AREA WAS RENAMED METSO AUTOMATION FORMERLY THE NAME OF THE COMPANY WAS NELES AUTOMATION WHICH WAS FORMED IN 1999 BY MERGING TWO COMPANIES, NELES CONTROLS AND VALMET AUTOMATION. BOTH COMPANIES HAVE ADVANCED ACROSS A MULTI-PHASED HISTORY IN ATTAINING AN OUTSTANDING WORLDWIDE POSITION AS PROCESS INSTRUMENTATION, AUTOMATION AND FLOW CONTROL SUPPLIERS.}

^ACTIVITIES:

^{* DESIGNS, DEVELOPS AND DELIVERS AUTOMATION & INFORMATION MANAGEMENT}

^{APPLICATION NETWORKS AND SYSTEMS.}

^PRODUCTS:

^{PULP AND PAPER:}

^{* WOODHANDLING}

^{* FIBER LINE}

^{* RECOVERY LINE}

^{* MECHANICAL PULPING}

^{* RECYCLED FIBER}

^{* PULP DRYER}

^{* PREPARING THE FURNISH}

^{* PAPER-BOARD-TISSUE MAKING LINE}

^{ENERGY AND PROCESS:}

^{* POWER GENERATION}

^{* CO-GENERATION}

^{* COMBINED CYCLE}

^{* FLUIDIZED BED BOILERS}

^{* ENERGY FROM WASTE}

^VALVES:

^{* PRODUCTS ARE ENGINEERED TO PROVIDE DRAMATIC IMPROVEMENTS IN PROCESS PERFORMANCE WHILE REDUCING COSTS. THEY INCORPORATE SOME OF THE INDUSTRY'S MOST UNIQUE AND SOPHISTICATED DIGITAL, METAL AND SOFT SEATING AND MATERIALS TECHNOLOGIES. APPLICATIONS COVERED INCLUDE FROM CRYOGENICS TO +600 °C. WITH THIS BROAD PRODUCT LINE, WE CAN ALSO MEET YOUR NEEDS FOR IMPROVED PROCESS SAFETY, UPTIME AND TROUBLE-FREE AUTOMATION.}

^BRANDNAMES:

^{* JAMESBURY}

^{* KAJAANI}

^{* METSODNA}

^{* NELES}

^{* PAPERIQ}

^{* SENSODEC}

^{INDUSTRIES SERVED:}

^{* POWER}

^{* ENERGY}

^{* OIL AND GAS INDUSTRIES}

^{* PULP AND PAPER INDUSTRY}

^{TERMS OF PAYMENT:}

^{* TRADE AND OTHER RECEIVABLES: 60 DAYS TERM}

^{* TRADE AND OTHER PAYABLES : 60 DAYS TERM}

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

^{THE COMPANY IS A WHOLLY OWNED SUBSIDIARY OF METSO AUTOMATION INC., INCORPORATED IN FINLAND. THE COMPANY'S ULTIMATE PARENT COMPANY IS METSO CORPORATION, INCORPORATED IN FINLAND.}

^{NUMBER OF EMPLOYEES:}

^{* 20 - AS OF 2006}

^{REGISTERED AND BUSINESS ADDRESS:}

^{238A THOMSON ROAD}

^#25-09

^{NOVENA SQUARE}

^{SINGAPORE 307684}

^{DATE OF CHANGE OF ADDRESS: 12/12/2004}

^{- PROPERTY RECORD WAS NOT AVAILABLE}

^{WEBSITE: http://www.metsoautomation.com}

^{EMAIL : intelligent.reliability@metso.com}

MANAGEMENT

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

^{1) ANTTI KALERVO KUISMA, A FINNISH}

^{- BASED IN FINLAND}

^{2) EEVA LIISA VIRKKUNEN, A FINNISH}

^{- BASED IN FINLAND}

^{3) LAU SEE HOE, A SINGAPOREAN}

^{- HOLDS NO OTHER DIRECTORSHIPS AS RECORDED IN OUR DATABASE.}

ADVERSE ON DIRECTORS

^{DIRECTOR'S NAME: LAU SEE HOE}

^{ADVERSE REPORT AGAINST DIRECTOR: NOT AVAILABLE FROM OUR DATABASE}

^{PROPERTY OWNERSHIP: OWNS 1}

^{ANNUAL VALUE: S$21,600}

^{CO-OWNER (S): NG YI LANE CORINNE}

^{* 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.}

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

THE WHOLESALE AND RETAIL TRADE SECTOR GREW BY 6.0% IN 4Q 2007, SLOWER THAN THE 6.8% GROWTH IN 3Q 2007. RETAIL SALES FELL BY 2.5%, FOLLOWING A 1.5% GROWTH IN 3Q 2007.

DOMESTIC WHOLESALE TRADE INDEX

THE OVERALL DOMESTIC WHOLESALE TRADE ROSE BY 22.2% IN 4Q 2007 OVER 4Q 2006.

EXCLUDING PETROLEUM, DOMESTIC SALES GREW BY 4.8%.

THE RISE IN THE OVERALL INDEX WAS MAINLY DUE TO HIGHER SALES OF PETROLEUM AND PETROLEUM PRODUCTS (47.3%), TIMBER, PAINTS AND CONSTRUCTION MATERIALS (29.8%). OTHER WHOLESALE SEGMENTS THAT REPORTED DOUBLE-DIGIT GROWTH WERE WHOLESALING OF GENERAL WHOLESALE TRADE, HOUSEHOLD EQUIPMENT AND FURNITURE AND CHEMICALS AND CHEMICAL PRODUCTS.

ON THE OTHER HAND, WHOLESALE SEGMENT THAT REPORTED LOWER SALES WERE ELECTRONIC COMPONENTS (-35.8%).

AT CONSTANT PRICES, THE OVERALL DOMESTIC WHOLESALE TRADE ROSE BY 1.6% IN 4Q 2007 OVER 4Q 2006. EXCLUDING PETROLEUM, DOMESTIC SALES ROSE SLIGHTLY BY 0.2%.

ON A QUARTER-OVER-QUARTER BASIS, THE OVERALL DOMESTIC WHOLESALE TRADE IN 4Q 2007 ROSE BY 7.1% OVER 3Q 2007. EXCLUDING PETROLEUM, DOMESTIC SALES CONTRACTED BY 2.9%.

THE MAJORTIY OF THE WHOLESALE SECTORS RECORDED HIGHER DOMESTIC SALES IN 4Q 2007 OVER PREVIOUS QUARTER. PETROLEUM AND PETROLEUM PRODUCTS EXPANDED BY 20.0%. GENERAL WHOLESALE TRADE AND INDUSTRIAL AND CONSTRUCTION MACHINERY ALSO REGISTERED

DOUBLE-DIGIT GROWTH OVER PREVIOUS QUARTER.

ON THE OTHER HAND, SALES OF FOOD, BEVERAGES AND TOBACCO AND ELECTRONIC COMPONENTS FELL IN 4Q 2007 OVER 3Q 2007.

FOREIGN WHOLESALE TRADE INDEX

THE OVERALL FOREIGN WHOLESALE TRADE FOR 4Q 2007 ROSE BY 27.0%, IN COMPARISON TO 4Q 2006. EXCLUDING PETROLEUM, IT EXPANDED BY 15.3%

MOST OF THE SECTORS REPORTED HIGHER SALES. DOUBLE-DIGIT GROWTH RATES FOR OVERSEAS SALES WERE RECORDED BY FOOD, BEVERAGES AND TOBACCO (40.6%) PETROLEUM AND PETROLEUM PRODUCTS (39.9%) SHIP CHANDLERS AND BUNKERING (24.3%) INDUSTRIAL AND CONSTRUCTION MACHINERY (18.2%) CHEMICALS AND CHEMICAL PRODUCTS (16.4%) ELECTRONIC COMPONENTS (12.1%) TIMBER, PAINT AND CONSTRUCTION MATERIALS (11.1%).

ON THE OTHER HAND, OVERSEAS SALES OF TELECOMMUNICATIONS AND COMPUTERS FELL BY 2.8%

IN 4Q 2007 OVER 4Q 2006.

AT CONSTANT PRICES, THE OVERALL INDEX ROSE BY 11.5% IN 4Q 2007 OVER 4Q 2006.

EXCLUDING PETROLEUM, FOREIGN WHOLESALE TRADE GREW BY 15.1%.

ON A QUARTER-OVER-QUARTER BASIS, THE OVERALL FOREIGN WHOLESALE TRADE IN 4Q 2007 ROSE BY 11.7% OVER 3Q 2007. EXCLUDING PETROLEUM, IT GREW BY 6.0%.

ALL WHOLESALE SECTORS RECORDED BETTER BUSINESS IN 4Q 2007 WITH THE EXCEPTION OF THE ELECTRONIC COMPONENTS SECTOR. THOSE SECTORS THAT REGISTERED DOUBLE-DIGIT GROWTH WERE WHOLESALE SECTORS OF PETROLEUM AND PETROLEUM PRODUCTS, TELECOMMUNICATIONS AND COMPUTERS, INDUSTRIAL AND CONSTRUCTION MACHINERY AND CHEMICALS AND CHEMICAL PRODUCTS.

RETAIL TRADE

THE OVERALL RETAIL SALES CONTRACTED BY 2.5%, IN CONTRAST TO THE 1.5% GROWTH IN 3Q 2007. THE SECTOR THAT RECORDED THE LARGEST DECLINE WERE MOTOR VEHICLES, FOLLOWED BY PROVISION AND SUNDRY SHOPS, FOOD AND BEVERAGES, WATCHES AND JEWELLERY AND MEDICAL GOODS AND TOILETRIES. EXCLUDING MOTOR VEHICLES, RETAIL SALES ROSE BY 5.2%, A DECLINE FROM THE 6.O% GROWTH IN 3Q 2007.

NEWS

SURPRISING DROP IN RETAIL SALES

RETAIL SALES FELL UNEXPECTEDLY IN FEBRUARY, THE FIRST TIME IN SEVEN MONTHS, AS INFLATION HIT 26 YEAR HIGHS AND WORRIES GREW ABOUT THE WORLD ECONOMY. SHOPS, SUPERMARKETS AND OTHER RETAILERS SAW REVENUES FELL 1.3% FROM A YEAR EARLIER, AS CAR SALES DECLINED 10.6% AND FOOD AND BEVERAGES SALES PLUNGED 21.8%.

THE OVERALL CONTRACTION BY THE SECTOR WOULD HAVE BEEN BIGGER IF NOT FOR MUCH HIGHER PRICES THIS YEAR. IN CONSTANT PRICES TERMS, SALES FELL 5.7%. THIS IS THE WORST READING SINCE THE 5.0% DECLINE IN MARCH 2007, IF ONE WERE TO IGNORE THE 2.0% CONTRACTION IN JULY THAT WAS DUE TO THE HIKE IN THE GOODS AND SERVICES TAX,” SAID HSBC ECONOMIST PRAKRITI SOFAT.

ANALYSTS SAID RISING LIVING COSTS AND UNCERTAINTY ABOUT THE ECONOMY WOULD AFFECT SINGAPORE CONSUMER’S SPENDING THIS YEAR. MANY, HOWEVER, REMAIN LARGELY OPTIMISTIC ABOUT THE DOMESTIC RETAIL SCENE, SAYING THE POOR FEBRUARY SHOWING COULD BE A STATISTICAL BLIP.

DOMESTIC DEMAND CONDITIONS REMAIN POSITIVE, HELPED BY THE GOVERNMENT WHICH IS GIVING CASH FROM LAST YEAR’S SURPLUS TO THE WHOLE POPULATION AND ISSUING FOOD VOUCHERS TO THE POOR. “LOW INTEREST RATES AND A HEALHY JOBS MARKET SHOULD KEEP SPENDING FIRM,” SAID HSBC’S MS SOFAT. SHE ADDED THAT FEBRUARY’S DECLINE WAS DUE LARGELY TO A HIGH BASE SET THE PREVIOUS YEAR AND PREDICTED THAT MARCH SALES WOULD BOUNCE BACK WITH A 15.0% SURGE. ALSO, IF COMPARED WITH JANUARY, FEBRUARY SALES ROSE 8.8% AFTER ADJUSTING FOR SEASONAL EFFECTS. THIS WAS THE STRONGEST PERFORMANCE IN FOUR YEARS, SHE SAID.

CIMB-GK ECONOMIST SONG SENG WUN SAID MUCH OF THE POOR PERFORMANCE CAME ON THE BACK OF WEAKER CAR SALES. EXCLUDING THOSE, RETAIL SALES WOULD HAVE RISEN 2.9%. CAR SALES HAVE BEEN HURT SINCE OCTOBER BY RISING CERTIFICATE OF ENTITLEMENT PRICES, CAUSED BY AN EXPECTED CUT IN QUOTAS FROM NEXT MONTH AND SURGING PUMP PRICES.

OUTLOOK

GENERALLY, WHOLESALERS ARE POSITIVE ABOUT THEIR BUSINESS PROSPECTS IN THE COMING MONTHS, WITH A NET WEIGHTED BALANCE OF 4% OF FIRMS EXPRESSING POSITIVE BUSINESS SENTIMENTS. THE MAJORITY OF WHOLESALERS OF PETROLEUM AND PETROLEUM PRODUCTS, CHEMICALS AND CHEMICAL PRODUCTS, INDUSTRIAL MACHINERY AND EQUIPMENT AND COMPUTERS AND ACCESSORIES FORECAST BUSINESS OUTLOOK TO REMAIN THE SAME IN THE FIRST SIX MONTHS OF 2008 COMPARED WITH THE LAST SIX MONTHS IN 2007.

A NET WEIGHTED BALANCE OF 12% OF RETAILERS PREDICTS LESS FAVOURABLE BUSINESS CONDITIONS FOR THE PERIOD ENDING JUNE 2008. AS A RESULT OF THE REDUCED CERTIFICATE OF ENTITLEMENT (COE) QUOTA, MOTOR VEHICLES RETAILERS ARE ESPECIALLY CONCERNED WITH THE SALES.

EXTRACTED FROM: MINISTRY OF TRADE AND INDUSTRY, SINGAPORE

SINGAPORE DEPARTMENT OF STATISTICS

THE STRAITS TIMES

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