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TOTAL AUTOMATION LTD

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					PROSPECTUS DATED 27 MARCH 1999

Application has been made to the Stock Exchange of Singapore Limited (“SES”) for permission to deal in
and quotation for all the ordinary shares of $0.05 each (“Shares”) in the capital of Total Automation Ltd
(the “Company”) already issued as well as the new Shares which are the subject of this Invitation (“New
Shares”). Such permission will be granted when the Company has been admitted to the Official List of
the Stock Exchange of Singapore Dealing and Automated Quotation System (“SESDAQ”). Acceptance of
applications will be conditional upon permission being granted to deal in and quotation for all the issued
Shares as well as the New Shares. Moneys paid in respect of any application accepted will be returned,
without interest or any share of revenue or other benefit arising therefrom and at the applicant’s own risk,
if the said permission is not granted. The SES assumes no responsibility for the correctness of any of
the statements made, opinions expressed or reports contained in this Prospectus. Admission to the
Official List of SESDAQ is not to be taken as an indication of the merits of the Invitation, the Company,
its subsidiaries, the Shares or the New Shares.

A copy of this Prospectus has been lodged with and registered by the Registrar of Companies and
Businesses in Singapore who takes no responsibility for its contents.




                        TOTAL AUTOMATION LTD
                            (Incorporated in the Republic of Singapore on 5 June 1987)




   Invitation in respect of 21,000,000 ordinary shares of $0.05 each comprising
         14,975,000 New Shares and 6,025,000 Vendor Shares as follows:-

(a) 4,200,000 Offer Shares at $0.22 for each Offer Share by way of public offer;
    and

(b) 16,800,000 Placement Shares by way of placement, comprising:-

     (i) a minimum of 14,800,000 Placement Shares at $0.22 for each Placement
         Share; and

     (ii) up to 2,000,000 Reserved Shares at $0.22 for each Share reserved for
          the employees and business associates of the Group,

                                  payable in full on application



                               Manager, Underwriter and Placement Agent




                                                       61
                     TABLE OF CONTENTS

                                                                                    Page

CORPORATE INFORMATION .............................................. 1

DEFINITIONS ........................................................................ 2

GLOSSARY OF TECHNICAL TERMS .................................. 5

DETAILS OF THE INVITATION
–     Listing on SESDAQ ....................................................... 6
–     Terms and Conditions and Procedures
                                                                                                    TOTAL AUTOMATION LTD
                                                                                                     (Incorporated in the Republic of Singapore on 5 June 1987)
       for Application .............................................................. 7
–     Additional Terms and Conditions for Applications
       Using Printed Application Forms ............................... 10
–     Additional Terms and Conditions for Electronic                                                Invitation in respect of 21,000,000 ordinary
       Applications ............................................................... 13            shares of $0.05 each comprising 14,975,000 New
–     Indicative Timetable for Listing .................................... 18                         Shares and 6,025,000 Vendor Shares
                                                                                                                     as follows:-
PROSPECTUS SUMMARY ................................................ 19

ISSUE STATISTICS ............................................................. 20                 (a) 4,200,000 Offer Shares at $0.22 for each
                                                                                                      Offer Share by way of public offer; and
SUMMARY OF PROFORMA GROUP FINANCIAL
INFORMATION ................................................................... 21
                                                                                                  (b) 16,800,000 Placement Shares by way of
GENERAL INFORMATION ON THE GROUP                                                                      placement, comprising:-
–     Share Capital .............................................................. 23
–     Shareholders ............................................................... 24                 (i) a minimum of 14,800,000 Placement
                                                                                                          Shares at $0.22 for each Placement
–     Moratorium .................................................................. 25
                                                                                                          Share; and
–     Restructuring Exercise ................................................ 25
–     Group Structure ........................................................... 26                  (ii) up to 2,000,000 Reserved Shares at
–     History ......................................................................... 27                 $0.22 for each Share reserved for the
                                                                                                           employees and business associates of
–     Business ...................................................................... 28
                                                                                                           the Group,
–     Turnover and Profitability ............................................ 37
–     Major Suppliers ........................................................... 43                         payable in full on application
–     Major Customers ......................................................... 44
–     Competition ................................................................. 44
–     Vulnerability to Specific Factors .................................. 46                            Manager, Underwriter and Placement Agent

–     Interest Person Transactions ....................................... 48
–     Potential Conflicts of Interest ....................................... 48
–     Directors, Management and Staff ............................... 49
–     Letters of Employment ................................................. 50
–     Directors’ Remuneration ............................................. 52
–     Properties and Fixed Assets ....................................... 53
–     Finance ........................................................................ 54
–     Review of Past Performance ....................................... 56
                                                                                                                      PROSPECTUS
–     Prospects and Future Plans ........................................ 57

DIRECTORS’ REPORT ...................................................... 60

ACCOUNTANTS’ REPORT ................................................ 61

GENERAL AND STATUTORY INFORMATION ................... 80
                                                                                             62
                          CORPORATE INFORMATION


BOARD OF DIRECTORS             :   Richard Edward Willenbrock (Group Managing Director)
                                   Ngai Kok Leong (Managing Director)
                                   Nabil Bin Tan Sri Abdul Jalil
                                   Nor Zainal Bin Abdul Rahman
                                   Khaw Kheng Joo
                                   Tay Siew Liong

COMPANY SECRETARY              :   Chua Sok Keow, CPA

REGISTERED OFFICE              :   45 Gul Drive
                                   Jurong
                                   Singapore 629492

REGISTRARS AND SHARE           :   Lim Associates (Pte) Ltd
 TRANSFER OFFICE                   10 Collyer Quay #19-08
                                   Ocean Building
                                   Singapore 049315

MANAGER, UNDERWRITER AND       :   The Development Bank of Singapore Ltd
 PLACEMENT AGENT                   6 Shenton Way
                                   DBS Building Tower One
                                   Singapore 068809

AUDITORS AND REPORTING         :   Ernst & Young
 ACCOUNTANTS                       Certified Public Accountants
                                   10 Collyer Quay #21-01
                                   Ocean Building
                                   Singapore 049315

SOLICITORS TO THE INVITATION   :   Allen & Gledhill
                                   36 Robinson Road #18-01
                                   City House
                                   Singapore 068877

PRINCIPAL BANKER               :   HL Bank
                                   20 Collyer Quay
                                   #01-02 & #02-02
                                   Tung Centre
                                   Singapore 049319




                                            1
                                            DEFINITIONS


For the purpose of this Prospectus and the accompanying Application Forms, the following definitions
have, where appropriate, been used:-

“Act”                                :   Companies Act, Chapter 50 of Singapore

“Application Forms”                  :   Official application forms to be used for the purpose of the
                                         invitation and which form part of this Prospectus

“Application List”                   :   List of applications to subscribe for the Invitation Shares

“ATM”                                :   Automated teller machine

“Audit Committee”                    :   Audit committee of the Company

“CDP”                                :   The Central Depository (Pte) Limited

“CPF”                                :   Central Provident Fund

“Company” or “TAL”                   :   Total Automation Ltd

“DBS Bank” or “Manager” or           :   The Development Bank of Singapore Ltd
“Underwriter” or “Placement Agent”

“Directors”                          :   Directors of the Company as at the date of this prospectus,
                                         unless otherwise stated

“Electronic Applications”            :   Applications for the Offer Shares through an ATM of one of the
                                         Participating Banks in accordance with the terms and conditions
                                         of this Prospectus

“FY94”, FY95” and “FY96”             :   Financial years ended 30 June 1994, 30 June 1995 and 30 June
                                         1996, respectively

“FY97”, “FY98”                       :   Financial years ended 31 December 1997 and 31 December
                                         1998, respectively

“Group” or “TAL Group” or            :   Company and its subsidiaries, following the completion of the
“Proforma Group”                         Restructuring Exercise, treated, for the purposes of this
                                         Prospectus, as if it had been in existence since 1 July 1993

“Invitation”                         :   Invitation to the public in respect of the Invitation Shares
                                         subject to and on the terms of this Prospectus

“Invitation Shares”                  :   21,000,000 Shares which are the subject of the Invitation,
                                         comprising 14,975,000 New Shares and 6,025,000 Vendor
                                         Shares

“ISO”                                :   International Standards Organisation, a world-wide federation of
                                         national standards bodies

“Issue Price”                        :   $0.22 for each Invitation Share




                                                    2
“Market Day”                :   Day on which the Stock Exchange is open for trading in
                                securities

“New Shares”                :   14,975,000 new Shares for which the Company invites
                                applications to subscribe subject to and on the terms of this
                                Prospectus

“NTA”                       :   Net tangible assets

“Offer”                     :   Offer by the Company and the Vendors of the Offer Shares at
                                the Offer Price

“Offer Price”               :   $0.22 for each Offer Share

“Offer Shares”              :   4,200,000 Invitation Shares which are the subject of the Offer

“Participating Banks”       :   DBS Bank (including its POSBank Services division); Keppel
                                TatLee Bank Limited (“KTB”); Oversea-Chinese Banking
                                Corporation Limited (“OCBC”) Group (comprising OCBC and
                                Bank of Singapore Limited); Overseas Union Bank Limited
                                (“OUB”) Group (comprising OUB and International Bank of
                                Singapore Limited); and United Overseas Bank Limited (“UOB”)
                                Group (comprising UOB, Chung Khiaw Bank Limited, Far
                                Eastern Bank Limited and Industrial & Commercial Bank
                                Limited)

“Placement”                 :   Placement by the Company and the Vendors of the Placement
                                Shares at the Placement Price

“Placement Price”           :   $0.22 for each Placement Share

“Placement Shares”          :   16,800,000 Invitation Shares which are the subject of the
                                Placement (including the Reserved Shares)

“Reserved Shares”           :   Up to 2,000,000 Invitation Shares reserved for employees,
                                business associates and those who have contributed to the
                                success of the Group

“Restructuring Exercise”    :   Restructuring exercise undertaken in connection with the
                                Invitation, as described on pages 25 to 26 of this Prospectus

“SCCS”                      :   Securities Clearing & Computer Services (Pte) Ltd

“SES” or “Stock Exchange”   :   Stock Exchange of Singapore Limited

“SESDAQ”                    :   Stock Exchange of Singapore Dealing and Automated Quotation
                                System

“Securities Account”        :   Securities account maintained by a depositor with CDP

“Shares”                    :   Ordinary shares of $0.05 each in the capital of the Company

“TAIL”                      :   Total Automation (International) Limited

“TAME”                      :   Total Automation Middle East L.L.C.




                                           3
“TPML”                             :   Total Plant Maintenance Pte Ltd

“UAE”                              :   United Arab Emirates

“USA” and “United States”          :   United States of America

“Velosi Singapore”                 :   Velosi (S) Pte Ltd

“Vendors”                          :   Messrs Richard Edward Willenbrock, Ngai Kok Leong, Goh Yong
                                       Kwee and Woo Fook Onn and Velosi (M) Sdn Bhd

“Vendor Shares”                    :   6,025,000 Shares for which the Vendors invite applications to
                                       purchase subject to and on the terms of this Prospectus

“Dhs”                              :   United Arab Emirates dirhams

“dwt”                              :   Deadweight tonnes

“$” and “cents”                    :   Singapore dollars and cents, respectively

“HK$” and “HK cents”               :   Hong Kong dollars and cents, respectively

“RM” and “RM cents”                :   Malaysian ringgit and cents, respectively

“US$” and “US cents”               :   United States dollars and cents, respectively

“£”                                :   Sterling pound

“%” or “per cent.”                 :   per centum or percentage

“sq ft”                            :   square feet

“sq m”                             :   square metre

Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders and
vice versa. References to persons shall include corporations.

Any reference in this Prospectus and the Application Forms to any enactment is a reference to that
enactment as for the time being amended or re-enacted. Any word defined under the Act or any
statutory modification thereof and used in this Prospectus and the Application Forms shall have the
meaning assigned to it under the said Act or statutory modification as the case may be.

Any reference in this Prospectus and the Application Forms to shares being allotted to an applicant
includes allotment to CDP for the account of that applicant.

A reference to a time of day in this Prospectus and the Application Forms shall be a reference to
Singapore time.




                                                  4
                           GLOSSARY OF TECHNICAL TERMS


“FPSO”   :   Floating production storage and offloading


             An FPSO is either a new vessel or a converted VLCC. After conversion, the FPSO is
             located offshore above an oilfield. It takes on board crude oil/gas from the undersea well.
             It will partially process and store the crude oil/gas prior to discharging them into a shuttle
             tanker


“FSO”    :   Floating storage and offloading


“LNG”    :   Liquefied natural gas


“LPG”    :   Liquefied petroleum gas

“VLCC”   :   Very large crude carrier




                                                   5
                                  DETAILS OF THE INVITATION


LISTING ON SESDAQ
Application has been made to the Stock Exchange for permission to deal in, and quotation for, all the
Shares already issued (including the Vendor Shares) as well as the New Shares on SESDAQ. Such
permission will be granted when the Company has been admitted to the Official List of SESDAQ.
Acceptance of applications will be conditional upon permission being granted to deal in, and quotation
for, all the issued Shares (including the Vendor Shares) as well as the New Shares. Moneys paid in
respect of any application accepted will be returned, without interest or any share of revenue or benefit
arising therefrom and at the applicant’s own risk, if the said permission is not granted.

The Stock Exchange assumes no responsibility for the correctness of any of the statements made,
opinions expressed or reports contained in this Prospectus. Admission to the Official List of SESDAQ is
not to be taken as an indication of the merits of the Invitation, the Company, its subsidiaries, the Shares
or the New Shares.

The Directors and the Vendors individually and collectively accept full responsibility for the accuracy of
the information given in this Prospectus and confirm, having made all reasonable enquiries, that to the
best of their knowledge and belief, there are no other material facts the omission of which would make
any statement in this Prospectus misleading.

No person is authorised to give any information or to make any representation not contained in this
Prospectus in connection with the Invitation and, if given or made, such information or representation
must not be relied upon as having been authorised by the Company, the Vendors or the Manager. Neither
the delivery of this Prospectus and the Application Forms nor the Invitation shall, under any
circumstances, constitute a continuing representation or create any suggestion or implication that there
has been no change in the affairs of the Company or the Group or any statements of fact or information
contained in this Prospectus since the date of this Prospectus. Where such changes occur, the
Company may make an announcement of the same to the SES. All applicants should take note of any
such announcement and, upon release of such an announcement, shall be deemed to have notice of
such changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as,
a promise or representation as to the future performance or policies of the Group. This Prospectus has
been prepared solely for the purpose of the Invitation and may not be relied upon by any persons other
than the applicants in connection with their application for the Invitation Shares or for any other purpose.
This Prospectus does not constitute an offer, or invitation or solicitation, to subscribe, for and/or
purchase the Invitation Shares in any jurisdiction in which such offer or invitation or solicitation is
unauthorised or unlawful, nor does it constitute an offer or invitation or solicitation to any person to whom
it is unlawful to make such offer or invitation or solicitation.

Copies of this Prospectus and the Application Forms and envelopes may be obtained on request,
subject to availability, from:-

                               The Development Bank of Singapore Ltd
                                          6 Shenton Way
                                      DBS Building Tower One
                                         Singapore 068809

and from DBS Bank branches (including POSBank Services division), members of the Association of
Banks in Singapore, members of the Stock Exchange and merchant banks in Singapore.

The Application List will open at 10.00 a.m. on 7 April 1999 and will remain open until 12.00 noon
on the same day or for such further period or periods as the Directors may in their absolute
discretion decide, subject to any limitation under all applicable laws.




                                                     6
TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION
Applications are invited for the subscription and/or purchase of the Invitation Shares at the Issue Price
subject to the following terms and conditions:-

1.   Applications for the Offer Shares may be made by way of the Offer Shares Application Forms or by
     way of Electronic Applications. Applications for Placement Shares may only be made by way of the
     Placement Shares Application Forms, and applications for Reserved Shares may only be made by
     way of the Reserved Shares Application Forms. Applicants may not use their CPF Funds to
     apply for the Invitation Shares.

2.   ONLY ONE APPLICATION MAY BE MADE FOR THE BENEFIT OF ONE PERSON FOR EITHER
     THE OFFER SHARES OR THE PLACEMENT SHARES (OTHER THAN THE RESERVED
     SHARES) IN HIS OWN NAME. A PERSON SUBMITTING AN APPLICATION FOR THE OFFER
     SHARES BY WAY OF THE OFFER SHARES APPLICA TION FORM MAY NOT SUBMIT ANOTHER
     APPLICATION BY WAY OF ELECTRONIC APPLICATION AND VICE VERSA. SUCH SEPARATE
     APPLICATIONS WILL BE DEEMED TO BE MULTIPLE APPLICATIONS AND SHALL BE
     REJECTED.

     A PERSON, OTHER THAN AN APPROVED NOMINEE COMPANY, WHO IS SUBMITTING AN
     APPLICATION IN HIS OWN NAME SHOULD NOT SUBMIT ANY OTHER APPLICATIONS,
     WHETHER ON A PRINTED APPLICATION FORM OR THROUGH AN ELECTRONIC
     APPLICATION, FOR ANY OTHER PERSON. SUCH SEPARATE APPLICATIONS WILL BE
     DEEMED TO BE MULTIPLE APPLICATIONS AND SHALL BE REJECTED.

     AN APPLICANT WHO HAS AGREED WITH THE PLACEMENT AGENT TO PURCHASE
     PLACEMENT SHARES (OTHER THAN FOR THE RESERVED SHARES) OR WHO OTHERWISE
     PURCHASES PLACEMENT SHARES FROM THE PLACEMENT AGENT SHALL NOT MAKE ANY
     SEPARATE APPLICATION FOR OFFER SHARES EITHER BY WAY OF THE OFFER SHARES
     APPLICATION FORM OR THROUGH AN ELECTRONIC APPLICATION. SUCH SEPARATE
     APPLICATIONS WILL BE DEEMED TO BE MULTIPLE APPLICATIONS AND SHALL BE
     REJECTED.

     CONVERSELY, AN APPLICANT WHO HAS MADE AN APPLICATION FOR OFFER SHARES
     EITHER BY WAY OF THE OFFER SHARES APPLICATION FORM OR THROUGH AN
     ELECTRONIC APPLICATION SHALL NOT MAKE ANY SEPARATE APPLICATION FOR THE
     PLACEMENT SHARES (OTHER THAN FOR THE RESERVED SHARES). SUCH SEPARATE
     APPLICATIONS WILL BE DEEMED TO BE MULTIPLE APPLICATIONS AND SHALL BE
     REJECTED.

     JOINT OR MULTIPLE APPLICATIONS WILL BE REJECTED. PERSONS SUBMITTING OR
     PROCURING SUBMISSIONS OF MULTIPLE SHARE APPLICATIONS (WHETHER FOR OFFER
     SHARES, PLACEMENT SHARES OR BOTH OFFER SHARES AND PLACEMENT SHARES) MAY
     BE DEEMED TO HAVE COMMITTED AN OFFENCE UNDER THE PENAL CODE (CHAPTER 224)
     OF SINGAPORE AND THE SECURITIES INDUSTRY ACT (CHAPTER 289) OF SINGAPORE AND
     SUCH APPLICATIONS MAY BE REFERRED TO THE RELEVANT AUTHORITIES FOR
     INVESTIGATION. MULTIPLE APPLICATIONS OR THOSE APPEARING TO BE OR SUSPECTED
     OF BEING MULTIPLE APPLICATIONS WILL BE LIABLE TO BE REJECTED AT THE DISCRETION
     OF THE COMPANY AND THE VENDORS.

     AN APPLICANT MAKING AN APPLICATION FOR THE RESERVED SHARES USING THE
     RESERVED SHARES APPLICATION FORM MAY SUBMIT ONE SEPARATE APPLICATION FOR
     OFFER SHARES IN HIS OWN NAME EITHER BY WAY OF THE OFFER SHARES APPLICATION
     FORM OR THROUGH AN ELECTRONIC APPLICATION OR SUBMIT ONE SEPARATE
     APPLICATION FOR PLACEMENT SHARES (OTHER THAN FOR THE RESERVED SHARES),
     PROVIDED HE ADHERES TO THE TERMS AND CONDITIONS OF THIS PROSPECTUS. SUCH
     SEPARATE APPLICATIONS WILL NOT BE TREATED AS MULTIPLE APPLICATIONS.




                                                   7
3.   Applications will not be accepted from any person under the age of 21, undischarged bankrupts,
     sole proprietorships, partnerships, chops or non-corporate bodies, joint Securities Account holders
     and applicants whose addresses (furnished in their printed Application Forms or, in the case of
     Electronic Applications, contained in the records of the relevant Participating Banks, as the case
     may be) bear post office box numbers.

4.   The existence of a trust will not be recognised. Any application by a trustee or trustees must be
     made in his/their own name(s) and without qualification or, where the application is made by way of
     a printed Application Form, in the name(s) of approved nominee companies after complying with
     paragraph 5 below.

5.   Nominee applications may be made by approved nominee companies only. Approved
     nominee companies are defined as banks, merchant banks, finance companies, insurance
     companies, licensed securities dealers in Singapore and nominee companies controlled by them.
     Applications made by persons acting as nominees other than approved nominee companies will be
     rejected.

6.   For non-nominee applications, each applicant must maintain a Securities Account in his own name
     at the time of application. An applicant without an existing Securities Account in his own name at
     the time of application will have his application rejected (in the case of an application by way of an
     Application Form) or will not be able to complete his Electronic Application (in the case of an
     Electronic Application). An applicant with an existing Securities Account who fails to provide his
     Securities Account number or who provides an incorrect Securities Account number in section B of
     the Application Form or in his Electronic Application, as the case may be, is liable to have his
     application rejected. Subject to paragraph 7 below, an application may be rejected if the applicant’s
     particulars such as his name, NRIC or passport number, nationality and permanent residence status
     provided in his Application Form or, in the case of an Electronic Application, contained in the
     records of the relevant Participating Bank at the time of his Electronic Application, as the case may
     be, differ from those particulars in his Securities Account as maintained with CDP. If the applicant
     possesses more than one individual direct Securities Account, his application will be rejected.

7.   If the address of an applicant stated on the Application Form or, in the case of an Electronic
     Application, contained in the records of the relevant Participating Bank, as the case may be,
     is different from the address registered with CDP, the applicant must inform CDP of his
     updated address promptly, failing which the notification letter on successful allotment and/or
     allocation will be sent to his address last registered with CDP.

8.   The Company and the Vendors reserve the right to reject or accept, in whole or in part, or to scale
     down or ballot, any application without assigning any reason therefor, and no enquiry and/or
     correspondence on the decision of the Company or the Vendors will be entertained. This right
     applies to applications made by way of printed Application Forms and by way of Electronic
     Application. In deciding the basis of allotment and/or allocation, at the discretion of the Company
     and the Vendors, due consideration will be given to the desirability of allotting and/or allocating the
     Invitation Shares to a reasonable number of successful applicants with a view to establishing an
     adequate market for the Shares.

9.   The Company and the Vendors reserve the right to reject any application which does not conform
     strictly to the instructions set out in the Application Form and this Prospectus or which does not
     comply with the instructions for Electronic Applications or with the terms and conditions of this
     Prospectus or, in the case of applications by way of printed Application Forms, which is illegible,
     incomplete, incorrectly completed or which is accompanied by an improperly drawn remittance. The
     Company and the Vendors further reserve the right to treat as valid any applications not completed
     or submitted or effected in all respects in accordance with the terms and conditions of this
     Prospectus, the instructions set out in the Application Forms and this Prospectus or the instructions
     for Electronic Applications and also to present for payment or other processes all remittances at
     any time after receipt and to have full access to all information relating to, or deriving from, such
     remittances or the processing thereof.




                                                     8
10. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is
    expected that CDP will send to each successful applicant at his own risk, within 15 Market Days
    after the close of the Application List, a statement showing that his Securities Account has been
    credited with the number of Invitation Shares allotted and/or allocated to him. This will be the only
    acknowledgement of application moneys received and is not an acknowledgement by the Company
    or the Vendors. Each applicant irrevocably authorises CDP to complete and sign on his behalf as
    transferee or renouncee any instrument of transfer and/or other documents required for the issue or
    transfer of the Invitation Shares allotted and/or allocated to the applicant. This authorisation applies
    for applications made by way of printed Application Forms and by way of Electronic Applications.

11. By completing and delivering an Application Form and, in the case of an Electronic Application, by
    pressing the “Enter” or “OK” or “Confirm” or “Yes” key on the ATM in accordance with the provisions
    herein, each applicant:-

    (a) irrevocably offers to subscribe for and/or purchase the number of Invitation Shares specified in
        his application (or such smaller number for which the application is accepted) at the Issue
        Price for each Invitation Share and agrees that he will accept such Shares as may be allotted
        and/or allocated to him, in each case on the terms of, and subject to the conditions set out in,
        this Prospectus and the Memorandum and Articles of Association of the Company; and

    (b) warrants the truth and accuracy of the information in his application.

12. Applications must be made in lots of 1,000 Invitation Shares or higher integral multiples of 1,000
    Invitation Shares. Applications for any other number of Invitation Shares will be rejected.

13. No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months
    after the date of this Prospectus.

14. In the event of an under-subscription for the Offer Shares as at the close of the Application List,
    that number of Offer Shares under-subscribed shall be made available to satisfy applications for the
    Placement Shares to the extent there is an over-subscription for the Placement Shares as at the
    close of the Application List. Any of the Reserved Shares not taken up by the employees and
    business associates of the Group will be made available to satisfy applications for the Placement
    Shares to the extent that there is an over-subscription for the Placement Shares. In the event of an
    under-subscription for the Placement Shares as at the close of the Application List, that number of
    Placement Shares under-subscribed shall be made available to satisfy applications for the Offer
    Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the
    Application List.

15. In the event of an over-subscription for the Offer Shares as at the close of the Application List and/
    or the number of Placement Shares are fully subscribed or over-subscribed as at the close of the
    Application List, the successful applications for the Offer Shares shall be determined by ballot, or
    otherwise as determined by the Directors and approved by the SES.

16. Acceptance of applications will be conditional upon the Company and the Vendors being satisfied
    that:-

    (a) permission has been granted by the SES to deal in, and quotation for, all the existing Shares
        and the Invitation Shares on a “when issued” basis on SESDAQ, and

    (b) the Management and Underwriting Agreement and Placement Agreement referred to on page
        93 of this Prospectus have become unconditional and have not been terminated.

17. Additional terms and conditions for applications by way of printed Application Forms are set out on
    pages 10 to 13 of this Prospectus.

18. Additional terms and conditions for Electronic Applications are set out on pages 13 to 17 of this
    Prospectus.




                                                     9
19. Each applicant irrevocably authorises CDP to disclose the outcome of his application, including the
    number of Invitation Shares allotted and/or allocated to the applicant pursuant to his application, to
    authorised operators.

20. Any reference to the “applicant” in this section shall include a person applying for the Offer Shares
    by way of an Electronic Application or by way of the Offer Shares printed Application Form and a
    person applying for the Placement Shares through the Placement Agent.

21. No application will be held in reserve.


ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION
FORMS
Applications by way of printed Application Forms shall be made on, and subject to, the terms and
conditions of this Prospectus, including but not limited to the terms and conditions appearing below and
those set out under the section on “Terms and Conditions and Procedures for Application” found on
pages 7 to 10 of this Prospectus, as well as the Memorandum and Articles of Association of the
Company.

1.   Applications for the Offer Shares must be made using the WHITE Application Forms and official
     envelopes “A” and “B” and applications for the Placement Shares (other than for the Reserved
     Shares) must be made using the BLUE Application Forms, accompanying and forming part of this
     Prospectus. Care must be taken to follow the instructions set out in the respective Application
     Forms and this Prospectus for the completion of the respective Application Forms. Applications
     which do not conform strictly to these instructions or to the terms and conditions of this Prospectus
     or which are illegible, incomplete, incorrectly completed or which are accompanied by improperly
     drawn remittances may be rejected.

2.   The Application Forms must be completed in English. Please type or write clearly in ink using
     BLOCK LETTERS. All spaces in an Application Form, except those under the heading “FOR
     OFFICIAL USE ONLY”, must be completed and the words “NOT APPLICABLE” or “N.A.” should be
     written in any space that is not applicable.

3.   Individuals, corporations, approved nominee companies and trustees must give their names in full.
     Applications must be made, in the case of individuals, in their full names as appearing in their
     identity cards (if applicants have such identification documents) or passports and, in the case of
     corporations, in their full names as registered with a competent authority. Applicants, other than
     individuals, completing the Application Form under the hand of an official, must state the name and
     capacity in which that official signs. A corporation completing an Application Form is required to
     affix its Common Seal (if any) in accordance with its Memorandum and Articles of Association or
     the equivalent constitutive documents of the corporation. If an application by a corporate applicant
     is successful, a copy of its Memorandum and Articles of Association or its equivalent constitutive
     documents must be lodged with the Company’s Share Registrar. The Company and the Vendors
     reserve the right to require any applicant to produce documentary proof of identification for
     verification purposes.

4.   (a) All applicants must complete Sections A and B and sign page 1 of the Application Form.

     (b) All applicants are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application
         Form. Where paragraph 7(a) is deleted, the applicant must also complete Section C of the
         Application Form with particulars of the beneficial owner(s).

     (c) Applicants who fail to make the required declaration in Paragraph 7(a) or 7(b) (as the case may
         be) on page 1 of the Application Form are liable to have their applications rejected.

5.   Applicants may apply for the Invitation Shares using cash only. Each application must be
     accompanied by a remittance in Singapore currency for the full amount payable, in respect of the
                                                                             ,
     number of Invitation Shares applied for, in the form of a BANKER’S DRAFT CASHIER’S ORDER or
     POSB CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “TAL SHARE
     ISSUE ACCOUNT” crossed “A/C PAYEE ONLY”, or in the form of a DBS AUTOBANK CASHIER’S

                                                   10
     ORDER EQUIVALENT, with the name and address of the applicant written clearly on the reverse
     side. Applications not accompanied by any payment or accompanied by any other form of
     payment will not be accepted. Remittances bearing “Not Transferable” or “Non Transferable”
     crossings will be rejected. No acknowledgement of receipt will be issued by the Company, the
     Vendors or the Manager for applications and application moneys received.

6.   Individual applicants and corporate applicants will be required to declare whether they are citizens or
     permanent residents of Singapore or corporations, whether incorporated or unincorporated and
     wherever incorporated or constituted, in which citizens or permanent residents of Singapore or any
     body corporate constituted by any statute of Singapore have an interest in the aggregate of more
     than 50% of the issued share capital of or interests in such corporations. Approved nominee
     companies are required to declare whether the beneficial owner of the Invitation Shares is a citizen
     or permanent resident of Singapore or a corporation, whether incorporated or unincorporated and
     wherever incorporated or constituted, in which citizens or permanent residents of Singapore or any
     body corporate constituted by any statute of Singapore have an interest in the aggregate of more
     than 50% of the issued share capital of or interests in such corporation.

7.   Unsuccessful applications and those not successfully balloted or accepted are expected to be
     returned to the applicants by ordinary post, at the risk of the applicants, within three Market Days
     after the close of the Application List, without interest or any share of revenue or other benefit
     arising therefrom. Where an application is rejected or accepted in part only, the full amount or the
     balance of the application moneys, as the case may be, will be refunded to the applicant by ordinary
     post at his own risk (without interest or any share of revenue or other benefit arising therefrom)
     within 14 days after the close of the Application List. Unsuccessful applicants using DBS Autobank
     Cashier’s Order Equivalent will have the full amount of their application moneys (without interest or
     any share of revenue or other benefit arising therefrom) automatically credited to their accounts
     maintained with DBS Bank.

8.   Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
     meanings assigned to them in this Prospectus.

9.   In consideration of the Company and the Vendors having distributed the Application Form to the
     applicant and agreeing to close the Application List at 12.00 noon on 7 April 1999 or such later time
     or date as the Directors and the Vendors may, in their absolute discretion, decide and by completing
     and delivering the Application Form, each applicant agrees that:-

     (a) his application is irrevocable;

     (b) his remittance will be honoured on first presentation and that any moneys returnable may be
         held pending clearance of his payment and he will not be entitled to any interest or any share of
         revenue or other benefit arising therefrom;

     (c) in respect of the Invitation Shares for which his application has been received and not rejected,
         acceptance of his application shall be constituted by written notification by or on behalf of the
         Company and the Vendors and not otherwise, notwithstanding any remittance being presented
         for payment by or on behalf of the Company and the Vendors;

     (d) he will not be entitled to exercise any remedy of rescission for misrepresentation at any time
         after acceptance of his application; and

     (e) all applications, acceptances and contracts resulting therefrom under the Invitation shall be
         governed by and construed in accordance with the laws of Singapore and that he irrevocably
         submits to the non-exclusive jurisdiction of the Singapore courts.




                                                    11
10. Applications for Offer Shares
    (a) Applications for Offer Shares must be made using the WHITE Application Forms and WHITE
        official envelopes “A” and “B”.

    (b) The applicant must:-

        (i)    enclose the WHITE Application Form, duly completed, together with the correct remittance
               in the WHITE envelope “A” which is provided;

        (ii)   in the appropriate spaces on the WHITE envelope “A”:-

               (A) write his name and address;

               (B) state the number of Offer Shares applied for;

               (C) tick the relevant box to indicate the form of payment; and

               (D) affix adequate Singapore postage;

        (iii) SEAL WHITE ENVELOPE “A”;

        (iv) write, in the special box provided on the larger WHITE envelope “B” addressed to DBS
             BANK, 6 SHENTON WAY #28-00, DBS BUILDING TOWER ONE, SINGAPORE 068809,
             the number of Offer Shares for which the application is made; and

        (v) insert WHITE envelope “A” into WHITE envelope “B”, seal WHITE envelope “B”, affix
            adequate Singapore postage on envelope “B” (if despatching by ordinary post) and
            thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at his own risk to
            DBS BANK, 6 SHENTON WAY #28-00, DBS BUILDING TOWER ONE, SINGAPORE
            068809, so as to arrive by 12.00 noon on 7 April 1999. Local Urgent Mail or Registered
            Post must NOT be used.

        Applications that are illegible, incomplete or incorrectly completed or accompanied by an
        improperly drawn remittance are liable to be rejected.

    (c) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
        receipt will be issued for any application or remittance received.

11. Applications for Placement Shares (other than for the Reserved Shares)
    (a) Applications for Placement Shares (other than for the Reserved Shares) must be made using
        the BLUE Application Forms.

    (b) The completed Placement Shares Application Form and the applicant’s remittance for the full
        amount payable in respect of the number of Placement Shares applied for must be enclosed
        and sealed in any envelope to be provided by the applicant. The sealed envelope must be
        despatched by ORDINARY POST OR DELIVERED BY HAND at the applicant’s own risk to
        DBS Bank, 6 Shenton Way #28-00, DBS Building Tower One, Singapore 068809, for the
        attention of Corporate Finance Services, to arrive by 12.00 noon on 7 April 1999. Local
        Urgent Mail or Registered Post must NOT be used.

    (c) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
        receipt will be issued for any application or remittance received.




                                                   12
    (d) Alternatively, the applicant may remit his application moneys by electronic transfer to the
        account of DBS Bank, Shenton Way Branch, Current Account No. 001-045568-0, in favour
        of “TAL SHARE ISSUE ACCOUNT” for the number of Placement Shares applied for by 12.00
        noon on 7 April 1999. Applicants who remit their application moneys via electronic transfer
        should send a copy of the telegraphic transfer advice slip to DBS Bank, 6 Shenton Way #28-
        00, DBS Building Tower One, Singapore 068809, for the attention of Corporate Finance
        Services, to arrive by 12.00 noon on 7 April 1999.

12. Applications for Reserved Shares
    (a) Applications for Reserved Shares must be made using the PINK Application Forms (“Priority
        Application Forms”).

    (b) The completed Priority Application Form and the applicant’s remittance for the full amount
        payable in respect of the number of Reserved Shares applied for must be enclosed and sealed
        in an envelope to be provided by the applicant. The sealed envelope must be despatched by
        ORDINARY POST OR DELIVERED BY HAND at the applicant’s own risk to the Company’s
        registered office presently at 45, Gul Drive, Jurong, Singapore 629492, so as to arrive by 12.00
        noon on 7 April 1999. Local Urgent Mail or Registered Post must NOT be used.

    (c) ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
        receipt will be issued for any application or remittance received.


ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications at ATMs of the Participating Banks are set out on the ATM
screens of the relevant Participating Banks (the “Steps”). For illustration purposes, the procedure for
Electronic Applications at ATMs of DBS Bank is set out in the “Steps for Electronic Applications”
appearing on page 17 of this Prospectus. Please read carefully the terms of this Prospectus, the Steps
and the terms and conditions for Electronic Applications set out below carefully before making an
Electronic Application. An ATM card issued by one Participating Bank cannot be used to apply for Offer
Shares at an ATM belonging to other Participating Banks.

Any reference to the “Applicant” in these Terms and Conditions for Electronic Applications and the Steps
shall mean the applicant who applies for the Offer Shares through an ATM of a Participating Bank. The
Steps set out the actions that the Applicant must take to complete an Electronic Application through an
ATM belonging to DBS Bank. The actions that the Applicant must take at the ATMs of the other
Participating Banks are set out on the ATM screens of the relevant Participating Banks. Upon the
completion of his Electronic Application transaction, the Applicant will receive an ATM transaction slip
(“Transaction Record”), confirming the details of his Electronic Application. The Transaction Record is for
the Applicant’s retention and should not be submitted with any printed Application Form.

An Applicant must have an existing bank account with, and be an ATM cardholder of, one of the
Participating Banks before he can make an Electronic Application at the ATMs of that
Participating Bank. An ATM card issued by one Participating Bank cannot be used to apply for the
Offer Shares at an ATM belonging to any of the other Participating Banks. An Applicant who fails
to use his own ATM card or who does not key in his own Securities Account number will have his
application rejected.

An Applicant, including one who has a joint bank account with a Participating Bank, must use an
ATM Card issued to him in his own name and must enter his own Securities Account number. An
applicant who fails to use his own ATM Card or who does not key in his own Securities Account
number will have his application rejected.

An Electronic Application shall be made on, and subject to, the terms and conditions of this Prospectus
including but not limited to the terms and conditions appearing below as well as those set out under the
section on “Terms and Conditions and Procedures for Application” found on pages 7 to 10 of this
Prospectus, as well as the Memorandum and Articles of Association of the Company.




                                                    13
1.   In connection with his Electronic Application for the Offer Shares, the Applicant is required to
     confirm statements to the following effect in the course of activating the ATM for his Electronic
     Application:-

     (a) that he has received a copy of this Prospectus and has read, understood and agreed to
         all the terms and conditions of application for the Offer Shares and this Prospectus prior
         to effecting the Electronic Application and agrees to be bound by the same;

     (b) that he consents to the disclosure of his name, NRIC or passport number, address,
         nationality and permanent resident status, CDP Securities Account number, CPF
         Investment Account number (if applicable) and share application amount (the “Relevant
         Particulars”) from his account with that Participating Bank to the Share Registrars,
         SCCS, CDP, CPF, the Company, the Vendors and the Manager (the “Relevant Parties”);
         and

     (c) that this application is his only application for the Offer Shares and it is made in his
         name and at his own risk.

     His application will not be successfully completed and cannot be recorded as a completed
                                                                                      es”
     transaction in the ATM unless he presses the “Enter” or “OK” or “Confirm” or “Y key. By doing so,
     the Applicant shall be treated as signifying his confirmation of each of the above three statements.
     In respect of statement 1(b) above, his confirmation, by pressing the “Enter” or “OK” or “Confirm” or
     “Yes” key, shall signify and shall be treated as his written permission, given in accordance with the
     relevant laws of Singapore, including Section 47(4) of the Banking Act (Chapter 19) of Singapore, to
     the disclosure by that Participating Bank of the Relevant Particulars of his account(s) with that
     Participating Bank to the Relevant Parties.

2.   An applicant may make an Electronic Application at an ATM of any Participating Bank for the Offer
     Shares using cash only by authorising such Participating Bank to deduct the full amount payable
     from his account with such Participating Bank.

3.   The Applicant irrevocably agrees and undertakes to subscribe for and/or purchase and to accept the
     number of Offer Shares applied for as stated on the Transaction Record or any lesser number of
     Offer Shares that may be allotted and/or allocated to him in respect of his Electronic Application. In
     the event that the Company and the Vendors decide to allot and/or allocate any lesser number of
     such Offer Shares or not to allot or allocate any Offer Shares to the Applicant, the Applicant agrees
     to accept the decision as final. If the Applicant’s Electronic Application is successful, his
     confirmation (by his action of pressing the “Enter” or “OK” or “Confirm” or “Yes” key on the ATM) of
     the number of Offer Shares applied for shall signify and shall be treated as his acceptance of the
     number of Offer Shares that may be allotted and/or allocated to him and his agreement to be bound
     by the Memorandum and Articles of Association of the Company

4.   The Applicant irrevocably requests and authorises the Company and the Vendors to:-

     (a) register the Offer Shares allotted and/or allocated to him in the name of CDP for deposit into
         his Securities Account;

     (b) send the relevant Share certificate(s) to CDP;

     (c) return (without interest or any share of revenue or other benefit arising therefrom) the
         application moneys, should his Electronic Application not be accepted, by automatically
         crediting the Applicant’s bank account with his Participating Bank with the relevant amount
         within three Market Days after the close of the Application List; and

     (d) return (without interest or any share of revenue or other benefit arising therefrom) the balance of
         the application moneys, should his Electronic Application be accepted in part only, by
         automatically crediting the Applicant’s bank account with his Participating Bank with the
         relevant amount within 14 days after the close of the Application List.




                                                    14
5.   BY MAKING AN ELECTRONIC APPLICATION, THE APPLICANT CONFIRMS THAT HE IS NOT
     APPLYING FOR THE OFFER SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANY
     ELECTRONIC APPLICATION THAT HE MAKES IS THE ONLY APPLICATION MADE BY HIM AS
     BENEFICIAL OWNER.

     THE APPLICANT SHALL MAKE ONLY ONE ELECTRONIC APPLICATION AND SHALL NOT
     MAKE ANY OTHER APPLICATION FOR THE INVITATION SHARES (OTHER THAN THE
     RESERVED SHARES), WHETHER AT THE ATMs OF ANY PARTICIPATING BANK OR ON THE
     PRESCRIBED PRINTED APPLICATION FORMS.

6.   The Applicant irrevocably agrees and acknowledges that his Electronic Application is subject to
     risks of electrical, electronic, technical and computer-related faults and breakdowns, fires, acts of
     God and other events beyond the control of the Participating Banks, the Company, the Vendors and
     the Manager and if, in any such event, the Participating Banks and/or the Company and/or the
     Vendors and/or the Manager do not record or receive the Applicant’s Electronic Application, or data
     relating to the Applicant’s Electronic Application or the tape containing such data is lost, corrupted,
     destroyed or not otherwise accessible, whether wholly or partially for whatever reason, the Applicant
     shall be deemed not to have made an Electronic Application and the Applicant shall have no claim
     whatsoever against the Participating Banks, the Company, the Vendors or the Manager for the Offer
     Shares applied for or for any compensation, loss or damage.

7.   Electronic Applications shall close at 12.00 noon on 7 April 1999 or such other time as the Directors
     and the Vendors may in their absolute discretion decide.

8.   All particulars of the Applicant in the records of his Participating Bank at the time he makes his
     Electronic Application shall be deemed to be true and correct and the relevant Participating Bank
     and the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been any
     change in the particulars of the Applicant after the time of the making of his Electronic Application,
     the Applicant shall promptly notify his Participating Bank.

9.   The Applicant must have sufficient funds in his bank account(s) with his Participating Bank at the
     time he makes his Electronic Application, failing which his Electronic Application will not be
     completed. Any Electronic Application made at ATMs of DBS Bank which does not strictly conform
     to the instructions set out in the Steps will be rejected. Any Electronic Application made at the
     ATMs of the other Participating Banks which does not strictly conform to the instructions set out on
     the ATM screens of such Participating Banks will be rejected.

10. No reserve application will be kept. Where an Electronic Application is not accepted, it is
    expected that the full amount of the application moneys will be refunded in Singapore dollars
    (without interest or any share of revenue or other benefit arising therefrom) to the Applicant by being
    automatically credited to the Applicant’s account with the relevant Participating Bank within three
    Market Days of the close of the Application List. Trading on a “when issued” basis, if
    applicable, is expected to commence after such refund has been made. Where an Electronic
    Application is accepted in part only, the balance of the application moneys will be refunded (without
    interest or any share of revenue or other benefit arising therefrom) to the Applicant by being
    automatically credited to the Applicant’s account with his Participating Bank within 14 days after the
    close of the Application List.

     If the Applicant’s Electronic Application is made through the ATMs of DBS Bank’s POSBank
     Services division, KTB or UOB Group and is unsuccessful, it is expected that a computer-
     generated notice will be sent to the Applicant by the relevant Participating Bank (at the address of
     the Applicant as stated in the records of the relevant Participating Bank at the date of his Electronic
     Application) by ordinary post at the Applicant’s own risk within three Market Days after the close of
     the Application List. If the applicant’s Electronic Application is made through the ATMs of
     OCBC Group, OUB Group or DBS Bank (other than those of its POSBank Services division)
     and is unsuccessful, no notification will be sent by the relevant Participating Bank.




                                                    15
    Applicants who make Electronic Applications through the ATMs of the following banks may check
    the provisional results of their Electronic Applications as follows:-

      Bank          Telephone          Available at ATM     Operating Hours      Service expected from

      DBS Bank       1800-222 2222    Autobanks or          24 hours a day       7.00 p.m. on the balloting
                                      Autoview                                   day

      KTB            222 8228         ATM                   ATM-24 hours a day   ATM-Evening of the balloting
                                                            Phone Banking day
                                                            Mon-Fri 0800-2200    Phone Banking –
                                                            Sat     0800-1500    8.00 a.m. on the day after
                                                                                 the balloting day

      OCBC           1800-363 3333    ATM                   ATM-24 hours a day   Evening of the balloting day
                                                            Phone Banking
                                                            Mon-Fri 0800-2200
                                                            Sat     0800-1500

      OUB            1800-534 0100     Not available        ATM-24 hours a day   Evening of the balloting day
                                                            Phone Banking
                                                            Mon-Fri 0800-2200
                                                            Sat     0800-1500

      UOB            539 4419         Not available         Mon-Fri 0900-1800    10.30 a.m. on the day after
                     539 3945                               Sat     0900-1800    the balloting day


11. By making and completing an Electronic Application, the Applicant agrees that:-

    (a) in consideration of the Company and the Vendors making available the Electronic Application
        facility, through the Participating Banks acting as agents of the Company and the Vendors at
        the ATMs of the Participating Banks:-

         (i)    his Electronic Application is irrevocable; and

         (ii)   his Electronic Application, the acceptance of his Electronic Application by the Company
                and the Vendors and the contract resulting therefrom under the Invitation shall be governed
                by and construed in accordance with the laws of Singapore and he irrevocably submits to
                the non-exclusive jurisdiction of the Singapore courts.

    (b) none of the Company, the Vendors, the Manager or the Participating Banks shall be liable for
        any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery
        of data relating to his Electronic Application to the Company or CDP or the Vendors due to a
        breakdown or failure of transmission, delivery or communication facilities or any risks referred
        to in paragraph 6 on page 15 of this Prospectus or to any cause beyond their respective
        controls;

    (c) he will not be entitled to exercise any remedy of rescission for innocent misrepresentation at
        any time after acceptance of his application; and

    (d) in respect of the Offer Shares for which his Electronic Application has been successfully
        completed and not rejected, acceptance of the Applicant’s Electronic Application shall be
        constituted by written notification by or on behalf of the Company and the Vendors and not
        otherwise, notwithstanding any payment received by or on behalf of the Company and the
        Vendors.




                                                       16
12. The Applicant should ensure that his personal particulars as recorded by both CDP and the relevant
    Participating Banks are correct and identical. Otherwise his Electronic Application may be rejected.
    The Applicant should promptly inform CDP of any change in his address, failing which the
    notification letter on successful allotment and/or allocation will be sent to his address last registered
    with CDP   .

13. The existence of a trust will not be recognised. Any electronic application by a trustee or trustees
    must be made in his/their own name(s) and without qualification. The Company and the Vendors will
    reject any application by any person acting as nominee.


Steps for Electronic Applications through ATMs of DBS Bank (other than those of its POSBank
Services division)
An Applicant making an Electronic Application through a DBS Bank ATM will be viewing the following
instructions on an ATM screen of DBS Bank. Certain words appearing on the screen are in abbreviated
form (“A/c”, “amt”, “appln”, “&”, “I/C” and “No.” refer to “Account”, “amount”, “application”, “and”, “NRIC” and
“Number”, respectively). Instructions for Electronic Applications on the ATM screens of Participating
Banks (other than DBS Bank) may differ slightly from those represented below.

Steps for Offer Shares Application
Step    1   :   Insert your personal DBS BankCard

        2   :   Enter your Personal Identification Number

        3   :   Select “CASHCARD & MORE SERVICES”

        4   :   Select “ELECT SECURITY / RIGHTS APPLN”

        5   :   Select share application to “TAL”

        6   :   Press the “ENTER” key to acknowledge:-

                –    You have read, understood & agreed to all terms of appln & Prospectus

                –    You consent to disclose your name, I/C No., address, nationality, CDP
                     Securities A/c No., CPF Investment A/c No. & share appln amount from your
                     DBS Account(s) to share registrars, SCCS, CDP, CPF, issuer(s)

                –    For FIXED price share appln, this is your only appln and it is made in your
                     own name and at your own risk

        7   :   Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) from which to
                debit your application moneys

        8   :   Enter the number of Offer Shares you wish to apply for using cash

        9   :   Select your nationality

       10   :   Enter your own 12-digit CDP Securities Account number. (Note: This step will be omitted
                automatically if your CDP Securities Account number has already been stored in DBS
                Bank’s records)

       11   :   Check the details of your share application, your NRIC/passport number and CDP
                Securities Account number on the screen and press the “ENTER” key to confirm
                application

       12   :   Remove the Transaction Record for your reference and retention only




                                                      17
INDICATIVE TIMETABLE FOR LISTING
In accordance with the Stock Exchange’s News Release of 28 May 1993 on the trading of initial public
offering shares on a “when issued” basis, an indicative timetable is set out below for the reference of
applicants:-

Indicative date/time             Event

7 April 1999, 12 noon            Closing date and time for applications

8 April 1999                     Balloting of applications, if necessary

9 April 1999, 9.00 a.m.         Commence trading on a “when issued” basis

20 April 1999                    Last day of trading on a “when issued” basis

21 April 1999, 9.00 a.m.         Commence trading on a “ready” basis

28 April 1999                    Settlement date for all trades done on a “when issued” basis and for all
                                 trades done on a “ready” basis on 21 April 1999

The above timetable is only indicative as it assumes that the closing of the Application List is 7 April
1999, the date of admission of the Company to the Official List of the SESDAQ will be 9 April 1999, the
Stock Exchange’s shareholding spread requirement will be complied with and the Invitation Shares will
be issued and fully paid up prior to 9 April 1999. The actual date on which the Shares will commence
trading on a “when issued” basis will be announced when it is confirmed by the SES.

The above timetable and procedure may be subject to such modifications as the SES may in its
discretion decide, including the decision to permit trading on a “when issued” basis, the commencement
date of such trading. All persons trading in the Shares on a “when issued” basis do so at their own risk.
In particular, persons trading in the Shares before their Securities Accounts with CDP are credited
with the relevant number of Shares do so at the risk of selling Shares which neither they nor their
nominees, if applicable, have been allotted with or are otherwise beneficially entitled to. Such
persons are also exposed to the risk of having to cover their net sell positions earlier if “when
issued” trading ends sooner than the indicative date mentioned above. Persons who have a net
sell position traded on a “when issued” basis should close their position on or before the first
day of “ready” basis trading.

Investors should consult the SES’s announcement on the “ready” listing date on the Internet (at the SES
website http://www.ses.com.sg), INTV or the newspapers, or check with their brokers on the date on
which trading on a “ready” basis will commence.




                                                   18
                                    PROSPECTUS SUMMARY


The information contained in this summary is derived from and should be read in conjunction with the full
text of this Prospectus:-

The Company                 :   The Company was incorporated in Singapore on 5 June 1987 as a private
                                company limited by shares. It changed its name to Total Automation Pte
                                Ltd on 18 January 1999 and subsequently to Total Automation Ltd on 10
                                March 1999 in line with the change of its status to a public limited
                                company. The Group is principally engaged in the maintenance, servicing,
                                commissioning and repair of all forms of pneumatic, electronic, electrical
                                and hydraulic equipment for the marine, offshore, petrochemicals, power,
                                utilities and processing industries.

The Invitation
Size                        :   21,000,000 Invitation Shares, comprising 14,975,000 New Shares and
                                6,025,000 Vendor Shares. The Vendor Shares rank, and the New Shares
                                will, upon registration in the name of CDP or its nominee, rank pari passu
                                in all respects with the then existing issued Shares.

Price                       :   $0.22 for each Invitation Share

Purpose of the Invitation   :   The Directors consider that the listing of the Company and the quotation of
                                the Shares on SESDAQ will enhance the Company’s public image. It will
                                also provide members of the public, the management, staff and business
                                associates of the Group an opportunity to participate in the equity of the
                                Company.

Use of Proceeds             :   The net proceeds of the New Shares (after deducting the estimated
                                expenses in relation to the Invitation) of approximately $3.0 million will be
                                utilised as follows:-

                                (a) approximately $2.0 million for the expansion of the Group’s business
                                    particularly into Europe and the Middle East; and

                                (b) the balance of approximately $1.0 million for working capital
                                    purposes.

                                Pending the deployment of net proceeds as aforesaid, the net proceeds
                                will be added to the Group’s working capital or used for investment in
                                short-term money market instruments, as the Directors may deem fit.

Reserved Shares             :   Out of the Placement Shares, up to 2,000,000 of the Placement Shares
                                will be reserved for employees, business associates and those who have
                                contributed to the success of the Group. In the event that any of the
                                Reserved Shares are not taken up, they will be made available to satisfy
                                applications for the Placement Shares, or in the event of an under-
                                subscription for the Placement Shares, to satisfy applications made by
                                members of the public for the Offer Shares.

Listing Status              :   The Shares will be quoted on SESDAQ, subject to admission of the
                                Company to the Official List of SESDAQ and permission for dealing in and
                                quotation for the Shares being granted by the SES.




                                                     19
                                                ISSUE STATISTICS


Offer Share and Placement Share                                                                              $0.22

NET TANGIBLE ASSETS
NTA per Share based on the consolidated balance sheet of the Group as at 31
December 1998, taking into account the sub-division of shares referred to on page 23
of this Prospectus:-

(a) before adjusting for the estimated net proceeds from the issue of the New                                8.36 cents
    Shares (and based on the pre-flotation share capital of 70,000,000 Shares)

(b) after adjusting for the estimated net proceeds from the issue of the New Shares                          10.42 cents
    (and based on the post-flotation share capital of 84,975,000 Shares)

Premium of Issue Price of $0.22 per Share over the NTA per Share as at 31
December 1998:-

(a) before adjusting for the estimated net proceeds from the issue of the New                                163%
    Shares (and based on the pre-flotation share capital of 70,000,000 Shares)

(b) after adjusting for the estimated net proceeds from the issue of the New Shares                          111%
    (and based on the post-flotation share capital of 84,975,000 Shares)

EARNINGS
Historical net earnings per Share of the Group for the financial year ended 31                               3.71 cents
December 1998 based on the pre-flotation share capital of 70,000,000 Shares

                                        (1)
NET OPERATING CASH FLOW
Historical net operating cash flow per Share for the financial year ended 31 December                        4.23 cents
1998 based on the pre-flotation share capital of 70,000,000 Shares

PRICE EARNINGS RATIO
Historical price earnings ratio based on the historical net earnings per Share of the                        5.93 times
Group for the financial year ended 31 December 1998

PRICE TO NET OPERATING CASH FLOW
Historical price to net operating cash flow based on the historical net operating cash                       5.20 times
flow per Share for the financial year ended 31 December 1998



Note:-
(1) Net operating cash flow is defined as net profit after tax with provision for depreciation added back.




                                                              20
             SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION


The following selected financial information should be read in conjunction with the full text of this
Prospectus. The Group changed its financial year end in 1996 from June to December.

Results of Operations of the Proforma Group(1)

($’000)                                                                             Six
                                                                                   months
                                                                                   ended             Year ended
                                                 Year ended 30 June             31 December         31 December
                                        FY94           FY95           FY96         1996          FY97           FY98

Turnover                               9,272          10,441          15,081      8,051         17,042        23,894


Operating Income                          909            815            829          665         2,283         4,450

Other Income                               17              13            14           22             29            66

Share of results of
associated companies                       —               —              —           —              13           (36)

Profit before depreciation,
interest and tax                          926            828            843          687         2,325         4,480

Depreciation                             (316)           (290)          (262)       (133)          (317)         (363)

Profit before interest and tax            610            538            581          554         2,008         4,117

Interest                                  (16)            (35)           (14)          (1)           —              (6)

Profit before tax                         594            503            567          553         2,008         4,111

Taxation                                 (134)           (159)          (158)       (157)          (557)       (1,515)

Profit after tax                          460            344            409          396         1,451         2,596

Extraordinary items                        —              (27)            —           —              —             —

Profit attributable to
shareholders                             460             317            409         396          1,451         2,596


Earnings per Share
(cents) (2)                               0.7             0.5            0.6         0.6            2.1           3.7


Notes:-
(1) The financial results of the Proforma Group for the period under review have been prepared on the basis that the
    Proforma Group had been in existence throughout the period under review.

(2) For comparative purposes, the Earnings per Share is calculated based on the pre-flotation share capital of 70,000,000
    Shares.




                                                           21
Financial Position of the Proforma Group(1)

($’000)                                                                           Six
                                                                                 months
                                                                                 ended           Year ended
                                               Year ended 30 June             31 December       31 December
                                      FY94           FY95            FY96        1996        FY97          FY98

Fixed assets                          2,035          2,221          2,201       4,201        4,279         3,601

Interest in associated
companies                                28             28             28          27           38             63

Other investments                         7              7               7           7          —              —

Current assets                        4,742          6,411          4,942       4,899        9,249        11,295

Current liabilities                  (4,149)        (5,687)         (3,775)     (3,312)     (8,498)       (9,104)

Net current
assets                                  593            724          1,167       1,587          751         2,191

Non-current liabilities                  —              —              (14)        —            —              —

                                      2,663          2,980          3,389       5,822        5,068         5,855


Share capital                         1,000          1,000          1,000       1,000        1,000         1,000

Revaluation reserve                      —              —              —        2,037        2,037         1,228

Revenue reserve                       1,663          1,980          2,389       2,785        2,031         3,627

Shareholders’ equity                  2,663          2,980          3,389       5,822        5,068         5,855


Net tangible assets per
Share (cents)(2)                        3.8            4.3             4.8         8.3         7.2            8.4


Notes:-
(1) The financial results of the Proforma Group for the period under review have been prepared on the basis that the
    Proforma Group had been in existence throughout the period under review.

(2) For comparative purposes, the NTA per Share is calculated based on the pre-flotation share capital of 70,000,000
    Shares.




                                                         22
                          GENERAL INFORMATION ON THE GROUP


SHARE CAPITAL
The Company was incorporated in Singapore on 5 June 1987 under the Companies Act (Chapter 50) as a
private limited company under the name of “Total Automation Services (S) Pte Ltd”. On 18 January
1999, the name of the Company was changed to Total Automation Pte Ltd and on 10 March 1999, the
name of the Company was changed to “Total Automation Ltd” in connection with the Company’s
conversion to a public company limited by shares. There is only one class of shares in the Company.
The Articles of Association of the Company relating to the voting rights of shareholders are set out in
pages 88 to 90 of this Prospectus.

As at 31 December 1998, the Company has an authorised share capital of $1,000,000 divided into
1,000,000 shares of $1.00 each and an issued and paid-up share capital of $1,000,000 divided into
1,000,000 shares of $1.00 each.

At an Extraordinary General Meeting held on 10 March 1999, the shareholders of the Company approved,
inter alia, the following:-

(a) an increase in the authorised share capital of the Company from $1,000,000 divided into 1,000,000
    ordinary shares of $1.00 each to $20,000,000 divided into 20,000,000 ordinary shares of $1.00 each
    by the creation of 19,000,000 ordinary shares of $1.00 each;

(b) the capitalisation of $2,500,000 out of revenue reserves by way of a bonus issue of 2,500,000
    ordinary shares of $1.00 each in the capital of the Company fully paid to the shareholders;

(c) the sub-division of each of the ordinary shares of $1.00 each in the capital of the Company into 20
    ordinary shares of $0.05 each in the capital of the Company;

(d) the conversion of the Company into a public limited company and the change of its name to Total
    Automation Ltd;

(e) the adoption of the new Articles of Association of the Company;

(f)   the issue of 14,975,000 New Shares which forms part of the subject of this Invitation. The New
      Shares, when fully paid, will rank pari passu in all respects with the existing shares of the Company;
      and

(g) the authority to the Directors, pursuant to Section 161 of the Companies Act, to issue Shares from
    time to time.

Details of the issued and paid-up share capital of the Company since 31 December 1998, being the date
of the last audited accounts of the Company, are as follows:-

                                                                 Number of shares                 $

Issued and fully paid ordinary shares of $1.00 each
as at 31 December 1998                                                 1,000,000              1,000,000
Bonus issue of ordinary shares of $1.00 each                           2,500,000              2,500,000

                                                                       3,500,000              3,500,000
Subdivision of ordinary shares of $1.00 each into
ordinary shares of $0.05 each                                        70,000,000               3,500,000

Pre-Invitation share capital                                         70,000,000               3,500,000
New Shares to be issued for public subscription                      14,975,000                 748,750

Post-Invitation share capital                                        84,975,000               4,248,750


                                                      23
The authorised share capital and the shareholders’ funds of the Company as at 31 December 1998,
before and after adjustments to reflect the increase in the authorised share capital of the Company, the
sub-division of the ordinary shares of $1.00 each and the issue of New Shares are set forth below. These
statements should be read in conjunction with the Accountants’ Report set out on pages 61 to 79 of this
Prospectus.

                                                     As at 31 December 1998           As adjusted
                                                                $                          $

Authorised Share Capital
Ordinary shares of $1.00 each                               1,000,000                           —
Ordinary shares of $0.05 each                                       —                  20,000,000

Shareholders’ Funds
Issued and fully paid shares                                1,000,000                    4,248,750
Share premium reserves                                              —                    2,250,750
Capital reserve                                             1,227,734                    1,227,734
Retained earnings                                           3,627,032                    1,127,032

Shareholders’ funds                                         5,854,766                    8,854,266


SHAREHOLDERS
The shareholders of the Company and their respective shareholdings immediately before and after the
Invitation are set out below:-

                                        <—— Before Invitation ——>        <—— After Invitation ——>
                                         No. of Shares        %           No. of Shares       %

Directors
Ngai Kok Leong(1)                           4,612,160           6.59         3,639,283           4.29
Richard Edward Willenbrock(1)               9,880,640          14.11         7,796,443           9.17
Nabil Bin Tan Sri Abdul Jalil                       —             —                  —               —
Nor Zainal Bin Abdul Rahman                         —             —                  —               —
Khaw Kheng Joo                                      —             —                  —               —
Tay Siew Liong                                      —             —                  —               —

Others
Velosi (M) Sdn Bhd(2)                      47,600,000           68.0        46,300,000          54.49
Goh Yong Kwee(1)                            3,953,600           5.65         3,119,637           3.67
Woo Fook Onn(1)                             3,953,600           5.65         3,119,637           3.67

Public                                              —             —         21,000,000          24.71

Total                                      70,000,000         100.00        84,975,000         100.00




                                                  24
Notes:-
(1) The Shares held by Messrs Richard Edward Willenbrock, Ngai Kok Leong, Goh Yong Kwee and Woo Fook Oon were
    originally held by Hoopice Investment Ltd. As part of the Restructuring Exercise, the shareholders of Hoopice
    Investment Ltd have commenced the liquidation of Hoopice Investment Ltd and the Shares held by Hoopice Investment
    Ltd have been distributed to Messrs Richard Edward Willenbrock, Ngai Kok Leong, Goh Yong Kwee and Woo Fook Onn,
    who now hold the Shares directly. Please refer to the Restructuring Exercise described on pages 25 to 26 of this
    Prospectus.

(2) Velosi (M) Sdn Bhd is a private company incorporated in Malaysia on 24 April 1982. Its principal activities are providing
    quality assurance and control, general inspection, corrosion monitoring and manpower supply to the oil and gas industry.
    Velosi (M) Sdn Bhd is a 70% owned subsidiary of Trenergy (M) Bhd. The other shareholders are Mohamed Ashari Bin
    Abas (4.89%), Ong Thean Huat (3.17%), Mohd Jai Bin Suboh (1.80%), Ratus Khidmat Sdn Bhd (10.89%) and Tokoh
    Tulin Sdn Bhd (9.25%). The directors of Velosi (M) Sdn Bhd are Dr Nabil bin Tan Sri Abdul Jalil, Messrs Mohamed Ashari
    Bin Abas, Mohd Jai Bin Suboh, Liow Hoon Ing, Baharin Bin Salleh and Nor Zainal Bin Abdul Rahman. The authorised
    share capital of Velosi (M) Sdn Bhd is RM5,000,000 divided into 5,000,000 ordinary shares of RM1.00 each, of which
    2,700,000 ordinary shares of RM1.00 each are issued and fully paid up.

    Trenergy (M) Bhd is a publicly listed company incorporated in Malaysia with its shares quoted on the Kuala Lumpur
    Stock Exchange. Trenergy (M) Bhd is an investment holding company and its subsidiaries manufacture barite and
    disposable lighters, provide technical engineering and industrial services, freight forwarding and related services,
    contract offshore installations and related services for the oil and gas industry. The authorised share capital of Trenergy
    (M) Bhd is RM100,000,000 divided into 100,000,000 ordinary shares of RM1.00 each, of which 68,198,631 ordinary
    shares of RM1.00 are issued and fully paid up. The directors of Trenergy (M) Bhd are Messrs Datuk Yahya bin Yaacob,
    Baharin bin Salleh, Nor Zainal bin Abdul Rahman, Liow Hoon Ing, Dato’ Abdul Rahman bin Nasir, Dato’ Chee Peck Kiat,
    Dato’ Abdul Ghani bin Awang, Dr Nabil bin Tan Sri Abdul Jalil, Mohamed Ashari bin Abas and Yan Ying Chieh (alternate to
    Liow Hoon Ing).


MORATORIUM
To demonstrate their commitment to the Group, Velosi (M) Sdn Bhd, Messrs Richard Edward
Willenbrock, Ngai Kok Leong, Goh Yong Kwee and Woo Fook Onn, who will collectively own 63,975,000
Shares, representing 75.29% of the Company’s issued share capital after the Invitation, will give an
undertaking not to sell or transfer any part of their shareholding interests in the Company for a period of
12 months commencing on the date of listing of the Company on SESDAQ. In addition, Velosi (M) Sdn
Bhd, Messrs Richard Edward Willenbrock, Ngai Kok Leong, Goh Yong Kwee and Woo Fook Onn will give
an undertaking not to reduce their shareholding interests in the Company to below 51% of the enlarged
share capital of the Company in the subsequent 12 months.


RESTRUCTURING EXERCISE
The Group underwent a Restructuring Exercise in connection with the Invitation and the listing of the
Company on SESDAQ.

The Restructuring Exercise involved the following transactions:-

(a) Bonus issue of shares
     The capitalisation of $2,500,000 out of revenue reserves by way of a bonus issue of 2,500,000
     ordinary shares of $1.00 each in the capital of the Company fully paid to the shareholders.

(b) Subdivision of shares
     The subdivision of each of the ordinary shares of $1.00 each in the capital of the Company into 20
     ordinary shares of $0.05 each in the capital of the Company;

(c) Liquidation of Hoopice Investment Ltd
     Hoopice Investment Ltd was incorporated in Hong Kong on 24 August 1993 as an investment
     holding company with an issued and paid up share capital of 10,000 ordinary shares of HK$1.00
     each. Hoopice Investment Ltd is the private investment vehicle of Messrs Richard Edward
     Willenbrock (44.11%), Ngai Kok Leong (20.59%), Goh Yong Kwee (17.65%) and Woo Fook Onn
     (17.65%). Messrs Richard Edward Willenbrock, Ngai Kok Leong, Goh Yong Kwee and Woo Fook
     Onn are also the directors of Hoopice Investment Ltd.




                                                             25
     By an agreement dated 25 September 1996 made between Messrs Richard Edward Willenbrock,
     Ngai Kok Leong, Goh Yong Kwee and Woo Fook Onn (together, the “Vendors”), Velosi (M) Sdn Bhd
     (the “Purchaser”) and Hoopice Investment Ltd, each of the Vendors agreed to sell to the Purchaser
     and the Purchaser agreed to purchase from each of the Vendors the following amounts of the
     ordinary shares of $1.00 each in the capital of the Company (the “Sale Shares”) for a total
     consideration of $6,120,000:-

     (i)     Ngai Kok Leong                          140,000;
     (ii)    Goh Yong Kwee                           120,000;
     (iii)   Woo Fook Onn                            120,000; and
     (iv)    Richard Edward Willenbrock              300,000.

     By this agreement, the Purchaser and Hoopice Investment Ltd agreed that, upon completion of the
     sale and purchase of the Sale Shares, they would make available to the Company a loan (the
     “Loan”) which would be contributed by the Purchaser and Hoopice Investment Ltd in proportion to
     their respective shareholdings in the Company. Further, Hoopice Investment Ltd agreed to pledge
     its entire shareholding of 320,000 ordinary shares of $1.00 in the Company (the “Pledged Shares”) to
     Velosi (M) Sdn Bhd as collateral for the warranty given by the Vendors and Hoopice Investment Ltd
     that the Company’s total audited net profit before tax for the period from 1 January 1996 to 31
     December 1998 will not be less than $4,500,000.

     By an agreement dated 12 November 1996 made between Messrs Richard Edward Willenbrock,
     Woo Fook Onn, Goh Yong Kwee and Ngai Kok Leong (together, the “Shareholders of Hoopice
     Investment Ltd”), it was agreed that:-

     (i)     upon the return of the Pledged Shares by Velosi (M) Sdn Bhd to Hoopice Investment Ltd, the
             Shareholders of Hoopice Investment Ltd shall cause the Pledged Shares returned to be
             transferred to the Shareholders of Hoopice Investment Ltd at a sale price of $1.00 by each
             Shareholder;

     (ii)    upon the repayment by the Company to Hoopice Investment Ltd of its proportion of the Loan,
             the Shareholders of Hoopice Investment Ltd shall cause the Loan so repaid to be distributed to
             the Shareholders of Hoopice Investment Ltd; and

     (iii) upon completion of the distribution of the transfer of the Pledged Shares referred to in sub-
           paragraph (i) above and the distribution of the Loan referred to in sub-paragraph (ii) above, the
           Shareholders of Hoopice Investment Ltd shall cause Hoopice Investment Ltd to be liquidated.

GROUP STRUCTURE
The Group structure is as follows:-



                                                Total Automation Ltd



                 100%                                            100%                                         50%

      Total Plant                                  Total Automation
                                                                                                 Velosi (S) Pte Ltd (2)
  Maintenance Pte Ltd                           (International) Limited

                                                                 49%

                                                  Total Automation
                                                 Middle East L.L.C.(1)

Notes:-
(1) The balance of the 51% interest in TAME is registered in the name of Mohammed Khalifa Bin Hadher.
(2) The balance of the 50% interest in Velosi Singapore is held by Velosi International E.C. which, in turn, is a 51% owned
    subsidiary of Velosi (M) Sdn Bhd.


                                                            26
HISTORY
The Group’s origin dates back to 1987 when a team of experienced instrument engineers and managers
with extensive world-wide experience came together to provide clients with a comprehensive range of
services in the field of instrumentation, automation and control equipment for tankers, container vessels,
cargo vessels and offshore storage vessels. TAL was incorporated on 5 June 1987 as a private limited
company under the Companies Act and it commenced operations thereafter.

When it commenced operations in June 1987, TAL concentrated on providing a comprehensive range of
services specifically to ship-owners on vessels undergoing repairs in major Singapore shipyards, at
anchorage and on voyage. Some of the initial larger projects were undertaken by the Company on
vessels in the Persian Gulf which had been damaged during the Gulf War.

Originally, the key management team of the Company included Mr Goh Yong Kwee and Mr Woo Fook
Onn who were involved in the Group’s initial operations. Mr Ngai Kok Leong and Mr Richard Edward
Willenbrock joined the management team on a full time basis in 1989 and 1990, respectively.

TAL’s operations were initially conducted from a terrace factory at Pandan Loop. With the growth of the
Company, TAL acquired its current premises at Gul Drive in 1991 to house its Singapore operations. This
is a leasehold factory with a land area of 3,841 sq m and a built-up area of 1,800 sq m. The factory is
leased from the Jurong Town Corporation (“JTC”) for a term of 60 years of which there is still 43 years
remaining until expiry.

Due to the continued growth in the marine and petrochemical industries, TAL expanded its operations in
the early 1990s to include not only service and retrofit work in these industries, but also turnkey projects
on marine, offshore, petrochemical and utility projects. The demand for the Company’s services has
continued to increase and at the repeated requests of numerous marine customers, TAME was
incorporated in August 1997 and received its trade licence from the Government of Dubai (UAE),
Department of Economic Development on November 1997.

In April 1991, Total Hydraulic & Engineering Pte Ltd was incorporated in Singapore. This was to expand
the Group’s hydraulic activities. Its name was subsequently changed to Velosi (S) Pte Ltd on 26 June
1996 and became a joint venture company between TAL and Velosi International E.C. Velosi Singapore
currently handles vendor inspection work and is part of the Velosi group of companies which has offices
and operations world-wide involved in vendor inspection services. This vendor inspection work forms
part of the overall range of services provided by the Group.

Total Systems & Controls Pte Ltd was incorporated in March 1992 to cover a niche area in the marine
industry, specifically the design of automation and control systems for FPSOs and FSOs.
Subsequently, TAL decided to conduct this activity within the Company as part of its project division.
Following that, the company’s name was changed to Total Plant Maintenance Pte Ltd on 28 January
1997. TPML now specialises in the marketing and servicing of masonry sawblade equipment throughout
the Far East and is the sole agent for Diamant Boart S.A., a Belgium company which is well respected in
its field world-wide.

Over the years, the Group has grown and expanded from an initial workforce of 10 employees in 1987 to
over 200 employees and contract personnel in 1998 due to the extensive work undertaken in electrical
and instrumentation projects. As at 31 December 1998, the Group employed 20 management and
support staff plus over 100 engineering personnel in Singapore. In addition, the Group employed
approximately 20 management and technical personnel from its Dubai office in the UAE. Its permanent
workforce is supplemented by about 60 contract personnel, the number of which will fluctuate according
to the Group’s projects on-hand.

The TAL Group has enhanced its project management capabilities to manage wider-based engineering
projects for the marine, offshore, petrochemicals, power and land-based industries. The Group’s ability to
coordinate and support major turnkey contractors has helped to establish the Group as a reliable and
effective automation service and systems group providing quality, prompt and competitive services to its
customers in Singapore, the Far East and the Middle East and to its other customers world-wide.




                                                    27
In March 1996, TAL was awarded the ISO 9002 certificate for its quality products, systems and services
in recognition of the Group’s objective to continually improve on its quality standards.

In October 1996, Velosi (M) Sdn Bhd (“Velosi Malaysia”) purchased a 68% shareholding interest in TAL
from the then existing shareholders of TAL for a total consideration of $6.12 million on a willing seller and
willing buyer basis. Velosi Malaysia is a 70% owned subsidiary of Trenergy (M) Bhd (“Trenergy”), a
publicly listed company with its shares quoted on the Kuala Lumpur Stock Exchange.

As the Group continued to expand its base of international customers, TAIL was established on 25 April
1997 in Gibraltar to co-ordinate all overseas activities of the Group. Such activities include the co-
ordination of the Far East and the Middle East operations and for the future expansion of European
activities. TAIL operates from a registered office in Gibraltar. TAME was incorporated in August 1997 as
an associated company of TAIL to co-ordinate the Group’s Middle East operations.

Since its establishment in 1987, the Group has expanded its operations throughout the Far East and the
Middle East. Over the years, it has built on its technical manpower and expertise and is now able to
offer total automation services and systems to its customers. The Group’s turnover has increased from
approximately $1.1 million in 1988 to $23.9 million in 1998, representing a compounded annual growth
rate of 36.1% per annum.


BUSINESS
Principal Activities
The TAL Group is principally engaged in the maintenance, servicing, commissioning and repair of all
forms of pneumatic, electronic, electrical and hydraulic equipment for the marine, offshore,
petrochemicals, power, utilities and processing industries. It specialises in systems engineering,
equipment sales, maintenance and repair, turnkey installation and commissioning and start-up services
of instrumentation, control equipment and electrical and mechanical systems.

Marine Automation Services
Shipyard, Port and Anchorage Instrumentation Services
To meet the requirements of its world-wide customers, the Group offers comprehensive instrumentation/
electrical service capabilities to all types of vessels requiring repairs in shipyards, at anchorage and on
voyage. Being the Group’s main division, it is manned 24 hours a day to attend to all of its customers’
requirements such as docking repairs, breakdown repairs, regular instrument maintenance and refit
services. Teams of experienced service personnel fully equipped with all the necessary tools and test
equipment attend to vessels at all locations world-wide to carry out repairs, refits, installations and
maintenance work.

Voyage Repairs
The Group’s repair teams are based in Singapore and Dubai to attend to the vessels on voyages world-
wide, carrying out emergency repairs, planned maintenance, retrofit work, extensive survey work and
commissioning and start-up services. With modern communication systems installed onboard the
vessels, urgent requirements for spare parts can be forwarded to either its office in Dubai or Singapore
and subsequently despatched to the vessel’s next port of call.

Workshop Support Services
The Group operates from a 3,841 sq m factory site in Singapore and it also has a 8,000 sq ft factory in
Dubai. These facilities have been equipped to give total support for all types of instrumentation repairs
and retrofits of new systems. The facilities provide excellent calibration, pneumatic and electronic
laboratories, machine shops, control valve repair bays, hydraulic equipment repair bays and the
necessary supporting facilities to meet all types of customer repair requirements. All workshop repairs
are carried out in line with the Group’s quality assurance procedures under ISO 9002 certification.




                                                     28
Systems Installation and Testing
In addition to its experienced instrument service engineering personnel, the TAL Group also has a
qualified team of installation personnel. This installation team is capable of carrying out new installations
in shipyards, at anchorage and on voyage. On completion of installation, full commissioning and
certification of systems are carried out according to the requirements of the owner’s representative.

The list of marine automation services provided by the Group is as follows:-

l    Boiler Automatic Combustion Controls             l    Electronic and Electrical Controls
l    Boiler Feedwater Level Controls                  l    Installation of Control Instruments and Piping
l    Boiler Burner Management                         l    Hydraulic Cargo Valve Controls
l    Remote Engine Controls                           l    Hydraulic Crane & Hatch Cover Controls
l    Pressure and Temperature Controls                l    Cargo Pump Controls
l    Fuel Oil Viscoscity Controls                     l    Inert Gas Systems
l    Transmitter, Controller and Control Valves       l    Tank Gauging Systems
l    Generator and Switch Board Controls              l    Oil Discharge Monitoring Systems
l    Soot Blowing Systems                             l    Fire Detection Systems
l    Alarm Monitoring Systems                         l    Gas Detection Systems
l    Level Monitoring Systems                         l    Draught Gauge Systems
l    Pneumatic Controls

Project Management Services
The TAL Group undertakes work for its world-wide customers that includes engineering design,
equipment selection, procurement, system configuration, panel manufacture, site installation, testing and
commissioning. These range of services provided consist of pneumatic, electrical, electronic, hydraulic
and mechanical instrumentation/electric systems.

As part of project management, the Group schedules and plans each project to its customers’
requirements, taking into account the types of projects undertaken which may involve the provision of an
array of services. The Group has established in-house procedures to monitor all phases of project
progress and takes corrective measures in order to achieve planned completion dates. Regular contract
meetings are held both within the Group’s facilities and at site locations.

The Group’s project team comprises many experienced instrumentation/electrical engineers who have
been in the relevant industries for many years. The Group places considerable importance on quality
control and safety procedures in executing contract works for the marine, offshore, power, utilities,
petrochemicals and process industries.

Project management services provided by the Group include:-

l    Turnkey Projects                                 l    Fabrication and Assembly of Equipment
l    Systems Design                                   l    Instrument Building
l    Procurement                                      l    Analyser Houses
l    Preparation of Equipment and Materials           l    Control Panels
l    Project Scheduling                               l    Large Stock Holding of Instruments and Parts
l    Detailed Surveys                                 l    Progress Monitoring
l    Equipment Sourcing World-wide                    l    Quality Controls
l    Site Erection                                    l    Safety
l    Hook-up and Commissioning                        l    Training
l    Calibration and Testing




                                                     29
Project Management
The Group is a system integrator, installer and service provider which has in-house capabilities to handle
both minor and major projects.

A typical major project conducted by the Group involves the following key stages:-


                                        Customer’s requirements



                                                Quotation



                                       Contract award and planning



                                          Systems engineering



                                      Factory assembly and testing



                           Site inspection, commissioning and start services



                                      Post-commissioning services


Customer’s requirements/Quotation
Upon receiving a customer’s request, depending on the nature of the project, a team of the Group’s
engineering personnel would be sent to the vessel, offshore rig, petrochemicals plant or process plant to
assess the extent of the work required. The Group will commence negotiations and/or discussions with
the customer’s representatives on the specific nature and requirements of the project. Thereafter, it will
compile a detailed quotation for the customer comprising technical and commercial aspects of the
project.

Contract award and planning/Systems engineering
If the customer accepts the quotation, it will award the Group the contract. The Group will then prepare a
detailed work schedule to ensure efficient completion of the project. This schedule will usually specify
the types and quantities of the instrumentation/electrical systems and services required. The relevant
teams will then procure or obtain the required equipment and spare parts from the Group’s inventory and
its principals. All equipment and systems are subject to the Group’s stringent quality checks to ensure
that they comply with the required functional specifications.

Factory assembly and testing
The various instrumentation/electrical systems would be assembled either in the Group’s Singapore
office or directly on the customer’s vessel, offshore rig, petrochemicals plant or process plant. After the
system has been assembled, all the systems and panels installation of the complete set-up are subject
to functional tests to ensure that they are functioning effectively.

Site inspection, commissioning and start services
After the complete system has been fully tested, this is the stage where the system is ready for
operations.




                                                    30
Post-commissioning services
As an integral part of its ISO 9002 certification quality assurance procedures, the Group provides long
term planned maintenance and operations and training of the customer’s personnel in respect to the
operations and maintenance of the Group’s equipment and systems. The Group will also provide quality
product and systems guarantees in respect of these systems.

Systems and Equipment Sales
The Group carries an extensive inventory of instruments, electrical equipment and spare parts,
numbering in excess of 2,000 product line items, within the Group’s facilities. The stores, which have a
combined storage area of more than 185 sq m, are computerised to facilitate tracking of stock
movements and monitoring of stock levels to ensure that they are maintained at optimal levels. A
competent team of store officers and purchasing specialists maintain the storage facility as part of the
Group’s total service commitment and to facilitate project, service and turnkey contract requirements.

In addition to holding stocks of equipment in respect of all its agency lines, the Group maintains an
extensive range of spare parts which are required for maintenance and breakdown work. More
importantly, the Group is maintaining stocks of various items to meet customers’ requests for equipment
and spare parts, which may be required at short notice.

Typical items held in stock by the Group include:-

l     Transmitters, controllers, pressure switches, temperature switches
l     Oil content monitors, bilge alarms, viscotherms
l     Control valves, flow meters, gauges
l     Pressure calibrators, temperature calibrators, flow calibrators
l     Crankshaft deflection meters
l     Boiler controls and ignition equipment
l     Electrical motors, components and relays
l     Installation materials and relays
l     Installation materials in the form of cables, glands, tubing, fittings
l     Gas detection systems, portable gas analysers, fixed oxygen analysers

The TAL Group carries products from its numerous principals and has various exclusive and non-
exclusive agencies from these principals. Examples of agency agreements held by the Group include
the following:-

                                                            Territories/
                                                             Industry
Brand/Principal         Products                              Sector           Exclusive     Expiry

AMETEK                  Temperature/pressure calibrators       Marine            Yes          Yearly
                                                                                            Automatic
                                                                                             Renewal

GLACIER                 Centrifugal oil filters                Marine            Yes          Yearly
                                                                                            Automatic
                                                                                             Renewal

BODEWES                 Winches                              Singapore            No          Yearly
                                                                                            Automatic
                                                                                             Renewal

VAF                     Oil discharge monitors               Singapore            No          Yearly
                        Viscotherm control systems                                          Automatic
                        Flow meters                                                          Renewal




                                                     31
                                                           Territories/
                                                            Industry
Brand/Principal        Products                              Sector        Exclusive       Expiry

LESLIE                 Control valves                      Singapore/         Yes          Yearly
                       Regulators                           Malaysia                      Automatic
                       Pneumatic control equipment                                        Renewal

WHESSOE VAREC          Tank gauging systems                  Marine            No          Yearly
                       Storage tank controls                                              Automatic
                                                                                          Renewal

CTECH                  Precision draught monitors           Singapore         Yes           Yearly
                       Engine performance analysers                                       Automatic
                                                                                           Renewal

HF SCIENTIFIC          Oil content bilge monitors and       Singapore         Yes           Yearly
                       analyser                                                           Automatic
                                                                                           Renewal

MONITRAN               Vibration meters                    Singapore/         Yes          Yearly
                                                            Malaysia                      Automatic
                                                                                          Renewal

                       Accelerometers                      Indonesia/         Yes           Yearly
                                                             Brunei                       Automatic
                                                                                           Renewal

STAINSTALL             Stress Monitors                       Marine           Yes           Yearly
                                                                                          Automatic
                                                                                           Renewal

RAYTEK                 Temperature Monitors                  Marine           Yes           Yearly
                                                                                          Automatic
                                                                                           Renewal

Major projects with values exceeding $0.5 million undertaken by the Group for the last three financial
years include the following:-

Year/Contract Value      Project

Jan 1994 – Aug 1996 : Solitaire (Sembawang Shipyard Pte Ltd)
$4.78 million         – Design and engineer control and instrumentation work
                      – Supply manpower and material and install control systems and equipment
                      – Supply, design, install and check all control cables
                      – Test and commission work

Jun 1994 – Jun 1995   : Cossack Pioneer (Keppel Shipyard Ltd)
$1.87 million           – Overhaul, reinstate and modify engine room control systems
                        – Hook up and test deck process instrumentation
                        – Install and test fire and gas systems
                        – Start up and commission process instrumentation
                        – Secondment of instrument electrical teams to maintain various instruments
                          and electrical facilities after vessel’s departure

Jun 1995 – Jun 1996   : Essar Discover (Essar Oil Ltd)
$0.89 million           – Provide technical manpower and repair services to assist Essar Oil Ltd to
                          carry out repairs on various systems in the drill barge




                                                  32
Year/Contract Value     Project

Jul 1995 – Jun 1996   : Nan Hai Sheng Li FPSO (Modec Inc.)
$0.87 million           – Provide engineering support and technical manpower to assist Modec Inc.
                          in the conversion of the FPSO

Aug 1995 – Nov 1995 : Red Swan (Keppel Singmarine Dockyard and Engineering Pte Ltd)
$0.77 million         – Repair and service main switchboard
                      – Check and repair lighting power points and equipment in accommodation area
                      – Check and repair control, alarm and shutdown systems

Oct 1995 – Aug 1996 : Safe Project for Esso Refinery, Singapore (Foster Wheeler Eastern Pte Ltd)
$2.59 million         – Perform instrumentation and electrical works
                      – Install, test and commission electrical equipment
                      – Install and terminate both electrical and instrument cabling

Jul 1996 – Dec 1996   : Floating Production Storage and Offloading Facilities FPSO – Tantawan
$2.11 million           Explorer (Sembawang Shipyard Pte Ltd/Thaipo Ltd/SBM Bahamas Ltd)
                        – Overhaul, reinstate and modify engine room control systems
                        – Hook up and test deck process instrumentation
                        – Install and test fire and gas systems
                        – Start up and commission process instrumentation
                        – Instrument electrical teams secondment to maintain various instruments
                           and electrical facilities after the vessel departs

Dec 1996 – Mar 1997 : Floating Production Storage and Offloading Facilities FPSO II (Sembawang
$1.52 million         Shipyard Pte Ltd/SBM Bahamas Ltd/Granherne Ltd)
                      – Supply, install and commission numerous new instrumentation systems
                      – Refurbish existing instrument systems in engine room and on deck
                      – Upgrade mooring buoy controls
                      – Engineering for production systems
                      – Instrument and electrical team secondment for final installation and
                         commissioning of various instruments and electrical facilities during
                         vessel’s passage

Dec 1996 – Mar 1997 : Switchboards and Alarm Panels M.V. Hallborg (Thoresen & Co. (Bangkok) Ltd.)
$0.79 million         – Totally refurbish burnt out switch boards, engine control consoles, replace
                        burnt out cabling, test and commission the systems

Mar 1997 – Jan 1998   : Sage Hull 241 (Far East Levingston Shipbuilding Ltd, since renamed as
$1.29 million           Keppel FELS Limited)
                        – Cabling and electrical installation

Jul 1997 – present    : Engineering and Project Management Services MASA FPSO (Trenergy (M)
$4.21 million           Bhd)
                        – Conversion of M.T. Hitra into an FPSO for Petronas Carigali Bhd

Feb 1998 – Oct 1998   : Kerinci (Sembawang Shipyard Pte Ltd)
$0.88 million           – Labour and material supply

Mar 1998 – Jun 1998   : R007 Al Shaheen Development Project (Sembawang Marine and Offshore
$0.96 million           Engineering Pte Ltd)
                        – Manpower supply, offshore hook-up and commissioning

Mar 1998 – present    : Commissioning Services for 2x600mw steam power plant at Port Klang TNB
$0.64 million           (TBV Power Ltd)

Mar 1998 – present    : Engineering Services for Laminaria and Corallina FPSO (Woodside
$0.81 million           Engineering Energy Ltd)


                                                33
Year/Contract Value       Project

Apr 1998 – Sep 1998     : Vivekananda (Colombo Dockyard Ltd)
$0.50 million             – Carry out various automation work

Apr 1998 – present      : LNG Finima (Shell International Trading and Shipping Ltd)
$0.93 million             – Install, test and commission Distributed Control Systems

Sep 1998 – present      : Offshore Field Services, Peoples’ Republic of China (CACT Operators Group)
$0.77 million             – Supply labour, consumable materials, utilities and fabricate, install, hook-up
                            and construct equipment at three offshore platforms located at Huizhou
                            Field, South China Sea

Business Strategy
The Group’s business objective is to provide capable, prompt and competitive services to its local and
overseas customers. As such, the Group’s strategy is to emphasise total commitment and total quality
services in the fields of electrical instrumentation and automation.

The experiences and technical capabilities of the Group’s management team have enhanced the Group’s
expertise in equipment selection and supply, panel manufacture, turnkey instrumentation, electrical
projects, site installation, commissioning services and ongoing maintenance. These capabilities have
enabled the Group to meet its customers’ technical and service requirements from the basic design to
the final commissioning and plant acceptance. The Group would therefore be in a better position to
respond to customers’ requests at short notice and provide full service and system integration solutions
to its customers.

The Group will continue to maintain and further develop the close working relationships with its existing
customers and at the same time expand its customer base by offering to existing and new customers
high value-added services such as world-wide service support and prompt response to their requests
from anywhere in the world. In this regard, the Group will respond more proactively to satisfy the
customers’ requirements and demands for quality services and products.

In order to keep abreast of the latest technology used in sophisticated electronic and electrical
equipment, the Group regularly sends its technical engineering personnel for further training which may
take place either locally or overseas. In addition, the Group also maintains fully equipped electronic and
calibration in-house laboratories to carry out repairs, testing and calibration of all types of equipment in
the process/electrical control industry. It therefore has the ability to provide solutions incorporating the
latest available technology to satisfy its customers’ requirements.

The Group, having established operations in the Far East and Middle East, intends to expand its support
services into Europe within the next two years. It also intends to explore possible opportunities for long
term co-operation and relationships with companies in similar industries in order to expand the current
scope of business of the Group.

Workshop Facilities
The TAL Group operates from its two fully-staffed bases in Singapore and Dubai, both of which are fully
equipped to give total service support for all forms of instrumentation repairs, retrofits and new systems.
The facilities have calibration, pneumatic and electronic laboratories, machine shops, control valve repair
bays, hydraulic equipment repair bays to carry out the various types of repairs required.

Business Capacity
The Group has in-house engineering design and assembly capabilities, both in Singapore and Dubai. It
also has the capability of recruiting contract personnel from world-wide sources to meet specialised and
major projects undertaken by the Group. The Group maintains an in-house database and links with
overseas agents and recruitment agencies to recruit contract personnel such as skilled technicians and
engineers. Engineering personnel can be transferred between the Group’s Middle East and Far East




                                                    34
offices as well as other locations depending on the Group’s operations. It is normal for the Group to
employ up to 100 engineering staff of various nationalities on a contract basis for a specific project.
Many of these contract engineers have been working for the Group on a regular basis since its inception
in 1987.

Quality Assurance
To maintain high quality standards in the projects and service activities undertaken by the Group, the
Group adopts a total quality management programme. The Group’s commitment to quality, its project
management capabilities and its dedicated engineering personnel enabled TAL to achieve ISO 9002
certification in March 1996.

The Group maintains strict quality assurance procedures and control policies to ensure that all its
products and services meet its customers’ requirements. These procedures are documented,
implemented and maintained by each department within the Group and the complete quality process is
overseen by the quality assurance manager and its team of quality supervisors.

The Group also provides quality assurance training programmes for its staff to familiarise them with the
Group’s complete project management procedures. The Group complements this programme by
conducting regular on-the-job training programmes and overseas attachments.

The Group conducts half-yearly internal quality audits to ensure that the quality procedures comply with
the ISO 9002 certification requirements. The Group regards high quality standards as paramount to the
Group’s aim to provide total commitment and total quality services in the field of electrical
instrumentation and automation disciplines.

TAME is currently in the process of preparing to make an application for ISO 9002 certification.

Marketing and Distribution
The Group employs a team of sales engineers who regularly call on existing and new customers
throughout the Far East. Regular marketing and sales visits are made by the Group’s senior
management to its customers’ head offices world-wide, particularly to its marine customers throughout
Europe. Many of its major customers are multi-national oil companies which operate large fleets of
VLCCs and product tankers.

Information Technology
Since its incorporation in 1987, the Group has recognised the importance of adopting electronic data
processing systems for the efficient operations of the Group. Consequently, the Group’s accounting and
administration systems are fully computerised. In addition, the latest computer models and software
packages are acquired for use in the design, trouble-shooting and diagnostic checking, repairs and
testing of equipment.

      ear
The Y 2000 (“Y2K”) millennium bug issue arose due to some computer systems that operate on a two-
digit year element and are unable to make the proper transition from 1999 to 2000 and thereafter. The
Group is fully aware of the Y2K millennium bug issue and steps have already been taken to replace its
older computer systems and software packages with Y2K compliant systems, both in terms of hardware
and software. As such, the Group’s computer systems are fully Y2K compliant.

To the best of the Directors’ knowledge, the Group’s computer and information system should not have
any problems due to the Y2K millennium bug.

The Group is essentially a service-oriented company. The services provided by the Group are not date/
time sensitive. The products which the Group carries in respect of its agency lines are also Y2K
compliant.

The Group is working with key external parties, including customers and suppliers, to stem the potential
risk that Y2K millenium bug poses.




                                                   35
The estimated costs of the Group’s Y2K compliance programme is approximately $150,000 which will be
charged to profit and loss accounts as and when incurred while the cost of new hardware and software
will be capitalised and depreciated in accordance with the Group’s depreciation policies.

Corporate Governance
The Audit Committee of the Company will meet periodically to discuss and review (a) with the external
auditors, the audit plan, their evaluation of the system of internal accounting controls and the audit
report; (b) the assistance given by the Company’s officers to the external auditors; (c) the scope and the
results of the internal audit procedures; and (d) the accounts of the Company and the consolidated
accounts of the Group.

Research And Development
Electronic Laboratory
The TAL Group maintains well equipped electronic laboratories to repair and test all types of
sophisticated electrical and electronic equipment used in the electrical control industries. The Group has
a wide range of portable test equipment for use by its service personnel all over the world. These test
equipment are well maintained and are certified by the Singapore Institute of Standards and Industrial
Research. Teams of qualified electrical and electronic service personnel are regularly sent to
manufacturers for overseas training, upgrading and updating on the latest technology and product
knowledge. Technical personnel also attend training sessions to keep abreast of changes in marine-
related legislation. In addition to handling repair works, these laboratories also support the Group’s
project and engineering divisions in the design and testing of new systems and turnkey projects.

Calibration Laboratory
The Group also maintains fully equipped pneumatic calibration laboratories. These laboratories have been
designed and established based on the requirements of the Group’s customers. The laboratories are fully
equipped with all necessary test equipment. All test equipment is fully certified and has traceability
certificates which are updated at periodic intervals to comply with relevant legislation. These laboratories
are used for the calibration of new instrumentation for projects as well as for the calibration of repaired
equipment before they are returned to its customers’ plants and rigs. All service personnel are issued
with test and calibration equipment which are regularly checked for accuracy in the calibration
laboratories. All equipment calibrated is issued with data sheets duly certified by the engineer performing
the calibration and his divisional manager. Copies of these calibration sheets are maintained in the
Group’s filing system and originals are issued to the customers.

Pneumatic Laboratory
Even though sophisticated electrical and electronic equipment are increasingly being used in today’s high
technology environment, there are still wide-spread requirements for pneumatic control equipment,
particularly for hazardous area applications, main engine control systems, pump room control systems
and for use in hazardous areas. The Group has established pneumatic laboratories which are utilised for
the testing and certification of new and repaired equipment. Certifications of all new and repaired
equipment are issued in line with the Group’s operating policies.

Group Policy On Staff Training
The Group’s training programmes form an integral part of its business operating philosophy to equip its
administration and engineering staff with the relevant knowledge and skills to enable them to provide the
kind of quality and comprehensive services required by the Group’s customers. The Group’s training
budget and training programmes are set at the beginning of each financial year and reviewed quarterly
and updated depending on the requirements of its staff.

Administration Staff
Accounts, secretarial and support staff undergo a familiarisation and training programme on the Group’s
policy and operations upon joining the Group. Staff are sent for relevant courses to upgrade their skills in
their respective fields which can help increase their productivity or prepare them for expansion of the
Group’s activities.



                                                    36
Engineering Staff
In addition to the in-house training courses conducted in the Group’s facilities, engineering personnel are
sent to the manufacturer’s local and overseas offices for training on existing and new products.

In addition, courses are conducted on a regular basis to upgrade the skills and expertise of the Group’s
engineering personnel to enable them to improve their product knowledge and services rendered to the
customers. These courses cover, among other topics, recent developments in the relevant industries,
updates on the latest technology in instrumentation and electrical control equipment, advanced
engineering techniques and introductions to new products and services utilised by the Group. Certain
engineering personnel are also regularly sent overseas to the product manufacturers to familiarise
themselves with the latest products and technologies available.

As the training requirements of the staff are mainly provided for within the Group based on the “buddy”
system and on-the-job training methods, the Group’s expenditure on external training programmes is
therefore minimal.


TURNOVER AND PROFITABILITY
Review Of Past Performance By Activity
The distribution of the Group’s turnover, profit before tax and profit before tax margin by activity for the
past five financial years is provided below. This analysis should be read in conjunction with the
Accountants’ Report as set out on pages 61 to 79 of this Prospectus.

Group Turnover by Activity

                                                                            Six
                                                                         months
                                                                          ended
                                                                       31 December
$’000                               FY94        FY95         FY96          1996        FY97        FY98

Service/Repair                     6,585        6,224        7,832       3,755         9,523      10,370
Project/Technical Sales            2,687        4,217        7,249       4,296         7,519      13,524

                                   9,272       10,441       15,081       8,051        17,042      23,894


Group Profit Before Tax by Activity

                                                                            Six
                                                                         months
                                                                          ended
                                                                       31 December
$’000                               FY94        FY95         FY96          1996        FY97        FY98

Service/Repair                       738           799          801        566           928        2,118
Project/Technical Sales             (144)         (296)        (234)       (13)        1,080        1,993

                                     594           503         567         553         2,008        4,111




                                                    37
Group Profit Before Tax (“PBT”) Margin by Activity

                                                                            Six
                                                                         months
                                                                          ended
                                                                       31 December
$’000                              FY94         FY95         FY96          1996        FY97        FY98

Service/Repair                       11.2         12.8         10.2       15.1           9.7         20.4
Project/Technical Sales              (5.4)        (7.0)        (3.2)      (0.3)         14.4         14.7

                                      6.4          4.8          3.8         6.9         11.8         17.2


Service/Repair
FY94
In FY94, this segment recorded a turnover of $6.6 million due to the larger repair works secured by the
Group from its European customers. Gross profit grew in FY94 as a result of the higher margins
achieved from the repair jobs in an improved shiprepair sector and because the Group was able to
maintain its direct expenses despite the higher turnover. As a result, profit before tax also benefited from
the higher turnover and higher gross margin, increasing to $0.74 million while PBT margin was at 11.2%.

FY95
In FY95, this segment recorded a 5.5% decrease in turnover to $6.2 million and this was attributable to
the overall decline in the demand for repair jobs from its European customers. Profit before tax
increased slightly by 8.3% to $0.8 million while PBT margin registered a 1.6 percentage point increase to
12.8% due mainly to a few major repair jobs from the Middle East / Europe regions that were able to
command higher margins.

FY96
In FY96, this segment recorded a $1.6 million increase in turnover to $7.8 million. The increase in
turnover was primarily attributable to the increase in repair work undertaken for the shipyards in
Singapore. Gross profit, however, decreased slightly due to the higher than proportionate increase in
direct expenses. The main increase in direct expenses was mainly due to the increase in the purchases
of material to cater to the higher demand. The Group’s competitive pricing for these Singapore shipyards
caused the gross margin to decrease. Profit before tax was relatively stable at $0.8 million due to
operating expenses remaining relatively stable compared to FY95, while PBT margin declined to 10.2%.

Six Months Ended 31 December 1996
This segment recorded a turnover of $3.8 million during the last six months of 1996. This was
attributable to more repair jobs secured from customers in the Middle East / Europe regions during this
period. The Group managed to obtain favourable terms from the larger repair jobs done during this period.
The Group achieved a profit before tax of $0.6 million with PBT margin rising by 4.9 percentage points to
15.1% during this period.

FY97
This segment managed to achieve a 21.6% growth in turnover from $7.8 million in FY96 to $9.5 million in
FY97 for the following reasons:-

(a) sales to existing customers increasing as a result of several customers deciding to send their
    vessels for upgrading in FY97;

(b) shipyards in India and Sri Lanka were relatively busy and they had sub-contracted certain
    specialised repair jobs to the Group; and




                                                    38
(c) substantial repair jobs from new customers accounting for approximately 18.4% of the segment’s
    total turnover came about as a result of the Group’s reputation to co-ordinate and support major
    turnkey projects.

Profit before tax grew by 15.9% in line with the rise in turnover. Although PBT margin declined slightly to
9.7% due to higher operating expenses from payroll costs, the segment recorded a profit before tax of
$0.9 million due to the higher turnover achieved in FY97.

FY98
Turnover increased by 8.9% to $10.4 million in FY98. The turnover for FY98 was attributable to the
following factors:-

(a) increased number of large retrofitting and repair jobs from the shipyards in the Far East region;

(b) completion of a major repair project on the vessel “Solaris” and several other repair jobs for a
    European customer; and

(c) increased business from a shipyard in Sri Lanka.

Gross profit rose in line with the higher turnover due to the favourable terms obtained from the one-off
retrofitting jobs for two LNG carriers “Bonny” and Finima” and the European repair project “Solaris”. Profit
before tax increased by 128.2% to $2.1 million with PBT margin improving by 10.7 percentage points
from 9.7% in FY97 to 20.4% in FY98 due to a lower increase in operating expenses of 16.2% as a result
of the lower segment turnover proportion which represented about 43.4% of the total turnover of the
Group in FY98.

Project/Technical Sales
FY94
Project/technical sales contributed turnover of $2.7 million as the Group’s project/technical sales division
was not successful in securing additional projects in the midst of keen competition. The Group was not
able to achieve sufficient volumes to generate profits and therefore incurred a pre-tax loss of $144,000.

FY95
In FY95, this segment recorded a 56.9% increase in turnover to $4.2 million and this was attributable to
several large FPSO projects, namely “Nan Hai Kai Tou” and “Deep Sea Pioneer”, successfully awarded to
the Group. Despite the increase in turnover, this segment registered a pre-tax loss of $296,000 due to
the increase in operating expenses of 18.2% from payroll cost and other related expenses incurred as a
result of the project/technical sales division’s expansion to cope with the increased workload from the
FPSO projects and the major marine project on the pipe-laying vessel “Solitaire”.

FY96
In FY96, this segment recorded a $3.0 million increase in turnover to $7.2 million. The increase in
turnover was primarily attributable to the completion of the “Solitaire” project. In line with the rise in
turnover, gross profit increased due to the favourable terms obtained from the other FPSO projects
“Cossack Pioneer” and N’kossa” in FY96. However, this segment recorded a lower pre-tax loss of
$234,000 as the Group continued to expand its project/technical sales division thus increasing its
operating expenses by 12.6%.

Six Months Ended 31 December 1996
This segment recorded a turnover of $4.3 million during the last six months of 1996. This was
attributable to the ability of the Group to secure several projects from land-based industries compared to
the usual sales from offshore industries. The Group entered into a joint venture project with Bever
Engineering Services of the United Kingdom to secure a petrochemical project in Singapore. The Group
was able to obtain higher margins from its land-based projects secured from Foster Wheeler Eastern Pte
Ltd and Granherne Ltd and its FPSO jobs, namely “FPSO II” and “Tantawan Explorer”. The Group
managed to better control the project/technical sales division’s overheads and thus reduced the
segment’s pre-tax loss to $13,000.

                                                    39
FY97
This segment recorded a 3.7% increase in turnover from $7.2 million in FY96 to $7.5 million in FY97 and
this was attributable to the supply of technical manpower to several customers that included Trenergy (M)
Bhd. The Group has been in the technical manpower supply business since they commenced operations
and it recorded increased activity in FY97.        The segment had a profit before tax of $1.1 million
compared to a pre-tax loss of $234,000 in FY96 while PBT margin was at 14.4% as a result of the higher
turnover achieved coupled with the higher margins from the business of supplying technical manpower
and the segment’s relatively stable overheads in FY97.

FY98
Turnover increased by 79.9% from $7.5 million in FY97 to $13.5 million in FY98. The turnover for FY98
was attributable to the higher technical manpower supply business from the increased activity in the
marine FPSO and offshore sector. Profit before tax rose by 84.5% from $1.1 million in FY97 to $2.0
million in FY98 with PBT margin improving by 0.3 percentage points to 14.7% as a result of relatively
stable operating expenses.

Review of Past Performance by Geographical Region
The distribution of the Group’s turnover, profit before tax and profit before tax margin, by geographical
markets for the past five financial years is provided below. This analysis should be read in conjunction
with the Accountants’ Report as set out on pages 61 to 79 of this Prospectus.

Group Turnover by Geographical Region

                                                                         Six
                                                                      months
                                                                       ended
                                                                    31 December
$’000                             FY94         FY95        FY96         1996        FY97         FY98

Far East                          5,239        7,618      11,547       5,686       10,823       15,947
South Asia/Middle East/Europe     3,585        2,403       3,160       2,299        5,891        6,840
Others                              448          420         374          66          328        1,107

                                  9,272       10,441      15,081       8,051       17,042       23,894


Group Profit Before Tax by Geographical Region

                                                                         Six
                                                                      months
                                                                       ended
                                                                    31 December
$’000                             FY94         FY95        FY96         1996        FY97         FY98

Far East                            308          172         431         312        1,485        2,385
South Asia/Middle East/Europe       224          290         117         240          505        1,546
Others                               62           41          19           1           18          180

                                    594          503         567         553        2,008        4,111




                                                   40
Group PBT Margin by Geographical Region

                                                                          Six
                                                                       months
                                                                        ended
                                                                     31 December
$’000                              FY94        FY95         FY96         1996        FY97         FY98

Far East                             5.9          2.3         3.7         5.5         13.7         15.0
South Asia/Middle East/Europe        6.2         12.1         3.7        10.4          8.6         22.6
Others                              13.8          9.8         5.1         1.5          5.5         16.3

                                     6.4          4.8          3.8        6.9          11.8        17.2


Overview
The Far East markets have been the main contributor to the Group’s turnover and are expected to
continue to be an important market for the Group. However, the Far East markets and the South Asia/
Middle East/Europe markets are important contributors to the Group’s profit before tax. In line with the
Group’s strategy to expand overseas, the Group will continue to explore the opportunities available to tap
the respective markets.

Far East
FY94
Turnover from Far East markets contributed $5.2 million or about 56.5% of the Group’s total turnover in
FY94, with the bulk of the turnover coming from service/repair jobs. The projects undertaken by the
Group were generally of a smaller scale which were unable to command favourable margins. However,
the Far East markets registered a marginally higher profit before tax of $308,000 and a higher PBT
margin of 5.9% as a result of lower operating expenses.

FY95
Turnover attributable to Far East markets increased by 45.4% from $5.2 million in FY94 to $7.6 million in
FY95 due mainly to several large FPSO projects secured by the Group’s project/technical sales division.
The Group incurred higher direct expenses as a result of expanding the project/technical sales division to
cope with the increased workload from the FPSO projects and the marine project on a pipe-laying vessel
“Solitaire”. As a result, the segment recorded a lower profit before tax of $172,000 and a PBT margin of
2.3% was achieved.

FY96
Turnover from Far East activities grew by 51.6% to $11.5 million, which is about 76.6% of the total Group
turnover. This increase was mainly due to the increase in repair work for the Singapore shipyards and
the completion of the “Solitaire” project. The segment’s profit before tax increased by about 150.6% to
$431,000 and the PBT margin grew from 2.3% in FY95 to 3.7% in FY96 due to the higher turnover
recorded and its operating expenses remained relatively stable in FY96 compared to FY95.

Six Months Ended 31 December 1996
This segment recorded a turnover of $5.7 million during the last six months of 1996. This was
attributable to the higher contributions from the technical manpower supply business to marine and land-
based industries secured by the Group’s project/technical sales division. The Group was able to secure
projects at favourable terms during this period. The Group achieved a profit before tax of $312,000 with
PBT margin rising by 1.8 percentage points to 5.5% as the Group managed to reduce its operating
expenses from payroll expenses during this period.




                                                   41
FY97
Turnover dropped by 6.3% from $11.5 million in FY96 to $10.8 million in FY97. This decrease was due to
part of the Group’s technical manpower being utilised for the projects secured from the Europe/Middle
East regions instead. As a result of the higher margins obtained from the business of supplying
technical manpower from the Group’s project/technical sales division in the Far East markets, the
segment registered a profit before tax of $1.5 million with a PBT margin of 13.7%.

FY98
Turnover for FY98 increased by 47.3% from $10.8 million in FY97 to $15.9 million due to contributions
from its technical manpower supply services. In line with the increase in turnover, profit before tax
improved by 60.6% to $2.4 million and PBT margin increased to 15.0% for FY98.

South Asia/Middle East/Europe
FY94
Contribution from these markets to turnover was $3.6 million in FY94 which was mainly due to the higher
number of service/repair jobs secured from the customers in these markets. As the Group was able to
command higher margins from the larger service/repair projects undertaken, a profit before tax of
$224,000 was recorded with PBT margin at 6.2% in FY94.

FY95
Turnover dropped by 33.0% to $2.4 million in FY95. This decrease was due to the reduction in service/
repair and project/technical sales jobs from the region. Despite the drop in turnover, profit before tax
increased by 29.5% to $290,000 with PBT margin surging to 12.1% as a few major repair jobs from the
region were able to yield higher margins.

FY96
Turnover grew by 31.5% to $3.2 million in FY96. The increase in turnover was mainly due to the
completion of a major FPSO project for a Middle East shipyard. However, the Group incurred additional
costs due to technical problems from the FPSO project in the Middle East. Consequently, profit before
tax decreased by 59.7% to $117,000 and PBT margin declined from 12.1% in FY95 to 3.7% in FY96.

Six Months Ended 31 December 1996
This segment recorded a turnover of $2.3 million during the last six months of 1996. This was
attributable to the higher number of service/repair jobs secured from customers based in these markets.
The Group achieved a profit before tax of $240,000 with PBT margin rising by 6.7 percentage points to
10.4% in line with the higher gross profit and stable operating expenses recorded during this period.

FY97
Turnover grew by 86.4% from $3.2 million in FY96 to $5.9 million in FY97 which was mainly due to the
increased service/repair jobs undertaken for shipyards in India, Sri Lanka and the Middle East and from
European ship owners. As a result of an urgent FPSO project undertaken for an European ship owner
which commanded higher margins, profit before tax increased by 331.6% to $505,000 with PBT margin
increasing to 8.6%, up from 3.7% in FY96.

FY98
Turnover increased by 16.1% from $5.9 million in FY97 to $6.8 million in FY98. Profit before tax rose by
206.1% to $1.5 million due mainly to the higher turnover and the higher margins obtained from the larger
projects.

Others
FY94
In FY94, a turnover of $448,000 was registered due to the demand from ship owners in the United
States. As a result of the low turnover, profit before tax declined marginally to $62,000 in FY94.



                                                  42
FY95
Turnover in FY95 registered a decrease of 6.3% to $420,000. This was attributable to the further
reduction in service/repair jobs required from the ship owners in the United States. The volume of work
was insufficient to offset the direct expenses incurred which resulted in lower margins for the Group. As
a result of the reduced gross margin, profit before tax decreased further by 33.9% to $41,000 and PBT
margin recorded a decrease to 9.8%.

FY96
There was a reduction in turnover of 11.0% to $374,000 as there were fewer vessels from the United
States calling for service/repair work. In line with the lower turnover, profit before tax decreased by
53.7% to $19,000. PBT margin declined by 4.7 percentage points to 5.1%.

Six Months Ended 31 December 1996
This segment recorded a turnover of $66,000 during the last six months of 1996. This was attributable to
the service/repair work undertaken for vessels from the United States. The Group achieved a profit
before tax of $1,000 with PBT margin of 1.5% as the volume of work done was just sufficient to offset
the overheads incurred during this period.

FY97
Turnover decreased by 12.3% from $374,000 in FY96 to $328,000 in FY97 and this reduction is
attributable to fewer vessels from the United States requiring service/repair work. Despite the decrease
in turnover, the Group was able to maintain the direct expenses at FY96’s level. As a result, profit before
tax was relatively unchanged at $18,000 compared with $19,000 in FY96 while PBT margin registered a
0.4 percentage point increase to 5.5%.

FY98
In FY98, turnover for this segment rose by 237.5% from $328,000 in FY97 to $1.1 million due to several
projects undertaken for ship owners from Australia and the United States. Profit before tax increased by
about ten-fold to $180,000 while PBT margin rose to 16.3% in line with the increase in turnover.


MAJOR SUPPLIERS
As the Group is mainly a service-oriented organisation, it relies on its human resources, that is, its
management team and engineering personnel for the Group’s business. In the context of the Group’s
business, “suppliers” means suppliers who supply equipment, spare parts and labour for the Group’s
repair and project work.

The suppliers which accounted for five per cent. or more of the Group’s purchases during each of the
past three financial years were:-

                                                                   Percentage of Total Purchases
                                                                FY96             FY97             FY98

Supplier                                                         (%)              (%)              (%)

Kai Yip Marine Engineering                                        —               5.9               —
Messrs Michael Smith                                              6.4             7.8              7.1
Econosto Valves Pte Ltd                                           6.3              —                —

None of the Group’s Directors or substantial shareholders has any interest, direct or indirect, in any of
the above suppliers. The Group does not have any supply agreements with its suppliers.




                                                    43
MAJOR CUSTOMERS
The customers which accounted for five per cent. or more of the Group’s turnover in the past three
financial years are listed below.

                                                                                  Percentage of Total Turnover
                                                                             FY96                FY97                 FY98
Customer                                                                      (%)                 (%)                  (%)

Sembawang Shipyard Pte Ltd                                                    30.0                16.0                13.2
                                 (1)
Keppel Corporation Limited                                                    11.0                  —                    —
                                                                 (1)
Keppel Singmarine Dockyard and Engineering Pte Ltd                            10.0                  —                    —
                           (1)
Keppel FELS Limited                                                             —                  7.5                   —
                     (2)
Trenergy (M) Bhd                                                                —                  6.9                12.7
Shell International Trading and Shipping Ltd                                    —                   —                   5.5

Notes:-
(1) Keppel Corporation Limited, Keppel FELS Limited and Keppel Singmarine Dockyard and Engineering Pte Ltd are part of
    the Keppel Group of Companies. They are not treated as a single customer since these entities are autonomous units
    that operate independently.

(2) Trenergy (M) Bhd is a related party transaction in FY97. Please refer to page 48 of this Prospectus for further details.

The Group markets its services to a broad mix of corporate customers. The customer base has
expanded from approximately 28 customers in 1987 to approximately 1,000 customers currently.

None of the Group’s Directors or substantial shareholders has any interest, direct or indirect, in any of
the above customers.


COMPETITION
Market Conditions
As far as the Directors are aware, there are approximately five major companies in the instrumentation
and automation business in the Far East and approximately four major companies in the Middle East that
may compete with the Group. However, the Group believes that there are no direct competitors that can
offer a comprehensive service in both the Middle East and Far East regions. Some of the more notable
players in Singapore are Haven Automation Marine Singapore Pte Ltd, Bond Instrumentation Pte Ltd,
Keppel Automation Pte Ltd and Jurong Automation Pte Ltd. Examples of some companies in the Middle
East are Dart Automation, Roxby and Bond Instrumentation. The Directors believe that the Group’s
competitive strength lies in its proven track record, established business network and good product
knowledge in the instrumentation and automation industry.

Previously, some of the major Singapore shipyards have endeavoured to establish their own automation
divisions to retain the work in-house but due to the special complex nature of the business, the majority
of the Singapore shipyards have opted out of the marine automation repair and refit work. The Group
therefore competes with other registered subcontractors for projects and repair contracts which are
awarded on a tender basis. The Directors believe that due to the Group’s past performance with major oil
companies, ship owners and ship management companies, the Group is often the preferred contractor
for many of the major international shipyards.

The Directors believe that no comprehensive research has been undertaken on the instrumentation and
automation sector to derive any market share statistics. The Group is principally engaged in the
maintenance, servicing, commissioning and repair of all forms of pneumatic, electronic, electrical and
hydraulic equipment for the marine, offshore, petrochemicals, power, utilities and processing industries in
both the Far East and the Middle East regions. It is therefore difficult to determine on a comparable
basis the market share of the Group in Singapore or in the Middle East as players in this industry cater
to different markets.



                                                              44
For the financial year ended 31 December 1998, the Group achieved a turnover of $23.9 million. Despite
the economic slowdown, the Directors expect the Group to continue to expand its instrumentation,
electrical and automation business throughout the Far East and the Middle East.

Competitive Strengths
The Directors consider the following to be the competitive strengths of the Group:-

Strong Customer Relations
The Group has developed long term working relationships with major shipyards, shipping companies and
ship management companies such as Shell International Trading and Shipping, BP Shipping Ltd, Mobil
Shipping Ltd, Kuwait Oil Tanker Company S.A.K, Stolt Parcel Tankers Inc. and A.P. Moller. The Group is
also a registered subcontractor to Keppel Corporation Limited (including Keppel Marine Industries
Limited, Keppel FELS Limited and Keppel Hitachi Zosen Limited) and Jurong Shipyard Limited (including
Sembawang Shipyard Pte Ltd) in Singapore, Malaysian Shipyard and Engineering Sdn Bhd in Malaysia,
Colombo Dockyard Ltd in Sri Lanka, Cochin Shipyard Ltd and Hindustan Shipyard Ltd in India, Arab
Shipbuilding and Repair Yard Co. in Bahrain and Dubai Drydocks in the UAE. By working closely with
these companies, the majority of whom are repeat customers, it has enabled the Group to procure more
business through referrals of new customers. Due to the strong relationships between the Group’s senior
management and these companies world-wide, it has allowed the Group to have regular updates and
feedback from the industry.

These strong customer relationships can be seen by customers whose patronage dates back to 1987.
Repeat customers accounted for approximately 80% of the Group’s turnover for the financial year ended
31 December 1998.

Good Relationships with Suppliers
The Group has good rapport with its various manufacturers and suppliers of specialist instrumentation
and electrical equipment world-wide. These manufacturers and suppliers have sound reputations of
supplying high quality products which the Group uses regularly for its service/repair jobs and projects.
They allow the Group to represent them as agent in the Far East and the Middle East regions to market
their products, complementing the Group’s exclusive and non-exclusive agencies from its existing
principals.

The Group has in excess of 2,000 product line items maintained within the Group’s facilities. Among
these items are equipment held in respect of all its agency lines. Some of the Group’s principals and
suppliers include Babcock Bristol, Yokogawa, Foxboro, Fisher Rosemount, Honeywell, EH, Moore
Products and Moore Industries. From its offices in Singapore and Dubai, the Group is also able to
source for the required products from other suppliers for its projects. The Group’s good relations with its
suppliers enables it to respond to customers’ requests for equipment and spare parts at short notice.

Total Service and System Provider
The Group’s ability to co-ordinate and support major turnkey contractors has helped to establish the
Group as a reliable and effective automation service and systems group providing quality, prompt and
competitive services to its customers in Singapore, the Far East and the Middle East and to its other
customers world-wide. The Group’s Singapore office operates from a 3,841 sq m factory site with a
1,800 sq m built-up area. The facility in Singapore is well-equipped with an electronic laboratory,
pneumatic laboratory, calibration laboratory, valve repair facilities, test rigs, hydraulic bays and
fabrication areas. In the Group’s Dubai office, the Group’s facilities are less comprehensive but able to
provide similar services on a smaller scale. It also has large stockholdings of specialised equipment and
parts readily available. The Group is able to meet its customers’ technical and service requirements
from the basic design through to the final commissioning and plant acceptance. The Group would
therefore be in a position to respond to customers’ request at short notice and provide full service and
system integration solutions to its customers. This is important because most of its projects have tight
schedules and cost budgets to adhere to.




                                                    45
Geographical Reach
Over the years, the Group has developed a reputation for prompt, efficient and competitive services in
the field of electrical instrumentation and automation disciplines. The Group has teams of experienced
service personnel fully equipped with all necessary tools and test equipment to undertake repairs, refits,
installation and maintenance work. It has a dedicated workforce based in the Group’s offices in
Singapore and Dubai which enables the Group to react quickly to its customers’ requests from anywhere
in the world. Moreover, Singapore sits strategically on the main tanker route between the Arabian Gulf
and South East Asia. As many of the world’s laden VLCCs can be routed onto either the East or West-
bound trades from the Middle East, the Group’s potential market is effectively enlarged. The Group’s
capability to offer services at both ends of the tanker routes is recognised and appreciated by the
shipping companies because repairs carried out at one of the routes can be followed up at the other end.
The full range of services offered to the marine industry by the Group are available to the customers
while their vessels are at shipyards, at anchorage or on voyage.

Professional Team
Messrs Richard Edward Willenbrock, Ngai Kok Leong, Goh Yong Kwee, Woo Fook Onn and Peter John
Coveney each have an average of approximately 24 years of relevant experience in their respective
fields. Over the years, the Group has developed a team of experienced and qualified engineers and
technicians, most of whom have an average of more than five years work experience in their respective
fields with the Group. They possess strong product knowledge and are kept informed of customers’
operational requirements and the latest industry trends to enable them to handle most situations
effectively. The Directors believe that the management team and staff have the necessary experience
and capabilities to capitalise on the Group’s competitive strengths and to differentiate the Group from its
competitors.

Quality Service
The Group is committed to maintaining and improving the level of technical skills and quality service of
its management team and engineering personnel to further strengthen its position in the instrumentation
and automation industry. In keeping with its emphasis on customer satisfaction, the Group endeavours
to practise the “Total Commitment and Total Quality” philosophy in its dealings with its customers. In this
respect, the Company was awarded the ISO 9002 certificate for its quality products, systems and
services. This ISO 9002 certificate reflects the Group’s commitment to providing quality products and
services to its customers. The Directors believe that the success of the quality system adopted by the
Group lies in the uncompromising emphasis on training and quality control standards. These practices
have enabled the Group to improve its performance over the years. In line with the Group’s commitment
to service quality, TAME is currently in the process of preparing to make an application for ISO 9002
certification.


VULNERABILITY TO SPECIFIC FACTORS
The business of the Group is generally affected by conditions in the instrumentation/electrical and
automation industry which in turn is dependent on the areas in which the Group operates or intends to
operate. Such conditions include the following specific factors:-

Inherent Industry Risks
The Group’s growth has been based on two core activities: (i) marine automation services which includes
marine automation and instrumentation repairs and services; and (ii) project engineering services which
covers project engineering business relating to the marine, offshore and petroleum industries as well as
sales of technical products. Consequently, the Group is exposed to the cyclical nature of these
industries. This cyclical nature is due to the volatility in freight and charter rates, vessel values and the
demand and supply of shipping capacity.

The ship-repair industry in Singapore is also facing competition from lower-cost shipyards in the Middle
East as these shipyards in the Middle East are beginning to compete on the full range of services
provided by the Far East shipyards. The current economic slowdown in Asia has also resulted in an
import squeeze creating lower demand for transport services and lower trade growth. This has led to a
negative impact on bulk and tanker rates which has reduced ship-owners’ propensity to send their ships
for repairs.

                                                     46
However, the slowdown in the world-wide ship-repair industry has been mitigated to some extent by the
upswing in the offshore sector. The increasing demand for oil and the reduced cost of offshore oil
extraction has resulted in increasing demand for FPSO and FSO (source: ASMI News, 2nd Quarter
1998, “Good Prospects In The Offshore Market” and EDB Press Release, 29 December 1997, “Fixed
investments commitments for the engineering industries record a high of S$1.3 billion”). As the Group’s
project engineering services division is heavily involved with FPSO and FSO conversions, the increase
in the activities in this market will provide greater business opportunities for the Group.

To mitigate its exposure to the cyclical fluctuations in the marine sector, the Group is actively seeking
new markets for growth through the regionalisation of its business. As such, the establishment of the
Group’s Dubai office in 1997 was an initial step in this direction.

A further mitigating factor that has helped to reduce the Group’s exposure to the fluctuating marine
market is the Group’s world-wide customer base. To a certain extent, the Group’s business is not
dependent on any particular shipyard as its mobile workforce follows the vessels and the customers
rather than being entrenched in one shipyard. This has enabled the Group to spread its business risk
over a larger number of customers, thereby reducing its reliance on any one particular customer and
region.

Dependence on Key Personnel
The continued success of the Group is dependent to some extent on its ability to retain key
management and technical personnel. The loss of the services of certain of its existing key personnel, if
without adequate replacement, or the inability to attract and retain qualified personnel, could have
adverse effects on the Group.

Messrs Richard Edward Willenbrock, Ngai Kok Leong, Goh Yong Kwee and Woo Fook Onn have
contributed significantly to the success of the Group. The loss of the services of these officers could
have an adverse impact on the Group. To reduce the Group’s dependence on them, the Group has over
the years recruited suitably qualified managers for its operations. In addition, Mr Woo Fook Onn and Mr
Ngai Kok Leong have each entered into a two-year service agreement with TAL and Mr Goh Yong Kwee
has entered into a one-year service agreement with TAL. Further details of the service agreements are
disclosed on pages 50 to 52 of this Prospectus.

The Directors believe that with the public listing of the Company, the Group would be able to attract,
retain and motivate management and technical personnel to work with the Group. The Group is also
committed to staff training which ensures that all existing and new staff are adequately trained to
manage the Group’s operations.

Dependence On Foreign Labour and Strict Immigration Policy
The harsh working environment involved in the Group’s activities has made the recruitment of local
engineers difficult. Thus, it is necessary to employ skilled foreign personnel. As at 31 December 1998,
approximately 37% of the Group’s team of engineers and technicians are skilled foreign personnel
recruited from overseas. The employment of such skilled foreign professionals are dependent on the
strict immigration policy of the Singapore government. As such, any changes in the immigration policy
will affect the Group’s recruitment of professional personnel.

In addition to the immigration policy of the Singapore government, the Group also needs to consider the
economic conditions of the various countries from which these foreign personnel are recruited. When the
economic conditions improve in these countries, the Group may find it more difficult to attract such
persons to work in Singapore or in the Middle East.




                                                   47
INTERESTED PERSON TRANSACTIONS
Transactions with Trenergy (M) Bhd (“Trenergy”)
Since 1997, TAL has supplied technical manpower to Trenergy at market rate to assist it in the
undertaking of conversion of M.T. Hitra, a FPSO which Trenergy had contracted to supply to its
customer, Petronas Carigali Bhd. Trenergy is a publicly listed company incorporated in Malaysia with its
shares quoted on the Kuala Lumpur Stock Exchange. All such transactions made between TAL and
Trenergy have been carried out at arm’s length. The conversion of the FPSO is a one-off project which is
not expected to recur. This project is expected to be completed by the first quarter of 1999.

                                                                   1996        1997          1998

Sales by TAL ($million)                                             NA          1.2           3.0
As a percentage to Group turnover (%)                               NA          6.9          12.6
As a percentage to Group gross profits (%)                          NA          5.6           4.4

Transactions between Velosi Singapore and Velosi (M) Sdn Bhd and its related companies
(“Velosi Group”)
Velosi Singapore currently carries out inspection services in Singapore and Indonesia on behalf of other
companies of the Velosi Group. In turn, if Velosi Singapore has been contracted to inspect goods of its
Singapore or Indonesian customer in a country outside of Singapore or Indonesia, it would arrange for
such inspection services to the other companies of the Velosi Group in the respective countries. This is
part of the world-wide network required of vendor inspection services.

($’000)                                                            1996        1997          1998

Sales by Velosi Singapore to the Velosi Group                       NA          73            71
Purchases by Velosi Singapore from the Velosi Group                 NA          15            23

Velosi (M) Sdn Bhd is a private company incorporated in Malaysia. It is a 70% owned subsidiary of
Trenergy, a publicly listed company incorporated in Malaysia with its shares quoted on the Kuala Lumpur
Stock Exchange. Some of the procedures currently in place between Velosi Singapore and the Velosi
Group to ensure that sales and purchases between Velosi Singapore and the Velosi Group are carried out
at arm’s length are as follows:-

(a) the managers within the Velosi Group are given the authority to engage any unrelated third party to
    carry out the vendor inspection services. It is not required to engage a related Velosi company to
    undertake the work; and

(b) the manager of Velosi Singapore is required to get alternative verbal and/or written quotes from at
    least three unrelated third parties before awarding the contract.

The Directors expect the TAL Group to continue to transact with the Velosi Group in the future based on
the above procedures. In addition, such future transactions will be reviewed by the Audit Committee to
ensure that the prices paid are no more than what the Group would pay to unrelated third parties for
comparable purchases and the rates charged are no less than for comparable sales to unrelated third
parties.


POTENTIAL CONFLICTS OF INTEREST
Save as disclosed in the section entitled “Interested Person Transactions”:-

(a) no Director, substantial shareholder or Executive Officer of the Group has any interest, direct or
    indirect, in any transactions to which the Company was or is to be a party;

(b) no Director, substantial shareholder or Executive Officer of the Group has any interest, direct or
    indirect, in any company carrying on the same business or carrying on a similar trade as the Group;
    and

                                                    48
(c) no Director, substantial shareholder or Executive Officer of the Group has any interest, direct or
    indirect, in any enterprise or company that is the Company’s customer or supplier of goods or
    services.


DIRECTORS, MANAGEMENT AND STAFF
Directors
The Board of Directors is entrusted with the responsibility for the overall management of the Company.
The Directors’ particulars are listed below:-

Name                             Age    Address                             Current Occupation

Ngai Kok Leong                    49    8 Eng Kong Crescent                 Managing Director
                                        Singapore 599404

Richard Edward Willenbrock       56     23 Balmoral Park #05-05             Group Managing Director
                                        Pinewood Gardens
                                        Singapore 259852

Nabil Bin Tan Sri Abdul Jalil     46    No. 74 Jalan Datuk Sulaiman         Non-Executive Director
                                        Taman Tun Dr. Ismail.
                                        Kuala Lumpur, Malaysia

Nor Zainal Bin Abdul Rahman       45    9-01, Block E,                      Non-Executive Director
                                        Desa Kiara, Damansara, 60000
                                        Kuala Lumpur, Malaysia

Khaw Kheng Joo                    50    63 Holland Grove Drive              General Manager, Hewlett
                                        Singapore 278891                    Packard Singapore (Private)
                                                                            Limited

Tay Siew Liong                    52    No 32 Ah Hood Road                  Managing Director,
                                        Nadia Mansions #15-02               In Builders (S) Pte Ltd
                                        Singapore 329977

Audit Committee
The Audit Committee comprises Messrs Khaw Kheng Joo, Tay Siew Liong and Ngai Kok Leong. The
chairman of the Audit Committee is Mr Tay Siew Liong.

Management
The day-to-day operations of the Group are entrusted to the Executive Directors and an experienced and
qualified team of Executive Officers responsible for the different functions of the Group. The particulars
of the Executive Officers are set out below:-

Name                       Age    Address                                   Current Occupation

Goh Yong Kwee               46    31 Mayflower Place                        General Manager (Projects)
                                  Singapore 568712

Woo Fook Onn                42    Blk 286B Toh Guan Road #06-28             General Manager
                                  Singapore 602286                          (Operations)

Ranjitha Krishnan           36    Blk 426 Choa Chu Kang Avenue 4            Assistant Engineering
 Ravikrishnan                     #02-180                                   Manager
                                  Singapore 680426

Leong Yu Chiu               38    Blk 485B Choa Chu Kang Avenue 5           Service Manager
                                  #10-120
                                  Singapore 682485


                                                   49
Name                      Age     Address                                  Current Occupation

Aung Moe Lwin             34      Blk 176 Bukit Batok West Avenue 8        Service Manager
                                  #03-309
                                  Singapore 650176

Soh Hee Yeow              33      Blk 239 Bukit Panjang Ring Road          Assistant Project Manager
                                  #05-101
                                  Singapore 670239

Chua Sok Keow             46      Blk 130 Bukit Batok West Avenue 6        Finance Manager
                                  #10-350
                                  Singapore 650130

Amelia Gan Siew Lian      30      Blk 751 Choa Chu Kang North 5            Group Accounting Executive
                                  #07-193
                                  Singapore 680751

Peter John Coveney        50      PO Box 2159 Dubai,                       General Manager
                                  United Arab Emirates

Staff
As at 31 December 1998, TAL has 120 full-time employees. The Group does not experience any
significant seasonal fluctuations in the number of employees. Relationship between management and
staff is good and there have not been any industrial disputes in the Company or its subsidiaries since
they commenced operations.


LETTERS OF EMPLOYMENT
Mr Ngai Kok Leong
A letter agreement dated 1 October 1998 (the “Managing Director’s Letter of Employment”) confirms the
employment of Mr Ngai Kok Leong as the Managing Director of the Company with effect from 1 January
1999. By a supplemental letter of employment dated 5 October 1998 (the “Managing Director’s First
Supplemental Letter of Employment”) which supplements the Managing Director’s Letter of Employment,
Mr Ngai Kok Leong agreed that he would serve a fixed term of two years commencing from the date of
the initial public offer. Thereafter, Mr Ngai Kok Leong’s employment with the Company would be open-
ended and either party may terminate the Managing Director’s Letter of Employment by the giving of
three months written notice or payment in lieu of such notice. However, at any time during the period of
employment, the Company may terminate the Managing Director’s Letter of Employment if:-

(a) Mr Ngai Kok Leong is found guilty of a criminal offence or has grossly conducted himself in the
    execution of his duties; or

(b) Mr Ngai Kok Leong suffers from long term illness, in which case, the Company would have the right
    to terminate the employment agreement at the end of the 365 days hospitalisation period.

As Managing Director of the Company, Mr Ngai Kok Leong is entitled to the payment of a monthly salary
of $12,000. As a senior member of the Company, Mr Ngai Kok Leong’s salary would be subject to review
on 30 June of each year of employment. At the end of each calendar year, Mr Ngai Kok Leong is entitled
to receive an annual wage supplement of one month in addition to his monthly salary. Under the terms of
the Managing Director’s Letter of Employment, Mr Ngai Kok Leong would also be entitled to a
productivity bonus which would be paid in April and August. Before 31 December 1998, none of the
senior management staff were entitled to participate in the productivity bonus scheme. The productivity
bonus is determined mainly by the performance of the Company, the individual’s performance and
general labour market conditions. The award of the productivity bonus will be proposed to the Board of
Directors for consideration and decision. Messrs Ngai Kok Leong and Richard Edward Willenbrock will
abstain from participating and voting in the proposal and recommendation. The other remaining
Directors, including the two independent Directors will decide on the awards of the productivity bonus.


                                                  50
By a second supplemental letter of employment dated 12 January 1999 (the “Managing Director’s
Second Supplemental Letter of Employment”), which further supplements the Managing Director’s Letter
of Employment, the parties agree that Mr Ngai Kok Leong shall not for the period of 12 months from the
date of termination of the Managing Director’s Letter of Employment:-

(i)    accept employment in another business within Singapore in competition with the businesses of the
       Company and its subsidiaries; and

(ii)   solicit, within Singapore in competition with the businesses of the Company and its subsidiaries, the
       custom of any person, firm or company who within the last 12 months of Mr Ngai Kok Leong’s
       service with the Company was a customer of the Company or any of its subsidiaries.

Mr Richard Edward Willenbrock
A letter agreement dated 1 October 1998 (the “Director’s Letter of Employment”) confirms the
employment of Mr Richard Edward Willenbrock as the Director of the Company with effect from 1
January 1999. Mr Richard Edward Willenbrock’s employment with the Company is open-ended and either
party may terminate the Director’s Letter of Employment by the giving of three months written notice or
payment in lieu of such notice. However, at any time during the period of employment, the Company
may terminate the Director’s Letter of Employment if:-

(a) Mr Richard Edward Willenbrock is found guilty of a criminal offence or has grossly conducted
    himself in the execution of his duties; or

(b) Mr Richard Edward Willenbrock suffers from long term illness, in which case, the Company would
    have the right to terminate the Director’s Letter of Employment at the end of the 365 days
    hospitalisation period.

As a Director of the Company, Mr Richard Edward Willenbrock is entitled to the payment of a monthly
salary of $12,000. As a senior member of the Company, Mr Richard Edward Willenbrock’s salary would
be subject to review on 30 June of each year of employment. At the end of each calendar year, Mr
Richard Edward Willenbrock is entitled to receive an annual wage supplement of one month in addition to
his monthly salary. Under the terms of the Director’s Letter of Employment, Mr Richard Edward
Willenbrock would also be entitled to a productivity bonus which would be paid in April and August.
Before 31 December 1998, none of the senior management staff were entitled to participate in the
productivity bonus scheme. The productivity bonus is determined mainly by the performance of the
Company, the individual’s performance and general labour market conditions. The award of the
productivity bonus will be proposed to the Board of Directors for consideration and decision. Messrs
Ngai Kok Leong and Richard Edward Willenbrock will abstain from participating and voting in the proposal
and recommendation. The other remaining Directors, including the two independent Directors will decide
on the awards of the productivity bonus.

By a first supplemental letter of employment dated 12 January 1999 (the “Director’s First Supplemental
Letter of Employment”), which supplements the Director’s Letter of Employment, the parties agree that
Mr Richard Edward Willenbrock shall not for the period of 12 months from the date of termination of the
Director’s Letter of Employment:-

(i)    accept employment in another business within Singapore in competition with the businesses of the
       Company and its subsidiaries; and

(ii)   solicit, within Singapore in competition with the businesses of the Company and its subsidiaries, the
       custom of any person, firm or company who within the last 12 months of Mr Richard Edward
       Willenbrock’s service with the Company was a customer of the Company or any of its subsidiaries.




                                                     51
Mr Goh Yong Kwee and Mr Woo Fook Onn
Two letter agreements each dated 1 October 1998 (“Manager’s Letter of Employment”) confirm the
employment of Mr Goh Yong Kwee and Mr Woo Fook Onn as General Manager (Projects) of the
Company and General Manager (Operations) of the Company, respectively, with effect from 1 January
1999. By the respective supplemental letters of employment each dated 5 October 1998 (“Manager’s
First Supplemental Letter of Employment”) which supplement the respective Manager’s Letter of
Employment, Mr Goh Yong Kwee agreed to be bound by a fixed term of employment of one year
commencing from the date of the initial public offer and Mr Woo Fook Onn agreed to be bound by a fixed
term of employment of two years from the date of the initial public offer. Thereafter, the employment of
Mr Goh Yong Kwee and Mr Woo Fook Onn with the Company may be terminated by either party to the
respective Manager’s Letter of Employment by the giving of three months written notice or payment in
lieu of such notice. However, at any time during their employment with the Company, the Company may
terminate the respective Manager’s Letter of Employment if:-

(a) Mr Goh Yong Kwee or Mr Woo Fook Onn, as the case may be, is found guilty of a criminal offence
    or has grossly conducted himself in the execution of his duties; or

(b) Mr Goh Yong Kwee or Mr Woo Fook Onn, as the case may be, suffers from long term illness, in
    which case, the Company would have the right to terminate the employment of Mr Goh Yong Kwee
    or Mr Woo Fook Onn, as the case may be, at the end of the 365 days hospitalisation period.

While in the employment of the Company, Mr Goh Yong Kwee and Mr Woo Fook Onn would each be
entitled to the payment of a monthly salary of $12,000. As senior members of the Company, each of Mr
Goh Yong Kwee and Mr Woo Fook Onn’s salary would be subject to review on 30 June of each year of
employment. At the end of each calendar year, both Mr Goh Yong Kwee and Mr Woo Fook Onn would be
entitled to receive an annual wage supplement of one month in addition to their monthly salaries. Mr Goh
Yong Kwee and Mr Woo Fook Onn would also be entitled to a productivity bonus which would be paid in
April and August. Before 31 December 1998, none of the senior management staff were entitled to
participate in the productivity bonus scheme. The productivity bonus is determined mainly by the
performance of the Company, the individual’s performance and general labour market conditions.

Both Mr Goh Yong Kwee and Mr Woo Fook Onn have each entered into second supplemental letters of
employment dated 12 January 1999 (“Manager’s Second Supplemental Letter of Employment”) which
further supplement the respective Manager’s Letter of Employment. The Manager’s Second
Supplemental Letter of Employment provides that each of Mr Goh Yong Kwee and Mr Woo Fook Onn
shall not for the period of 12 months from the date of termination of their respective Manager’s Letter of
Employment:-

(i)    accept employment in another business within Singapore in competition with the businesses of the
       Company and its subsidiaries; and

(ii)   solicit, within Singapore in competition with the businesses of the Company and its subsidiaries, the
       custom of any person, firm or company who within the last 12 months of each of Mr Goh Y   ong Kwee
       and Mr Woo Fook Onn’s service with the Company was a customer of the Company or any of its
       subsidiaries.


DIRECTORS’ REMUNERATION
The remuneration of the Directors on an aggregate basis and in remuneration bands for FY97 and FY98
are as follows:-

(a) Aggregate Directors’ Remuneration

       $                                                       FY97               FY98(1)
       Executive Directors                                    511,200            258,425
       Non-Executive Directors                                      —                  —

       Total                                                  511,200            258,425


                                                     52
(b) Number of Directors in Each Remuneration Band

                                        <—————–— FY97 ––—————>                      <—————— FY98(1) ——————>
                                                     Non-                                        Non-
                                        Executive  Executive                        Executive  Executive
                                         Directors Directors Total                   Directors Directors Total

      $500,000 and above                    —               —              —            —               —             —
      $250,000 to $499,000                  —               —              —            —               —             —
      $0 to $249,999                          4              2             6             2               2            4

      Total                                   4              2             6             2              2             4

Note:-
(1)   Details of remuneration do not include the remuneration paid to two directors who resigned from the Board on 13 March
      1999.


PROPERTIES AND FIXED ASSETS
The Group currently owns the following properties:-

                                                                                                      Net book value
                                                                                    Registered            as at 31
Description/Location                       Tenure                Gross Area          Owner            December 1998

Single-storey semi-detached           30(1) + 30 years            Land area:            TAL              $2,834,000
factory with mezzanine floor           commencing                 3,841 sq m
level at 45 Gul Drive                  16 May 1982
Singapore 629492                                                 Build-up area:
                                                                  1,800 sq m

Note:-
(1) Jurong Town Corporation by way of a letter dated 27 April 1991 approved an extension of the lease for a further term of
    30 years from 16 May 2012.

The Group currently rents/leases the following properties:-

                                                                                    Annual
Description/Location                 Tenure                Gross Area               Rental                   Lessor

Warehouse No. 135 and No.            1 year           Office area: 1,000 sq ft     Dhs97,790     Arenco Real Estate
141, Warehouses Al Quoz,          commencing
Dubai, UAE                       1 January 1999          Workshop area:
                                                          7,000 sq ft

357 Umsuqaim, Villa No. 1,           1 year                      Villa            Dhs120,000     Mr Khalifa Kamis Khalifa
Dubai, UAE                        commencing                                                     Al Ayali
                                  5 March 1999

Al Shamsi, Villa No. 20,            1 year                       Villa             Dhs28,000     Shamsi Traders
Ajman, UAE                        commencing
                               15 November 1998

Al Shamsi, Villa No. 21,             1 year                      Villa             Dhs28,000     Shamsi Traders
Ajman, UAE                        commencing
                                1 November 1998




                                                            53
                                                                      Annual
Description/Location            Tenure            Gross Area          Rental               Lessor

Flat 102, Karim Khamas          1 year               Flat            Dhs40,000    Sheikh Mohd Bin Sultan
Building, Bur Dubai, UAE     commencing                                           Al Dhahery
                            13 March 1999

P.O. Box 4613, Dubai, UAE    Commencing           One room            Dhs1,200    Gulf Marine Maintenance &
                             2 May 1998           in a camp                       Offshore Service Company

10B Eng Kong Terrace            1 year            3-room flat          $16,800    Mr Poon Teng Fatt
Singapore 598982             commencing
                             23 April 1998

                                1 year                                 $12,000
                             commencing
                             22 April 1999

4A Eng Kong Terrace            6 months           3-room flat          $12,000    Mr Ong Chig Hong @
Singapore 598976             commencing                                           Ong Ching Hong
                            12 March 1999

Blk 9H, Yuan Ching Road         2 years           3-room flat          $13,200    Mr Tan Kim Kiat
#10-80 Lakeside Tower         commencing
Singapore 618650            15 January 1999


FINANCE
The growth of the Group has been financed through a combination of shareholders’ equity, retained
earnings and other credit facilities. The Group has secured adequate bank facilities to finance its
operations. The Group does not have any outstanding borrowings as at 31 December 1998.

Fixed Assets
Fixed assets comprises office equipment, computer software, motor vehicles, furniture and fittings,
workshop equipment, a leasehold factory building, building improvement and plant and machinery.

Fixed assets increased by $186,000 from $2.04 million in FY94 to $2.22 million in FY95 as the Group
purchased additional test equipment for its laboratories and office equipment. For the period between
FY95 and FY96, the Group’s fixed assets decreased marginally to $2.2 million as the increase in fixed
assets was offset against the aggregate depreciation incurred. For the six month period ended 31
December 1996, fixed assets increased from $2.2 million in FY96 to $4.2 million due to the revaluation of
its leasehold property at Gul Drive which added approximately $2.0 million to the net book value of the
property. Fixed assets was relatively stable in FY97. Although the Group had investments in additional
motor vehicles in FY97, this was offset by the annual depreciation charge. The Group’s fixed assets
decreased from $4.3 million to $3.6 million mainly as a result of the downward revision of the Group’s
leasehold property to reflect the then current market conditions.

Interest in Associated Companies
Interest in associated companies refers to the Company’s 49% equity interest in TAME and the
Company’s 50% equity interest in Velosi Singapore.




                                                   54
Other Investments
Other investments refer mainly to quoted equity shares that the Group holds. The Group purchased
equity shares in 1994 and realised all the equity shares in 1997.

Current Assets
Current assets comprise stocks, work in progress, trade debtors and other debtors, amount owing by
related companies, fixed deposit, cash and bank balances.

Current assets registered an increase of 35.2% from $4.7 million in FY94 to $6.4 million in FY95. This
was mainly attributable to the surge in stock levels to cater to the higher volume of work secured by the
Group. In FY96, current assets decreased by 22.9% to $4.9 million due to the decrease in stock levels
upon the completion of several major projects. For the six months ended 31 December 1996, the
Group’s current assets was relatively unchanged at $4.9 million as the higher cash balances was offset
by the reduction in trade debtors. Current assets registered a growth of 88.8% to $9.2 million in FY97
due to the increase in stock levels and trade debtors as a result of the Group’s expanded operations.
Current assets increased further from $9.2 million in FY97 to $11.3 million in FY98 due mainly to the
increase in trade debtors from the higher turnover.

Current Liabilities
Current liabilities comprises trade creditors and other creditors, progress billings, amount owing to a
related company, bank overdraft and provision for taxation.

Current liabilities increased by 37.1% from $4.1 million in FY94 to $5.7 million in FY95 mainly due to an
increase in the general provisions for bonuses and accruals and higher bank overdraft. Current liabilities
decreased by 33.6% to $3.8 million in FY96 mainly due to the reduction in other creditors following the
completion of the “Solitaire” project. For the period between FY96 and the six months ended 31
December 1996, current liabilities decreased by 12.3% to $3.3 million due to lower accruals for project
costs and provisions for discounts. Current liabilities rose by 156.6% to $8.5 million in FY97 due mainly
to the surge in progress billings by approximately $2.9 million to $3.2 million and an increase of $1.5
million to $3.4 million from other creditors and accruals such as bonuses. In FY98, current liabilities
edged up slightly by 7.1% to $9.1 million mainly as a result of the interim net dividend of $1.0 million
declared, increases in other creditors and provision for taxation was offset by FY97’s progress billings
that was billed totally.

Non-Current Liabilities
Non-current liabilities comprises hire purchase relating to motor vehicles due to creditor after 12 months.

Other than the Group’s non-current liabilities of $14,000 for FY96, respectively, the Group did not incur
any non-current liabilities for the other financial years between FY94 and FY98.

Shareholders’ Equity
In FY95, shareholders’ equity grew by 11.9% from $2.66 million in FY94 to $2.98 million due to an
increase in retained earnings. Shareholders’ equity increased by 13.7% to $3.4 million in FY96 due
mainly to an increase in retained earnings. For the six months ended 31 December 1996, shareholders’
equity increased by 71.8% to $5.8 million as a result of the Group’s revaluation surplus of $2.0 million
arising from the property at Gul Drive. Shareholders’ equity decreased by 13% to $5.1 million in FY97 as
a result of a net dividend of $2.2 million declared in FY97. The 15.5% increase in shareholders’ equity to
$5.86 million for FY98 compared to FY97 was mainly due to the higher profitability in line with the higher
turnover achieved offset by the downward revision of the Group’s leasehold property to reflect the then
current market conditions and the interim net dividend of $1.0 million declared.




                                                    55
REVIEW OF PAST PERFORMANCE
FY94 to FY95
In FY95, the Group’s turnover grew by 12.6% to $10.4 million compared to $9.3 million in FY94. The
increase in turnover was attributed to several large FPSO projects from the Far East region successfully
awarded to the Group. These FPSO projects, together with a major marine project on a pipe-laying
vessel “Solitaire”, resulted in an overall increase in the workload undertaken by the Group. The Group’s
operating income decreased by 10.3% in FY95 to $0.8 million due to the higher than proportionate
increase in direct expenses. Interest expenses rose to $35,000 due to higher bank overdraft utilisation.
The Group’s profit before tax and after tax decreased by 15.3% and 25.2%, respectively, given the higher
operating expenses from payroll cost and other related expenses incurred as a result of the increased
volume of business in FY95.

FY95 to FY96
For the period in FY96, the Group’s turnover increased by 44.4% from $10.4 million in FY95 to $15.1
million in FY96 in line with the increase in service/repair work undertaken for shipyards and the
completion of the marine project on a pipe-laying vessel “Solitaire”. Although the Group turnover
increased, gross margin decreased in FY96 due to higher direct expenses mainly from increased
purchases of material. As a result, operating income rose slightly by 1.7% to $0.83 million in FY96.
Both depreciation and interest expenses declined in FY96 as no new fixed assets were added and the
bank overdraft was lower. The Group’s profit before tax registered an increase of 12.7% to $0.57 million in
FY96 as operating expenses remained relatively stable compared to FY95.

Six months ended 31 December 1996
The Group recorded a turnover of $8.1 million and profit before tax of $0.55 million. The Group was able
to achieve higher margins from the larger repair projects and land-based industries. The service/repair
segment accounted for about 46.6% or $3.8 million of the Group’s turnover while the project/technical
sales segment accounted for $4.3 million of the Group’s turnover.

FY96 to FY97
Between FY96 and FY97, the Group’s turnover rose from $15.1 million to $17.0 million, equivalent to a
13.0% increase. The increase was attributed to the following reasons:-

(a) sales to existing customers increasing as a result of several customers deciding to send their
    vessels for upgrading in FY97;

(b) shipyards in India and Sri Lanka were relatively busy and they had sub-contracted out additional
    jobs to the Group;

(c) substantial repair jobs from new customers as a result of the Group’s reputation to co-ordinate and
    support major turnkey projects; and

(d) supply of technical manpower to several customers by the Group’s project/technical sales division.
    The M.T. Hitra project for Trenergy (M) Bhd contributed 6.9% to the Group’s total turnover in FY97.

The higher margins achieved for its technical manpower supply and the relatively stable overall direct
expenses resulted in operating income growing by 175.4% to $2.3 million in FY97. Both profit before tax
and after tax increased by 254.1% and 254.8%, respectively, in line with the rise in operating income.

FY97 to FY98
The Group’s turnover increased by 40.2% from $17.0 million in FY97 to $23.9 million in FY98. This was
attributable mainly to the higher technical manpower supply business in the Far East region. The M.T.
Hitra project for Trenergy (M) Bhd contributed 12.6% to the Group’s total turnover in FY98. Operating
income increased by 94.9% in FY98 due to the favourable terms obtained from the service/repair
segment offset by the lower margins from two of its major project/technical sales jobs. Profit before tax
increased by 104.7% in line with the increase in turnover in FY98. It was also due to the smaller
increase in selling and administration expenses of 6.2%.


                                                    56
PROSPECTS AND FUTURE PLANS
Outlook for the Marine Industry
Ship Repair
According to the Association of Singapore Marine Industries (“ASMI”), demand for ship repair is
expected to be sustained because of the high percentage of ageing ships in the global fleet, thus
benefiting the ship repair sector. As at September 1997, the average age of the world’s VLCC fleet is 23
years and 43.7% of the VLCC fleet is over 20 years old, compared to 37.4% in September 1996. In all,
193 VLCCs will reach the age of 25 in the next five years. In order to continue their operations, these
vessels may either convert to hydrostatic balanced loading or retrofit segregated ballast tanks (source:
Clarkson Research Studies, Autumn 1997, Shipping Review and Outlook) . Many of the world’s LPG and
LNG fleet of gas carriers are currently going through life-extension programmes to extend the life of such
vessels for a further 20 years. Their owners are investing substantially in the upgrade of the controls and
automation systems fitted on such sophisticated gas carriers.

The Group is expected to benefit from this trend as it leverages on its expertise in the provision of
marine automation services to capture some of these business opportunities. Over the last ten years,
there has been a shift towards the reduction of manpower required on vessels due to the need to reduce
costs and the shortage of experienced marine engineers. This has led ship owners and ship management
companies to depend more on shore-based support such as those services provided by the TAL Group.
In addition to the continuing need to repair and upgrade the existing ageing fleet, newer vessels that went
into operation over the last five years would also require technology-intensive services. The reason is
that such newer vessels are usually fitted with sophisticated electronic and computer systems which the
crew would require assistance from experienced shore-based service personnel to repair and maintain.
Given the Group’s experienced and qualified workforce, the Group is well positioned to provide extensive
services to both the older and newer vessels during shipyard refits, whether at anchorage or on voyage.

Conversion
The use of FPSOs and FSOs have become increasingly popular over the last decade, as they offer a
cost effective, quick and flexible way of recovering oil and gas. An FPSO costs less to build and
operate than a fixed offshore unit, and it may be moved to a new location as and when needed. This has
resulted in growth in the sector to convert vessels to FPSOs and FSOs.

Over the last 30 years, the Singapore marine industry has grown and developed from carrying out basic
marine engineering repairs until the 1990’s when the industry is capable of carrying out complex and
major refits, modifications and conversions. The Group has benefited considerably from these
developments, as major Singapore shipyards are now carrying out extensive conversions of vessels to
FPSOs and FSOs.

Over the years, the Group has undertaken conversion projects for FPSOs and FSOs destined for
operations in countries such as Vietnam, Malaysia, Angola, Egypt, the Peoples’ Republic of China and
Australia. It is expected that the prospect for conversion work for the next two years will remain good
due to the expectation that Singapore shipyards will be successful in securing many of these conversion
projects. Even though some of these projects would be awarded to the Middle East shipyards, the
Group will also be able to offer similar services. For the shipyards, the work scope is restricted generally
to the work undertaken during the vessel’s conversion in the shipyard. However, for the Group, although
major work is undertaken during the conversion, it is normal for the Group to provide a large team of
engineering personnel to accompany the vessel to its final location to ensure that all systems are
functioning correctly for its “first oil”. In many cases, the scope of work extends far beyond the original
project due to subsequent upgrades while onstation, regular maintenance and long term agreements with
operators for call-out maintenance services. For example, the Group is still providing services for a
Chinese FPSO which was converted eight years ago.

During the past decade, the Group has developed a dedicated engineering division specialising in
working with the major players in the FPSO and FSO conversions sector.




                                                    57
Offshore Oil and Gas
The current regional economic slowdown has not affected the business prospects of the offshore
exploration and production industry. The offshore industry in the regional countries such as Myanmar
and Vietnam is still in its infancy stage. The increasing energy requirements in the region will stimulate
the development and growth of the offshore industry as well as in the supporting infrastructure such as
regional gas pipeline grids. The growth of the offshore industry will provide an area of potential demand
for the Group’s expertise and technical skills in the maintenance and services of the instrumentation and
equipment of the offshore structures.

Overall, the TAL Group will benefit from the increase in demand for upgrades and repairs by offering to
undertake engineering, design, equipment supply, system integration, panel manufacture, installation,
hook up and commissioning.

Outlook for the Chemical Industry
Singapore’s chemical industry grew by 12% to $27.0 billion in 1997, compared to an output of $24.0
billion in 1996. This was fuelled mainly by robust growth in petrochemicals and specialty chemicals,
pharmaceuticals, biotechnology and healthcare (source: Economic Development Board, July 1998,
Singapore Investment News).

In 1995, the Singapore government embarked on a $7.4 billion project to amalgamate seven southern
islands to form the Jurong Island and to develop that island into the petrochemical hub of the region. The
development of the Jurong Island will augur well for the Group, as it would increase demand for the
Group’s services such as the provision of instrumentation, process control installation and maintenance
contracts. Given the Group’s experience and expertise, it is well positioned to take advantage of this
increased demand.

The business prospects for the chemical industry are also expected to be good despite the current
economic crisis in the region. The Jurong Island project is progressing as scheduled and currently it has
about 20 companies with a combined fixed investment of $12.5 billion and a workforce of 4,000 operating
on the island (source: Economic Development Board, March 1998, Singapore Investment News).

The Directors are confident of the Group’s capabilities in supplying technical expertise, providing
instrumentation and electrical contracting work, systems and equipment to cover commissionings and
start-ups of major process plants in the power, utilities, petrochemical and pharmaceuticals industries
through the Far East and the Middle East will allow opportunities for growth and development for the
years ahead.

Business Plans
The Group intends to continue capitalising on its established track record, its tested management team
and technical competencies, its established business network and its strategically located offices.

Increased Market Share in the Marine Automation Services Market
The Directors believe that by having an operational presence in Singapore and in Dubai, the Group is
able to offer the major ship owners and ship management companies full service facilities world-wide.
Singapore sits strategically on the main tanker route between the Arabian Gulf and South East Asia. As
many of the world’s laden VLCCs can be routed onto either the East or West-bound trades from the
Middle East, the Group’s potential market is effectively enlarged. To the best of the Directors’
knowledge, the TAL Group is the only group which is able to offer ship owners and ship management
companies integrated services in both the Middle East and Far East regions under the same Group. As
many oil tankers load up in the Persian Gulf and discharge in the Far East, the TAL Group is well
positioned to offer its services anywhere along the route.




                                                   58
Expanding into the European Market
The Group, having established operations in the Far East and the Middle East, intends to expand its
support services into Europe within the next two years. It also intends to explore possible opportunities
for long term co-operation and relationships with companies in similar industries in order to expand its
current scope of business of the Group.

After the Invitation, the Group would be in a better position to carry out the above plans as its capital
base would be enlarged. It will seek to enter into industries that will allow the Group to capitalise on its
core competencies in the instrumentation and automation disciplines.

For the financial year ending 31 December 1999, the Directors expect the Group’s pre-tax profit to be
lower than FY98. However, the Group’s after-tax profit for 1999 is envisaged to increase marginally
compared to FY98 as the Group’s effective tax rate is projected to decline to approximately 26.0% in
1999 compared to 36.9% in FY98.




                                                    59
                                     DIRECTORS’ REPORT


27 March 1999

The Shareholders
Total Automation Ltd
45 Gul Drive
Jurong
Singapore 629492

Dear Sirs,

This report has been prepared for inclusion in the Prospectus to be dated 27 March 1999 in connection
with the Invitation by Total Automation Ltd (the “Company”) in respect of 21,000,000 ordinary shares of
$0.05 each in the capital of the Company by way of public offer.

On behalf of the Directors of the Company, I report that, having made due inquiry in relation to the
interval between 31 December 1998, the date to which the last audited accounts of the Company were
made up, and the date hereof:-

(a) the business of the Company and its subsidiaries has, in the opinion of the Directors, been
    satisfactorily maintained;

(b) no circumstances have, in the opinion of the Directors, arisen since the last Annual General
    Meeting of the Company which would adversely affect the trading or the value of the assets of the
    Company or its subsidiaries;

(c) the current assets of the Company and its subsidiaries appear in the books at values which are
    believed to be realisable in the ordinary course of business;

(d) no contingent liabilities have arisen by reason of any guarantees given by the Company or its
    subsidiaries; and

(e) save as disclosed on pages 23, 24, 25, 62 and 78 of this Prospectus, there have been no changes
    in the published reserves or any unusual factors affecting the profit of the Company and its
    subsidiaries since the last audited accounts.



Yours faithfully
for and on behalf of the
Board of Directors




Ngai Kok Leong
Managing Director
Total Automation Ltd




                                                  60

				
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