Industry Prospects

We believe that growth in our business will be driven by the following:
(a) prospects for the growth of shipping traffic through Singapore; and
(b) prospects for the growth of the shipbuilding and ship repair industry in Singapore.

Prospects for the growth of shipping traffic through Singapore
According to the MPA(1), Singapore retained its status as the world’s busiest port with 133,185 ship arrivals totalling 1.04 billion gross tonnes in 2004 which represented a 5.7% increase over 2003 and the first time that tonnage has exceeded 1 billion tonnes. In addition container traffic for Singapore increased by 15.9% in 2004 to reach 21.3 million TEUs. Total cargo handled by Singapore port increased by 13.1% to reach 393 million tonnes of cargo in 2004. Our Directors expect that prospects for our business to be positive due mainly to the following reasons:

(1) Singapore is currently the world’s busiest port in terms of vessel tonnage and we believe the MPA will likely introduce measures to maintain the competitiveness of the Singapore ports. The recent cuts in port fees are examples of such measures.

(2) Singapore is a transhipment hub for international seaborne freight which is inbound for the region.

Accordingly, we expect the growth of the economies in the Asian region, particularly India and the PRC, to positively impact the shipping industry in Singapore.

Prospects for the growth of the shipbuilding and ship repair industry in Singapore
Our Directors believe that prospects for shipbuilding and ship repair activities in Singapore to remain positive in the foreseeable future due mainly to the following reasons:

(1) Singapore is a base for the offshore sector which serves the oil and gas industry in the Asian region. The ongoing demand for specialised vessels and tankers, offshore structures and rigs provides a base of business for the shipbuilding and ship repair industry.

(2) Singapore is a transhipment hub for international seaborne freight and possesses good port facilities for arriving vessels to avail themselves of its ship repair facilities. An increase in shipping traffic through Singapore may positively impact on the ship repair activities in Singapore.