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Pteris Global Limited annual report 2008

Board of Directors

Oon Chong Howe Executive Director & Chief Executive Officer Mr Oon joined Pteris Global in 2006 as Managing Director and was promoted to Chief Executive Officer on 1 July 2007. He was last reelected to the Board of Directors on 18 April 2007. Prior to joining Pteris Global, Mr Oon was the Regional General Manager with Agfa (Asean) Sdn Bhd and General Manager with Federal Packages Sdn Bhd for over 10 years. He has also held various positions such as engineer with Singapore Telecoms Pte Ltd and Submarine Cable System Division, and research engineer with Bell Northern Research in Ottawa, Canada. Mr Oon holds a Master of Science degree in Electrical Engineering from University of Colorado-Boulder, Masters of Business Administration degree from Hull University, and a Bachelor of Science degree in Electrical Engineering from University of Wisconsin-Madison. John Sng Hwee Kwee Executive Director & Executive Vice President Mr Sng was appointed as Executive Director on 26 August 2008. He joined Pteris Global in 1982 and has taken on various key roles in senior management including Head of Business Units, Head of Design & Engineering and Project Director. Presently, Mr Sng is heading the Technology division, responsible for leading the Group's technical solutions, quality and product development. He is also responsible for overseeing the operations of our UK subsidiary, CDG System Limited and assisting the Chief Executive Officer in implementing strategic plans of the Group. Armed with more than 27 years of experience, Mr Sng has vast knowledge in Airport Logistics System and plays a pivotal role in Pteris Global's senior management team. Mr Sng holds a Diploma in Mechanical Engineering from Singapore Polytechnic.

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Senior Management

1 5 9

2 6 10

3 7 11

4 8

Steven Lwi Tong Boon 1 Chief Financial Officer As Pteris Global's Chief Financial Officer, Mr Lwi is responsible for the Group's financial and management accounting, treasury, taxation, corporate service, and other corporate compliance matters. He also serves as Company Secretary of the Company. Mr Lwi joined Pteris Global in November 2007, with more than 16 years of experience in finance and accounting, treasury, mergers and acquisitions. He has held various managerial positions, including as Chief Financial Officer of Interra Resources Limited, heading the Compliance and Internal Audit Department of Fraser Securities Pte Ltd, and as Financial Controller of Ferrell Asset Management Pte Ltd. He was also an auditor with PricewaterhouseCoopers. Mr Lwi, a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore, holds a Bachelor of Accountancy (Honours) degree from Nanyang Technological University.

Vairakkannu Singaram 2 Executive Vice President Mr Singaram heads the Group's Marketing & Business Division for Airport Baggage Handling Systems (BHS) in various markets, including India, South America and Europe. He is responsible for developing and expanding Pteris Global's market share in the 3 continents. Mr Singaram joined the company in 1988 and has accumulated more than 20 years of invaluable experience. He holds a Bachelor of Business (Business Administration) degree from RMIT University, Australia. Chai Fook Chuan 3 Executive Vice President Mr Chai oversees the development of technical and system designs for all Pteris Global's projects.


Pteris Global Limited annual report 2008

Senior Management

He joined Pteris Global in 1982 as a design engineer and has accumulated more than 20 years of experience in system design, engineering and system proposal. His strong technical background has contributed to various product developments for the company. Mr Chai used to head System Engineering and Design department in the company from 2003 ­ 2006, providing customised technical drawings and planning for all Airport Logistics systems projects. He holds a Diploma in Mechanical Engineering. Mike Fong Meng Chai 4 Senior Vice President, Business Division of China, Southeast Asia and North America Senior Vice President for System Proposal & Costing Mr Fong heads the Business Division for China, Southeast Asia and North America markets. He is responsible for the business development of BHS in China, South East Asia and North America region. Mr Fong also oversees the Group's System Proposal & Costing department. Mr Fong joined Pteris Global in 1991 after serving his national service as an Officer. He has accumulated more than 18 years of invaluable experience in the field of project management. Mr Fong has also headed and completed a number of sizable projects such as Changi Airport Terminal 3 and Beijing Capital International Airport Terminal 3. He holds a Diploma (Merit) in Mechanical & Manufacturing and Diploma in Management. Mohamad Taufik Bin Mohamad Tahir 5 Senior Vice President, Business Division for Middle East & Africa General Manager of IR (Middle East LLC) Mr Taufik heads the Business Division for the Middle East and Africa markets. He is also the General Manager of our subsidiary in Dubai, IR (Middle East) LLC. He is responsible for the marketing and business development of BHS in the Middle East and Africa. Mr Taufik joined the company in December 1989, and has accumulated almost 20 years of experience in project management and marketing. He was previously in charge of the Operations & Maintenance in Singapore Changi Airport for 5 years, from 1994 to 1999. He holds a Bachelor of Business degree from RMIT University, a Diploma in Engineering and a Diploma in Management Studies. Tew Leong Fatt 6 General Manager, IR Engineering Sdn Bhd Mr Tew heads IR Engineering Sdn Bhd and oversees the business and manufacturing operations in Malaysia. He joined the company in 2007 and has accumulated more than 27 years of experience in manufacturing and management. He has held a range of senior management positions, with the last 17 years in general management positions at various publiclisted manufacturing companies in Malaysia. Mr Tew holds a Bachelor of Science (Honours) degree in Mechanical Engineering from United Kingdom. Chai Kor Yoon 7 Senior Vice President, System Engineering & Design Mr Chai heads the System Engineering & Design department, which handles all the detailed designing of technical systems for Airport Logistics Systems. He also oversees Design Manpower Planning & Project Scheduling department, ensuring all projects are delivered on time consistently. Mr Chai joined Pteris Global in 1982 and has accumulated 25 years of invaluable experience in the company. With his strong management and problem-solving skills, Mr Chai and his team has handled various key projects including upgrading Changi Airport Terminal 1 and 2, and new Terminal 3; upgrading Dubai Terminal 1 and 2, and new Terminal 3 as well as Dubai In-flight Catering; Beijing new Terminal 3 expansion; Shanghai new Terminal 2 and

harmony in motion


Senior Management

new Suvarnabhumi Airport; new Doha Baggage Handling & In-flight Catering System, Korean AirIncheon Catering and Singapore Airport Terminal Services (SATS) Catering. He holds a Diploma in Mechanical Engineering. Teh Sin Kim 8 Senior Vice President Mr Teh oversees the Group's manufacturing functions and operations for all three factories in Singapore, Malaysia and China. He is responsible for the development and improvement of the manufacturing process, training of technical skill transfers from the headquarters factory to its subsidiary factories in Malaysia and Suzhou. Prior to joining Pteris Global in 1997, Mr Teh has held various positions in the marine and engineering industries. Having been with the company for almost 12 years and with 41 years of experience, including 30 years at managerial level, he possesses immense knowledge about the management of factory operations. Mr Teh holds `A' level qualifications, and has attended many related short workshops/courses throughout his working life. Daniel Lim 9 Senior Vice President, Control & System Integration Mr Lim leads the Control & System Integration department (CSI) in areas of project execution. He is responsible for the system integration of the Airport Logistics Systems. Mr Lim joined Pteris Global in 1991. With over 17 years of experience in the company, he possesses a wealth of knowledge and vast experience in technical expertise and management skill, which is core to the execution of projects. He holds a Diploma in Electrical & Electronic Engineering. Chua Choon Beng 10 Senior Vice President, Information Technology Senior Vice President, Control & System Integration Mr Chua joined Pteris Global in 2002, and heads the IT and Software Development Department. He is responsible for implementing software control and system integration for Airport Logistics Systems as well as developing new control solutions. With more than 10 years of experience in the control industries, he has handled several significant projects in Pteris Global, including control system solution in Changi Airport Terminal 1, Dubai Airport Terminal 1 and Korean In-flight Catering System. Prior to joining Pteris Global, he has worked in China and Singapore, hence enabling him to gain global exposure in the control industries. Mr Chua holds a Bachelor of Engineering (Honours) degree in Electrical & Electronics Engineering, majoring in Control Engineering. Ivan Lim Wi Aun 11 Vice President and Head of Human Resource & Administration Mr Lim leads the Group's Human Resource & Administration function. Prior to joining Pteris Global in 2003, Mr Lim was with JP Morgan Chase Bank. Before assuming his role as Head of HR, Mr Lim was with the Corporate Services overseeing contract management. His existing responsibilities include policy formulation and implementation, performance management as well as other strategic HR initiatives such as talent development and organisational planning. He continues to oversee the company's contract management function and is actively involved in contract drafting and commercial negotiations. He is also the Group Internal Auditor. He holds a Bachelor degree in Economics and Finance (minor in corporate law) from the University of Western Australia, and an MBA in International Business Management.


Pteris Global Limited annual report 2008

Corporate Information

Products and Services Air Cargo Handling Systems Baggage Handling Systems Express Courier Handling Systems In-flight Catering Systems Maintenance Services Engineering Support Business Development Control & System Integration System Engineering & Design Production Administration Corporate Services Finance & Treasury Human Resources Information Technology Logistics and Procurement Board of Directors Lim Yong Wah

Chairman and Non-Executive Director

Audit Committee Rajan Menon (Chairman) Haider Mohamedally Sithawalla Lim Hwee Chiang Loh Chin Hua Nomination and Remuneration Committee Haider Mohamedally Sithawalla (Chairman) Low Kok Hua Loh Chin Hua Tan Guong Ching Auditors KPMG LLP 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 Lucas Tran

Engagement Partner

(Since financial year ended 31 December 2008) Share Registrar KCK CorpServe Pte Ltd 333 North Bridge Road #08-00 KH KEA Building Singapore 188721 Bankers DBS Bank Limited ABN-Amro Bank N.V. Malayan Banking Berhad Oversea-Chinese Banking Corporation Limited The Hongkong and Shanghai Banking Corporation Limited Registered Office 20 Benoi Crescent Singapore 629983 Tel : (65) 6861 2828 Fax : (65) 6266 5516 Email : [email protected] Website : Our New Office (effective from Q2 2009) 28 Quality Road Singapore 618828 Company Registration Number 197900230M

Low Kok Hua

Non-Executive Director

Haider Mohamedally Sithawalla

Independent Director

Lim Hwee Chiang

Independent Director

Loh Chin Hua

Independent Director

Rajan Menon

Independent Director

Dr Soon Kong Ann

Independent Director (appointed on 20 July 2008)

Tan Guong Ching

Independent Director

Oon Chong Howe

Executive Director

Sng Hee Kwee

Executive Director (appointed on 26 August 2008)

Company Secretaries Steven Lwi Tong Boon Foo Soon Soo

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Corporate Structure


Pteris Global Limited Inter-Roller Investments Pte Ltd Inter-Roller Engineering Services Pte Ltd Pteris Pte Ltd


Pteris Global Sdn Bhd

Middle East

IR (Middle East) Limited Liability Company


Inter-Roller Engineering (Beijing) Co., Ltd Inter-Roller Airport Logistics System (Suzhou) Co., Limited

United Kingdom

CDG Systems Limited


Pteris Global (Canada) Inc.

United States of America

Pteris Global (USA) Inc.


Pteris Global Limited annual report 2008

Inter-Roller Engineering

As Inter-Roller Engineering, we established ourselves as a corporation reputed for excellence in the design and manufacture of airport logistics systems.


harmony in motion



Pteris Global

In our bid to grow and extend our foothold, we have adopted a new identity to reinforce our vision and better represent our core values and expertise.


Pteris Global Limited annual report 2008

PterIS GloBal BranD

Harmony In Motion

The year 2009 marks our 30th anniversary, an ideal time to revitalise our brand image and usher in a new phase of our identity. Our business model has evolved tremendously since its inception in 1979: in terms of size, service/product offerings or geographical reach. With its long-term vision and strong leadership led by its founders, Board and senior executives, as well as the hard work and creativeness of our employees, our company brand has evolved and manifested from a provider of baggage conveyor components to a recognised full-fledged Airport Logistics solutions provider. Today, its notable international track records include over 100 airport projects covering six continents and more than 25 countries. Our new brand identity enables us to portray our persona. We believe that the brand, Pteris Global can accentuate the principles and values that we adhere to. With the new name, we can send a message to inform our customers, our partners and our people of our brand philosophy ­ Harmony In Motion. Re-inventing our company brand from an engineering/technical image to `A People's Brand' that enlivens relationships and airports around the world clearly sets the brand's focus on human dimensions and service excellence. The Pteris Global name will elevate the brand and create a distinct identity for us. An identity that speaks exactly what it stands for; how it connects with customers on a deeper engagement and reflects our international nature of business.

Brand Mission

Guided by our philosophy of `Harmony in Motion', we strive to constantly foster harmony with our people, our partners, and our customers. The brand mission is the roadmap to fulfilling our vision, our belief and guiding light to living our aspirations.

harmony in motion


Harmony Within Our People

Our people are the thought, face and voice of the Pteris Global brand. How we speak, behave and conduct ourselves reflect our brand to the external world. From evaluation to design, simulation to project management, we believe in working in One Harmony, harnessing the best of our collective expertise to deliver world-class solutions, at all times.

Harmony With Our Partners

We believe in growing enduring partnerships. Warm and personable, we work closely and harmoniously with all our partners in meeting their expectations. We understand that a genuine and sincere partnership is the cornerstone of every long-term relationship.

Harmony With Our Customers

Working closely with our customers, we are dedicated to the constant upgrading of our infrastructure and facilities, to enable airport systems to function/operate blissfully in seamless motion. We believe that fostering strong relationships are vital in ensuring quality products and excellent services.

About Pteris

Pteris is derived from the Greek word `Ptera', meaning `wings'. This reflects our ability to rise above all challenges and soar to greater heights. Pteris is a genus comprising some 280 species of deciduous and evergreen ferns that grow in tropical and subtropical regions worldwide. Similarly, it signifies our growing global presence with our list of track records. Such ferns are also naturally hardy and pervasive, with species being able to endure extreme temperatures from as low as -4°C to a sweltering 42°C. Like these ferns, Pteris Global's project teams can be found across six continents such as sub-zero conditions in Calgary and above 40°C in Dubai. These conditions are harsh but we are able to adapt to the local conditions, no matter which market we enter into worldwide. Strong and resilient, it can also thrive on limited resources, which reflects our determined and versatile spirit in providing world-class products and services. Through the years, we have showed resilience beyond surviving economic crises, providing customised and quality solutions to meet customers' needs. Hence, the qualities of Pteris ferns are aligned with our beliefs and values at Pteris Global.


Pteris Global Limited annual report 2008

modest roots

In 1979, when we established our company, we aspired to grow our business by developing our people's skills and sharpening our technical edge.


harmony in motion


to an

integrated enterprise

Today, we continue to deliver excellent solutions that include Airport Baggage Handling Systems, In-flight Catering Systems, Air Cargo Handling Systems and Express Courier Handling Systems.


Pteris Global Limited annual report 2008

our transformation

From our modest beginnings in 1979, Pteris Global had gradually built its reputation and track record as one of the world's leading Airport Logistic System provider. Each project that we undertook is purposely designed and built to meet specific requirements of the airport terminal needs. Our strength was the ability to customise manufacturing to meet those designs as well as seamless project execution, installation, testing and commissioning.

Over the years, we moved up the value chain by involving in design, developing high level control software and utilising technologies to speed up our project deliveries. We will continue to manufacture from our three global facilities, in order to control the quality and workmanship of our products. As we grow in capabilities, we are invited to bid for prestigious airport projects as system integrators.

harmony in motion


our transformation

After establishing our strong foothold in Asia and the Middle East, we embarked into a new market in 2007. North America is the largest Airport Logistics markets in the world. We invested in time and effort to get ourselves recognised and certified by the USA consultants. We also managed to win 2 airport contracts in Canada. To further demonstrate our commitment in the North America market, we setup a baggage handling system demo center in the United States Of America (USA). The demo center showcases our proven solutions and products used in an integrated Baggage Handling System (BHS). It allows system consultants, our clients and potential customers that

are located closer to proximity of USA to witness the full demonstration of our BHS's capabilities. In March 2009, we received a certificate of approval by a major airport consultant BNP Associates, Inc. for meeting the stringent requirements in building the BHS system. Receiving the certificate signifies that BNP recognises Pteris Global's compliance and its requirements for the manufacturing and installation of BHS in USA. The certificate also enable Pteris Global to bid for jobs managed by BNP on behalf of US airports, so we are one-stop closer to our quest of breaking into the USA market.


Pteris Global Limited annual report 2008

our transformation

In an effort to position our standing as the world's leading airport logistics system manufacturer, we decided to invest in control system integration in early 2000 to boost the overall efficiency of handling the high capacity of passenger luggage in airports. A huge portion of the investment went into software and technology adaptation to further enhance the performance of our system capabilities. Being an integrator, we now specialise in building configuring system and assembling different types of equipment together. To ensure the system performs effectively and efficiently, special attention needs to be given. Pteris Global has developed high-level controls computer software that is able to control various sub-systems that made up the BHS. These high-level controls consist of two main components, namely Sort Allocation Computer (SAC) and Maintenance Diagnostic System (MDS). SAC ensures accurate distribution of luggage to their designated destination; MDS allows airline operators to monitor the status of the BHS equipment at all times and also to ensure periodic maintenance is carried out at specific intervals. MDS also has the ability to track and monitor the maintenance statistics, and compilation of the statistics into a report.

In addition to the BHS, an integrated system for Inflight Catering was also developed for one of our clients, Emirates Airline for their In-flight Catering system in Dubai. The In-flight Catering system comprises two major sub systems, namely a Bin Conveying System and a Pallet Conveying System. Each system has its own specific tasks and functions. The Bin Conveying System is made up of 1.1km of bin conveyors, eight sets of inter-floor lifters, nine sets of single-floor lifters, six sets of stacker cranes as well as static and flow racks with storage capacity of more than 8,000 bins. The Pallet Conveying System consists of nine units of pallet stacker, one unit of pallet changer and two units of Very Narrow Aisle (VNA) trucks. Together, this entire sophisticated system is able to handle up to 115,000 meals daily. The process of switching to an integrator was not all smooth-sailing for Pteris Global. One of the adversities that we faced was meeting the expectations of various stakeholders of the projects. The projects had involved many people such as consultants, owners, remain as operation and maintenance staff who were holding different expectations. Their vast difference in opinions and high expectations had propelled us to work harder and drove us to explore solutions

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our transformation

beyond our boundaries. For every completed project, it is a fulfilling learning journey for us and helps to deepen our domain knowledge, seeking to perform better for our next assigned project. Our attempt at venturing into becoming an integrator paid off when Tocumen International Airport Authority awarded us the contract to design and build a baggage handling system in their airport in 2005. The baggage handling system incorporates high-level control system that includes computerised controls and the ability to monitor all flight allocations, baggage tracking and maintenance diagnostic system. This is also Pteris Global's first successful foray into the South America region and the first project of providing full-scale system integration for our client. It had also achieved an official certification from International Civil Aviation Organization (ICAO), complimenting Pteris Global on our high equipment quality, system control and computer control capabilities for the project.

Since then, we have completed projects as system integrators in baggage handling system for Tan Son Nhat International Airport (Vietnam) in 2007, Dubai International Airport Terminal 1 and Cyprus Paphos International Airport in 2008. In spite of the challenges imposed by the global recession, air travel will still remain as one of the key mode for global transport means. According to IATA, air passenger traffic is expected to increase by 2012 and newer airports will continue to be constructed to serve the growing volume of air traffic passengers. Existing airports will also be upgraded to meet new security regulations and capacity needs. Pteris Global will continue to seek strategic opportunities in the near future. We will also set our sight on building our track records in handling projects globally, and strengthening our reputation as one of the leading airport logistics system provider in the world.


Pteris Global Limited annual report 2008


Our strategic foundation in Singapore, one of the world's most recognised aviation hubs, has opened doors of growth opportunities for us.


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the World

Our system development, reputation and track records allow us to gain foothold in the Americas, the Middle East, Europe, Africa, Asia and Australia.


Pteris Global Limited annual report 2008

Geographical reach

Calgary Winnipeg Vancouver Toronto Chicago Los Angeles Phoenix Montreal New York Ireland

Curacao Panama



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United Kingdom Germany Ukraine Netherlands Belgium Czech Republic Hungary France


Syria Azerbaijan

Harbin Inner Mongolia Taiyuan Beijing Qingdao South Korea Shanghai Hangzhou Wenzhou Fuzhou Xi An Xiamen Taiwan Changsha Hong Kong Jinan



Lebanon Kuwait



Abu Dhabi Qatar Dubai Saudi Arabia United Arab Emirates Jordan



Haikou Myanmar Thailand Vietnam Cambodia Sri Lanka Maldives Malaysia Singapore






Pteris Global Limited annual report 2008

Pteris Global (USa) Inc.- Demonstration Centre

Introduction A fully functional BHS showcase was set up in Charlotte, North Carolina in 2008. The installation demonstrates Pteris Global's ability to meet and exceed all expectations of the major industry players in the United States such as our potential customers, end users and consultants, and allowing them to witness our system capabilities. Process This project commenced in mid-2008, and the planning and execution team comprised experienced technical experts and engineers to ensure success of our US demonstration system. The project was officially completed in November 2008, a testament to Pteris Global's expertise in project execution, strong supply chain and partnerships. Careful planning and market research was required to understand the needs of the US market prior to the execution of this project. With successful penetration

into new markets such as China and the Middle East previously, Pteris Global is right on track in our quest of entering into the US market. Technical The whole system sits on 10,000 square feet of floor space and includes the complete spectrum of BHS equipment supplied by Pteris Global. It ranges from our most innovative high-level controls (HLC) software solutions to industry-leading automated special equipment for the conveying, sorting and accumulation of baggage. Pteris Global has developed high-level controls computer software that is able to control various sub-systems that made up the BHS. These high-level controls consists of two main components, namely Sort Allocation Computer (SAC) and Maintenance Diagnostic System (MDS). SAC ensures accurate distribution of luggage to their designated destination and is fully IATA-compliant, whereas MDS allows airline operators to monitor the status of the BHS

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Pteris Global (USa) Inc.- Demonstration Centre

equipment at all times through animated and intuitive graphics (different levels of screens used to present the view of the BHS and equipment in progressive deep in-depth of details), and also to ensure periodic maintenance is carried out at specific intervals. MDS also has the ability to track and monitor the maintenance statistics and compilation of the statistics into a report. All these components are part of a complete BHS Solution that Pteris Global is able to provide as the main BHS supplier to any system of any size, worldwide. The components on display are, in principle, similar to those currently in our systems running in some of the world's biggest and most successful airports. However, changes have been engineered and developed into the designs to suit the market requirements and specifications. The result is a showcase system containing the latest technology in Baggage Handling Systems that Pteris Global has to offer.

What it means for the Future The completion of this project underlines Pteris Global's commitment to providing our services to all corners of the world. When the system is in operation, one can tangibly see the quality and performance that Pteris Global can bring to the table. It is only through our success in other regions that we have had this opportunity to highlight the expertise that we can bring to the US market. All early indicators point to the success of this investment, and we look forward to many successful years ahead in the United States.


Pteris Global Limited annual report 2008

"Long-lived companies were conservative in financing. They were frugal and did not risk their capital gratuitously. They understood the meaning of money in an old-fashioned way; they knew the usefulness of having spare cash in the kitty. Having money in hand gave them flexibility and independence of action."

Arie de Geus, The Living Company, prologue pg 7

How profound this statement is, judging from the root causes of the current global financial crisis. I am glad that our founders, Chairman and the Board passed down this time-tested corporate habit of conservatism in financing to us. It helped us weathered ups and downs in the past, and will continue to be the principal of our financial operation. We have, time and again, rejected proposals upon proposals using financial derivatives to `improve our margin", "minimise the up and down side", "expedite your growth" in the recent past. Over the years, we have achieved healthy cash flow and strong order book without the need of such instruments and most importantly, still governing our own growth and evolution in our own strides. We will strive forward with our new corporate identity in one coherent voice and action; taking on new markets and developing more software solutions and products range.

Oon Chong Howe Chief Executive Officer

the Year In review

36 37 44 49 53 54 55 56 59 72 The Year in Review Operational and Financial Review Market Overview Featured Projects Our People Our Strength Company Activities Corporate Events 2008 Risk Management Report on Corporate Governance Financial Statements

harmony in motion


operational and Financial review


Revenue 2008 has been a challenging year for the Group. The Group started the year with a healthy order book balance of S$115 million and secured an additional S$100 million of new orders during the year. However, due to the delay in implementation of some large orders, revenue declined by 39.1% on a year-on-year basis to S$75.9 million.

Revenue (S'000)

160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

19,864 19,267 26,826 16,875 30,568 13,850 16,689 38,340 19,599 30,449 44,871 27,315 25,613


20,656 27,228 46,585 39,085 18,099 17,591


FY2005 Quarter 1

FY2006 Quarter 2 Quarter 3

FY2007 Quarter 4


FY 2004 S$'000 Revenue Net Change 69,856 32.1%

FY 2005 S$'000 101,192 44.9%

FY 2006 S$'000 147,637 45.9%

FY 2007 S$'000 (restated)* 124,792 (15.5%)

FY 2008 S$'000 75,945 (39.1%)


restated - please see note 32 of Notes to the financial statement.

The Group's business continued to be largely international, with 87.7% of the revenue derived from outside Singapore. Revenue from the Middle East was the highest, accounting for 35.3% (FY 2007: 24.5%) of the Group's revenue. While the Middle East and China remained as our key markets, the group has diversified its source of revenue to other markets in FY2008.


Pteris Global Limited annual report 2008

operational and Financial review

In FY2008, 50.3% of the Group's revenue were generated from outside Middle East and China region. In FY2007, it was only 32.4% (see graph below on revenue distribution by key regions).

Revenue (%)

45 40 35 30 25 20

16.5% 24.5% 35.3%


15 10 5 0 Middle East Other ASEAN countries and Hong Kong


14.4% 12.3% 9.9% 8.0% 5.4% 1.2% 6.7% 3.5% 0.6% 1.4% 6.0%









Net Profit The Group incurred a loss of S$3.1 million in FY 2008. The high inflation rate in the first three quarters of year affected the Group's gross margin for the year. The Group's bottom line was also affected by the following: a. An impairment loss of S$1.3 million on the goodwill on consolidation arising from the Group's UK subsidiary, CDG System Ltd, was made. This reduces the goodwill on consolidation to S$1.5 million. In arriving at this loss, the Group took into account the performance of CDG and the economic downturn in Europe. A write-off of S$0.6 million of computer systems and software related expenses, which arose from aborting the implementation of an enterprise resource planning system in 2007. FY 2004 S$'000 (Loss)/Profit Before Income Tax Income Tax Expense (Loss)/Profit After Tax Effective Tax Rate Net Profit Margin 11,242 (1,244) 9,998 11.1% 14.3% FY 2005 S$'000 19,840 (2,924) 16,916 14.7% 16.7% FY 2006 S$'000 28,924 (3,224) 25,700 11.1% 17.4% FY 2007 S$'000 (restated) 19,257 (4,527) 14,730 23.5% 11.8% FY 2008 S$'000 (2,568) (484) (3,052) (18.8%) (4.0%)


harmony in motion


operational and Financial review

Materials, Subcontract and Other Direct Cost In line with the lower revenue, Materials, Subcontract and Other Direct Cost ("MSO") decreased by 41.9%. As with most other industries, the Group also faced rising costs and inflationary pressures until the third quarter of the year. However, through conscientious efforts, the Group managed to contain such cost increases. For the whole year, MSO decreased to 61.4% of revenue as compared with 64.2% of revenue in FY 2007. FY 2004 S$'000 Group MSO MSO % of revenue 37,988 54.4% 53,585 53.0% 85,548 57.9% FY 2005 S$'000 FY 2006 S$'000 FY 2007 S$'000 (restated) 80,167 64.2% FY 2008 S$'000 46,608 61.4%

Staff Costs In line with the reduction in revenue, staff cost declined by 21.1% from S$26.1 million in FY 2007 to S$20.6 million in FY 2008. The Group achieved this through reduction in short-term contract workers as well as reduction in the variable components of staff remuneration. The Company continues to encourage staff to upgrade their skills and capabilities. More in-house trainings were conducted as part of this effort. More staff have also been channeled to R&D activities to develop and enhance our products and systems to meet new demands of the industry. Other Operating Expenses Other operating expenses increased in FY 2008 as compared with FY 2007. This was largely due to the one-time impairment loss of S$1.3 million on the goodwill on consolidation and a write-off of computer software and related expenses of S$0.6 million. Higher professional fees arising from legal and compliance matters and higher rental payments on the existing premise which was sold in the third quarter of 2008 also contributed to the increase. Foreign Exchange Differences and Hedging Cost Majority of the projects that the Group has currently secured are dominated in USD or USD-pegged currencies. As at 31 December 2008, the Group has forward currency contracts amounting to S$87.2 million. As a practice, the Group hedges 50% - 75% of its foreign currency exposures. The Group does not use complex financial derivatives to hedge its foreign currencies exposures. All foreign currencies exposures were hedged using simple forward contracts. In FY 2008, the Group recorded of foreign exchange gain of S$20,000. Hedging cost of S$2.0 million was incurred in FY 2008. This included a marked-to-market ("MTM") loss of S$0.7 million.


Pteris Global Limited annual report 2008

operational and Financial review

Cashflow, Bank Borrowings and Net Gearing During the year, the Group generated a net cash inflow from operating activities of S$3.9 million as compared to a net cash outflow from operating activities of S$11.4 million in FY 2007. The Group's total trade and other receivables and contract work-in-progress reduced by 11.0% (FY 2008: S$67.4 million; FY 2007: S$75.7 million). FY 2004 S$'000 Group Trade and other receivables Contract work-in-progress Total 4,493 39,172 43,665 20,155 37,026 57,181 27,547 37,403 64,950 FY 2005 S$'000 FY 2006 S$'000 FY 2007 S$'000 (restated) 22,514 53,172 75,686 FY 2008 S$'000 21,238 46,168 67,406

During the year, the Group also received the proceeds from the sale of the existing leasehold property and factory at 20 Benoi Crescent of S$11.4 million (net of expenses). The Group spent S$13.0 million on capital expenditure during the year of which S$11.2 million was for the Group's new headquarter in 28 Quality Road. As a result of these capital expenditure items, property, plant and equipment increased by S$11.7 million (after deducting depreciation and amortisation of S$1.3 million) during this year. FY 2004 S$'000 Group Net Assets Net Current Assets Total Borrowings Gearing Ratio Cash and Cash Equivalents Net Borrowings Net Gearing Ratio 37,296 16,526 11,605 31.1% 1,543 10,062 27.0% 63,343 42,459 4,221 6.7% 20,143 (15,922) 68,544 39,268 23,076 33.7% 16,173 6,903 10.1% FY 2005 S$'000 FY 2006 S$'000 FY 2007 S$'000 (restated) 70,913 55,409 12,337 17.4% 5,817 6,520 9.2% FY 2008 S$'000 67,069 49,274 23,896 35.6% 17,781 6,115 9.1%

Group Amount repayable in one year or less, or on demand Amount repayable after one year Total

Secured $'000 557 3,248 3,805

As at 31 Dec 2008 Unsecured $'000 12,313 7,778 20,091

Total $'000 12,870 11,026 23,896

harmony in motion


operational and Financial review

As at 31 December 2008, the Group's cash and cash equivalents balance amounted to S$17.8 million (2007: S$5.8 million). Total borrowings increased to S$23.9 million. The additional borrowings arose due to the conversion of short-term borrowings to long-term borrowings to fund the construction of the Group's new headquarters at 28 Quality Road. The Group's net borrowings (bank borrowings less cash and cash equivalents) decreased from S$6.5 million as at 31 December 2007 to S$6.1 million as at 31 December 2008. Accordingly, the Group's net gearing ratio (net borrowing as a percentage of shareholders' equity) decreased from 9.2% to 9.1%. Net Assets Value The Group's net assets stood at S$67.1 million as at 31 December 2008 as compared to S$70.9 million as at 31 December 2007. This decline was due primarily to: 1) 2) Final dividend payment for Q4 2007 which was paid in April 2008 amounting to S$1.7 million; and Net loss of S$3.1 million for FY 2008.

As at 31 December 2008, the Group's net assets value per share stood at S$0.20 as compared to S$0.21 as at 31 December 2007.


Pteris Global Limited annual report 2008

operational and Financial review

Value-Added Statement FY 2004 $'000 Group Revenue Purchase of goods and services Value-added from operations Investment income Applied as follows: To employees: Salaries and other staff costs To government: Income and other taxes To providers of capital: Finance expense Dividends (net) 69,856 (41,402) 28,454 829 29,283 16,456 1,350 143 6,198 101,192 (58,840) 42,352 250 42,602 21,165 3,251 129 11,110 1,301 5,646 42,602 FY 2005 569 147,637 (91,855) 55,782 5,479 61,261 29,335 3,774 707 17,318 1,746 8,381 61,261 FY 2006 719 FY 2005 $'000 FY 2006 $'000 FY 2007 $'000 (restated) 124,792 (90,327) 34,465 13,358 47,823 26,147 4,801 643 11,647 1,502 3,083 47,823 FY 2007 (restated) 731 FY 2008 $'000 75,945 (58,667) 17,278 2,783 20,061 20,644 597 572 1,300 (3,052) 20,061 FY 2008 698

Retained for re-investment and future growth: Depreciation and amortisation 1,112 Accumulated profit 4,024 29,283 FY 2004 Group Average number of employees 421

Productivity data Value-added per employee ($) 67,587 Value-added per employment cost ($) 1.73 Value-added per investment in fixed assets ($) 1.37

74,432 2.00 1.95

77,583 1.90 2.43

47,149 1.32 1.40

24,754 0.84 0.64

harmony in motion


operational and Financial review

Five-Year Financial Profile FY 2004 Group Income Statement Revenue Profit/(Loss) After Tax Total Dividends Balance Sheet Non-Current Assets Current Assets Total Assets Total Equity Non-Current Liabilities Current Liabilites Total Equity and Liabilities Per Share Data (Cents) (Loss)/Earnings After Tax Dividends (Net) Net Assets Financial Ratios Return on Total Equity (%) Return on Total Assets Employed (%) Debt-Equity Ratio (%) Net Debt-Equity Ratio (%) 69,856 9,998 6,198 101,192 16,916 11,152 147,637 25,700 17,325 FY 2005 FY 2006 FY 2007 (restated) 124,792 14,730 11,647 FY 2008

75,945 (3,052) -

20,863 47,153 68,016 37,296 93 30,627 68,016

25,018 81,816 106,834 63,344 4,133 39,357 106,834

38,968 88,459 127,427 68,544 9,692 49,191 127,427

19,820 95,346 115,166 70,913 4,316 39,937 115,166

29,149 91,871 121,020 67,069 11,354 42,597 121,020

3.5 6.0 17.4

5.2 7.5 13.8

7.8 5.3 20.8

4.4 3.5 21.3

(0.9) 20.2

26.8 14.7 31.1 27.0

26.7 15.8 6.7 -

37.5 20.2 33.7 10.1

20.8 12.8 17.4 9.2

(4.6) (2.5) 35.6 9.1


Pteris Global Limited annual report 2008

Market overview

Overall situation The aviation industry, like all other industries, is unable to escape the effect of the recent economic meltdown. According to statistic from the International Air Transport Association (IATA), international passenger traffic fell 4.6% year-on-year in December 2008, outpacing a 1.5% cut in capacity during the same period. International cargo traffic tumbled 22.6% year-on-year last December. Nevertheless, amidst the gloomy outlook, heavy investment in infrastructure planning by various countries provides the silver lining for the aviation industry. For example, in Canada 2009 budget, CAD 282 million was set aside for aviation infrastructure improvement over the next two years while in the Middle East, an estimated investment of US$50 billion will be made over the next 20 years. This highlights the importance of aviation infrastructure and the recognition that the air transport industry is one of the major economic drivers and contributors. In a study done by the Air Transport Action Group, the aviation industry generates a total of 32 million jobs globally and its global economic impact is estimated at US$3.5 trillion. Aviation provides the only rapid worldwide transportation network which is essential for global business and tourism.

Armed with more than 100 projects spanning over 25 countries and six continents, Pteris Global is well poised to face the challenges in the new year and will continue to seek more opportunities to spread its wings globally. Whilst we are cautiously aggressive in our marketing efforts, we remain vigilant on the impact of the current financial turmoil. Asia-Pacific The much discussed financial turbulence from the United States is showing signs of negative impact in the Asia Pacific region. Nevertheless, the region as a whole is less adversely affected. Many Asian countries have emerged from developing countries to becoming one of the major business hubs, financial centers, tourism hotspots or aviation hubs. Countries like Singapore, Thailand and Malaysia, and more recently, Philippines and Vietnam, are also putting in more effort in building up their economy and develop their tourism industry. This has helped to drive the Asian aviation industry. For example, the Civil Aviation Administration of Vietnam (CAAV) expects the aviation market to grow at an average rate of approximately 12% per annum for the next 12 years. Singapore passenger traffic hits a record high of 36.7 million in 2007. The low cost carrier concept has become popular in the past few years, and this has enabled the Asian airports to be more

harmony in motion


Market overview

prepared for the economy turndown. Airports such as Singapore Changi Airport and Malaysia Kuala Lumpur International Airport have built terminals to cater for the low-cost carriers' traffic. As a result of the increased air traffic, many of these Asian airports are overcrowded and are unable to meet the rising air traffic. These Asian airports are expected to continue their upgrading and building of new terminals plans. Budgets and investments plans have been earmarked in various Asian countries to carry out the airport expansion plans. Pteris Global, with our headquarters strategically located in Singapore, has completed more than 50 projects over the years in Asia. We will continue to tap on the home ground advantages and our extensive knowledge of the region to seek more opportunities in this region. With our strong track record and advanced technical capabilities, we are confident that we can continue to secure more projects in the region. China Passenger traffic in China totaled 191 million in 2008, up 3.3% year-on-year, according to the Civil Aviation Administration of China (CAAC). While the global recession has dampened the international travel slightly, the domestic passenger demand has

recovered somewhat. Last year, natural disasters in parts of the country reduced passenger demand on Chinese airlines. Demand also fell during the period leading up to the Beijing Olympic Games partly due to strict visa restrictions imposed on foreign nationals for security reasons. China, being an economic giant in Asia, is more resilient to the recent financial turmoil. Their national economic strategy to further open its air travel and air cargo markets which creates a need to increase the number of airports in the country. Backed by the central government's call to expand domestic demand to beat the economic slowdown, new airport projects worth RMB 200 billion are to kick off in 2009 and 2010. China has planned to increase the total number of civil airports from 160 in 2008 to 244 over the next two year. The National Development and Reform Commission (NDRC) has also recently approved seven airport projects. As one of our key markets traditionally, we continue to strengthen our foothold as the preferred provider for airport logistics systems. Through our two subsidiaries in China, Inter-Roller Airport Logistics Systems (Suzhou) Co., Ltd and Inter-Roller Engineering (Beijing) Co., Ltd, we will continue to step up on our marketing efforts in this region.


Pteris Global Limited annual report 2008

Market overview

India Rapid economic growth in India has pushed India to become a major global economic power in the recent years. As a result, air traffic in India has grown spectacularly over the past few years. Air traffic growth in India has increased aircraft movement per airport, driving the need for greater airport capacities or development of new airports. The number of air travel passengers in India is expected to increase from 102.73 million in 2008 to 290.19 million by 2014, at a compound annual growth rate of 15%, according to Frost & Sullivan (Frost). India has five major international airports, namely Mumbai, Delhi, Kolkata, Chennai and Bangalore, and 87 domestic airports. The government has planned airport-wise infrastructure development budgets for metro, non-metro and green field airports. Funds have been set aside for communications, navigation and surveillance systems for air traffic management, and other equipment. Having secured more than 18 projects in various part of India, Pteris Global has built a strong reputation in this South Asia region. India will continue to be one of our key target markets over the next two years.

The Middle East The Middle East, known for its vast reserves of oil and gas, is one of the world's wealthiest regions. Tapping on its rich resources and extensive land space, the Middle East's strong economic growth has attracted increased foreign investment in the region and has led to rapid construction development in recent years. It is of no doubt that the air traffic growth is expected to remain above the world's average. As with most regions, developing a business and logistics hub and a tourism hotspot creates a success recipe for flourishing market, for example, Dubai and Abu Dhabi. With its continuous effort, Dubai is winning businesses by being a hub for transiting travellers from various air routes across the globe. Adding to its many magnificent iconic buildings, the newly built Palm Islands of Jumeirah further maintains Dubai's position as a premium tourist destination. Abu Dhabi, the capital of UAE, is also pitching itself as a cultural capital to attract tourists worldwide. The rest of the Gulf States are fast catching up with their economic growth.

harmony in motion


Market overview

To cater for the increasing passenger traffic, close to US$50 billion will be invested in airport expansion projects over the next 20 years. Of which US$22.5 billion are to be implemented in the UAE alone. The stunning economic growth amongst the states inevitably create healthy competition in the region. Each state is building bigger and more modern airports with world-class facilities. This propels them to be at the forefront of the world's aviation industry. Despite the current economic turmoil, there are still a number of large projects currently underway in the region. Most of these new airports are scheduled for completion between 2011 and 2015, when regional economies are expected to recover and capacity is needed to meet anticipated increases in passenger demand. Being in the region since 2004, the Group has played a vital role in the blooming Middle East market. Our subsidiary, IR (Middle East) LLC, is strategically located in Dubai. Since its incorporation, IR (Middle East) LLC has successfully established a strong foothold in the region and has secured major projects in all three terminals at Dubai International Airport. In 2008, we added Jebel Ali Low Cost Terminal to our Middle East stable. Located in the midst of the action, we are able to provide timely and effective on-site and after-sales services. This has earned us numerous praises and recognition from our customers in the various projects that we have worked on in this region

so far. Moving forward, the Group will continue to ride on the blooming waves through IR (Middle East) LLC and seek further working opportunities in this region. Americas The effects of the US credit crunch and the subprime crisis, coupled with the high fuel price during the first half of 2008, began to sink into the US aviation industry. In December 2008, demand for international passenger travel on the North American airlines dropped by 4.3% year-on-year and the cargo traffic was down 22.2% year-on-year. Airlines in the region are fighting to stay afloat and cutting flights to destinations with lower travel demand. Although US airlines faced reduced passenger traffic in 2008, the Federal Aviation Administration expects the number of air travelers to double by 2025. Hence, there is a need to expand the capacity of existing US airports. Industry experts estimate that US airports and air-traffic control systems will need at least US$50 billion in upgrades over the next five years. The American Recovery and Reinvestment Act of 2009 has set aside supplemental funding of US$200 million for upgrading airport facilities and equipment. An additional US$1.1 billion is available as grants for authorised airport projects, as well as for procurement, installation and commissioning of runway incursion prevention devices and systems. We believe proper


Pteris Global Limited annual report 2008

Market overview

management of US stimulant packages like these will improve the economic situation. Additionally, we will seize every market opportunity in the US arising from this Act. In Canada, a budget of CAD 282 million was set aside for measures that will support the development of aviation security plans, improve operations of the Canadian Air Transportation Security Authority, and implement a new passenger assessment system over the next two years. These measures include new, advanced, internationally compatible screening equipment and other technology and training for the screening workforce to increase levels of security and efficiency. Budget 2009 also provides CAD 14 million to support the implementation of a new security program for cargo that departs from Canadian airports over the next two years.

In 2006, Pteris Global has successfully completed the Tocumen International Airport at Panama. In 2007, we secured a software upgrading project in Phoenix Airport, Arizona and another turnkey design-andbuild baggage handling system project for Winnipeg James Armstrong Richardson International Airport. In 2008, we marked another success in securing a project at Calgary International Airport to provide baggage handling system. These projects mark our first forays into the American market. Recently, our solutions and equipment are recognised as USAcompliant by one of the major airport consultants. To better service our customers in America, we have set up two wholly-owned subsidiaries, Pteris Global (USA) Inc. and Pteris Global (Canada) Inc. in 2008. We will continue to strengthen our marketing efforts in this new region and we look forward to clinching more projects in the near future.


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