JAYA AR2007

JAYA HOLDINGS LIMITED ANNUAL REPORT 2007

Steering Ahead Jaya Holdings Limited Annual Report 2007 JAYA HOLDINGS LIMITED 13 Tuas Crescent Singapore 638707 Telephone

: (65) 6265 1010

Facsimile

: (65) 6864 5555

E-mail

: enquiry@jayaholdings.com

Website

: http://www.jayaholdings.com

Co Reg. No. : 199002391E

CORPORATE MISSION STATEMENT A commitment to quality and integrity in all aspects of our business - equipment, service and relationships.

A constant drive to satisfy our customers, while always being mindful of our responsibility to our shareholders, employees and the community.

contents 1

financial highlights

2

corporate information

3

corporate group structure

4

chairman’s statement

6

board of directors

9

key executives

review of operations

10 - offshore shipping 13 - shipbuilding division 16 - conventional shipping 17 - corporate affairs and human resources 19 report of corporate governance

financial highlights

Group Results For The Past Five Financial Years

Group revenue Profit before tax Profit attributable to shareholders Earnings per share (cents) Net tangible asset backing per ordinary share (cents) Total assets Shareholders’ fund

2003 $’000

2004 $’000

2005 $’000

2006 $’000

2007 $’000

135,233 35,328 32,888 4.50

104,820 49,847 46,218 6.24

168,869 95,229 86,108 11.50

306,190 127,868 107,328 14.20

307,638 135,125 120,774 15.80

24.23 319,836 179,917

27.15 387,051 202,477

33.98 481,216 255,856

41.93 514,355 318,619

49.10 600,839 377,743

32,888

03

06

07

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15.80

03

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11.50

07

04

Note: The above bar-charts are drawn to scale only within each category illustrated.

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06

07

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06

14.20

600,839

514,355

481,216

387,051

04

05

Earnings Per Share (cents)

4.50

03

04

6.24

05

Total Assets ($’000)

319,836

46,218

168,869

04

120,774

307,638

07

86,108

306,190

06

104,820

135,233

03

107,328

Profit Attributable To Shareholders ($’000)

Group Revenue ($’000)

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corporate information

BOARD OF DIRECTORS

SHARE REGISTRAR

Tang Kok Yew (Chairman) Chan Mun Lye (Chief Executive Officer) Chan Fook Kong (Executive Director) Lai Tak Seng (Non-Executive Director) Mok Weng Sun (Non-Executive Director) Fung Hwee Ling (Non-Executive Director) Lim Jiew Keng (Independent Director) Liow Keng Teck (Independent Director) Goon Kok Loon (Independent Director)

Lim Associates (Pte) Ltd 3 Church Street #08-01 Samsung Hub Singapore 049483 Telephone : (65) 6536 5355 Facsimile : (65) 6536 1360

Chan Mun Lye (Chairman) Chan Fook Kong Lai Tak Seng

Ernst & Young One Raffles Quay North Tower, Level 18 Singapore 048583 Partner: Yee Woon Yim

(appointed since FY 2003)

AUDIT COMMITTEE

Principal Bankers

Lim Jiew Keng (Chairman) Lai Tak Seng Liow Keng Teck

ABN-AMRO Bank N.V. BNP Paribas Commerzbank Aktiengesellschaft DBS Bank Ltd KBC Bank N.V. Oversea-Chinese Banking Corporation Limited Rabobank International RHB Bank Berhad Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Limited United Overseas Bank Limited

EXECUTIVE COMMITTEE

NOMINATION COMMITTEE Liow Keng Teck (Chairman) Tang Kok Yew Lim Jiew Keng REMUNERATION COMMITEE Goon Kok Loon (Chairman) Lai Tak Seng Liow Keng Teck COMPANY SECRETARY Yeo Poh Noi Caroline

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REGISTERED OFFICE

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AUDITORS

13 Tuas Crescent Singapore 638707 Telephone : (65) 6265 1010 Facsimile : (65) 6864 5555 Email : enquiry@jayaholdings.com Website : http://www.jayaholdings.com

Java Marine Lines Pte Ltd (100%)

Airia Jaya Marine (S) Pte Ltd (100%)

Jaya Shipbuilding and Engineering Pte Ltd (100%)

Jaya International Transport Pte Ltd (100%)

Jaya DMS Marine Pte Ltd (50%)

Sanergy Jaya Marine Pte Ltd (50%)

DMS Jaya Marine W.L.L (49%)

Batamindo Carriers Pte Ltd (35%)

THE ABOVE GROUP STRUCTURE INCLUDES ONLY ACTIVE SUBSIDIARIES AND ASSOCIATED COMPANIES AS AT 30 JUNE 2007.

A FULL LISTING OF THE GROUP'S INVESTMENTS IS DISCLOSED UNDER ITEM 3 OF NOTES TO THE FINANCIAL STATEMENTS.

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P.T. Jaya Asiatic Shipyard (95%)

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JAYA HOLDINGS LIMITED

Jaya Offshore Pte Ltd (100%)

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corporate group structure

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chairman’s statement

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DEAR SHAREHOLDERS

FINANCIAL RESULTS

As your new Chairman and on behalf of your Board, I am pleased to report another strong performance by the Jaya Group for the financial year ended 30 June 2007. With this, our Group of companies has demonstrated that it is set on strong business fundamentals which have enabled us to attain a new profit record consecutively for the seventh year.

For the 12 months ended 30 June 2007, the Group achieved a net profit attributable to shareholders of $120.8 million. This was 13% higher than that of the previous financial year. Earnings per share rose to 15.8 cents from 14.2 cents in the previous year.

We have continued to capitalise on the healthy state of the oil and gas industry and the resultant strong demand for offshore support vessels (OSVs) and related services. Aside from the higher level of exploration and production activities driven by the high price of crude oil, the demand for such vessels has also been due to the fact that the world’s existing fleets are of a highly aged profile. We have therefore pursued an aggressive investing strategy in the building of select offshore support vessels which will command premium charter rates and selling prices when they are completed and made available to the market.

The Group’s total revenue of $307.6 million was marginally higher than that of the previous financial year. An increase in the revenue of the Offshore Shipping Division was offset by decreases in the Shipbuilding and Conventional Shipping divisions.

Our business model has served us well in the current market situation. We firstly identify the types of vessels in demand by our existing and potential clients who are mainly involved with the oil and gas industry. This identification process is done through reviewing our logbook of customers’ enquiries against the market information on the supply side of each type of vessels. Having a relatively small operating fleet gives us the internal requirement to build new vessels primarily for own chartering operations but which at the same time can also be made available for sale to external parties. The shorter available time for a vessel already under construction when compared to the lead time for a fresh build-to-order one invariably gives us a decisive edge when marketing such vessels.

We are thus able to reap the synergies and flexibilities inherent in our dual business lines as a ship charter operator and a ship builder.

REVENUE CONTRIBUTIONS

Our Offshore Shipping Division performed well with its revenue of $69.4 million which was 18% higher than the year before. This was despite it having operated a smaller fleet due to the divestment of several of its smaller and older vessels although it had also added on some of the larger and higher valued ones from our new building programme. Such intentional fleet improvement measures have enabled us to achieve a higher fleet utilisation rate of 81% against 79% in the previous year. In addition we have also been able to improve the average daily vessel earning rate.

The Shipbuilding Division recorded a revenue of $236.9 million, 4% lower than the $245.7 million in the previous year. This was mainly due to the timing of our sales contracts which had resulted in a lower progressive recognition of revenue from vessels sold under its new building programme.

PROFIT CONTRIBUTIONS Of the Group’s total net profit attributable to shareholders of $120.8 million, the Offshore Shipping Division was our top contributor with

CHANGES TO THE BOARD As previously announced by the Company, Nautical Offshore Services (“NOS”) had, on 8 January 2007, completed its purchase of an approximate 55.9% equity stake in the Company.

Pursuant to this development, Messrs Tang Kok Yew, Lai Tak Seng, Mok Weng Sun and Fung Hwee Ling, all nominees of NOS, were appointed to the Board on 8 January 2007. On the same date, Mr Chan Fook Kong was also appointed to the Board. Mr Goon Kok Loon joined the Board as an Independent Director on 4 April 2007. Kindly join me in welcoming these new members as we look forward to their advice and contributions in helping the Group reach new heights. At the same time, I would also like to thank Messrs Eka Tjandranegara, Pang Yoke Min, Khong Lai Cheong, Lee Tuck Onn, Mohd Shukri Baharom, K Sekhar S Krishnan and Michael Wong Pakshong, who had all stepped down on 8 January 2007, for their invaluable past services to the Board.

OUTLOOK AND PROSPECTS During the financial year under review, the Company had engaged the services of an internationally reputed consulting group to do a market research and strategic options study for the Group. We have been reassured by the study that for the current financial year and near term, the business outlook for the industry in which we operate should remain attractive. We can expect the oil and gas sector to remain active and robust with the demand for energy being fuelled by growth in major economies like China and India. The current high price of crude oil is not expected to weaken appreciably any time soon and should remain a key driver for robust exploration and production activities of the major oil and gas companies.

These conditions should augur well for the continued high demand for OSVs. Although much effort has been made by the global fleet owners

The Group is well placed to take advantage of these favorable market conditions, particularly as we have established positions in both the chartering as well as sale and purchase markets of OSVs. We have a relatively young offshore fleet with an average age of 5.5 years and a decisive head start in the fleet renewal process.

Currently, our new building programme has over 60 vessels planned or under construction, with deliveries scheduled over the next three financial years. We shall continue to monitor the market demand and supply situation and ensure that so long as the outlook remains positive, our new building programme will remain active and resourceful. This will provide us with sufficient new vessels and the flexibility to either commit them to our chartering fleet for moderate but recurrent earnings or for sale to external parties where we are able to get larger one-off gains.

Other initiatives which we shall be pursuing in the near term include the expansion of our in-house shipbuilding capacity. In this respect we shall be adding more berths to our Batam shipyard and we have also acquired an existing shipyard in China which we shall be expanding and upgrading. The addition of this third shipyard in a low cost country will further improve the competitiveness of our shipbuilding division. We shall also be looking to move up our value chain through the construction of higher end and more complex forms of OSVs with upgraded ship designs.

ACKNOWLEDGEMENT AND APPRECIATION Finally, on behalf of my fellow board members, I would like to thank our committed management staff and employees who have been pivotal in getting Jaya to where we are today. We would also like to express our gratitude to all our customers, valued shareholders, business associates and suppliers for their unwavering support. We look forward to your continuing support as we work together going forward to bring continued success to the Jaya Group.

TANG KOK YEW CHAIRMAN 18 September 2007

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In line with the good financial results, I am pleased to advise that your Board has proposed a final tax exempt one-tier dividend of 6.5 cents per share, subject to approval at the forthcoming annual general meeting on 26 October 2007.

Together with the interim tax exempt one-tier dividend of 4.0 cents per share paid out in March 2007, the total dividend will amount to $81 million, representing a payout rate of 67% as against the 59% paid out in respect of the previous financial year.

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DIVIDENDS

to renew and expand their existing fleets, we do not foresee an over supply situation in the near term. The shortage of shipyard capacities as well as long lead times in the supply of ship engines and other key equipment will limit the pace of the global fleet renewal process. A typical mid-sized anchor handler new building currently has a production lead time of up to 30 months compared to about 16 months a couple of years back.

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$66.6 million. The Shipbuilding Division recorded a profit of $52.1 million which was lower than the previous year’s profit of $61.7 million as a result of its lower progressive revenue recognition. The Conventional Shipping Division which has been left with one product tanker on a long term charter also contributed a profit of $1.7 million.

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board of directors

from left to right: Tang Kok Yew, Chan Mun Lye, Chan Fook Kong

Tang Kok Yew, Malaysian, 54

Chan Mun Lye, Singaporean, 56

He is the Chairman of the Group and was appointed to the Board on 8 January 2007.

Mr Tang also sits on the Nomination Committee.

Mr Tang joined UBS Capital as Chairman, Asia Pacific in 1999 before co-founding Affinity Equity Partners in 2002. Prior to UBS Capital, he was the Chief Executive for Investment Banking, East Asia at Union Bank of Switzerland in 1995. Following the merger of Union Bank of Switzerland and Swiss Bank Corporation to form UBS, Mr Tang became Chief Executive, Hong Kong, of UBS Group and Asia Regional Head of Corporate Finance for UBS Warburg.

He is Chief Executive Officer of the Group and is a pioneer of its origin. He also sits on the Executive Committee. Mr Chan is a Chartered Engineer (UK) and has a Diploma in Mechanical Engineering, an Extra First Class Engineer (UK) qualification and is a Fellow of The Institute of Marine Engineering, Science & Technology (London). Prior to joining the Group in 1982, Mr Chan had 12 years of experience in the shiprepair, shipowning and operating industries including sailing experience as a marine engineer with various shipping companies. Mr Chan is responsible for the overall business development and management of the Group.

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Prior to UBS, he served in a number of senior roles over 20 years in Banque Indosuez Group and Chase Manhattan Bank.

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Mr Tang holds a Bachelor of Economics (Accounting) Degree with First Class Honours from the University of Malaya.

Chan Fook Kong, Singaporean, 58 He is the Executive Director and a member of the Executive Committee. Mr Chan is a FCPA Singapore and has a Bachelor of Accountancy from the University of Singapore. Prior to joining the Group in 1993, he had over 20 years of experience with several multinational companies rising from accountant to finance director positions. He is responsible for the business development and strategic planning and is Chief Financial Officer of the Group.

from left to right: Lai Tak Seng, Mok Weng Sun, Fung Hwee Ling

Lai Tak Seng, Singaporean, 46

Mok Weng Sun, Malaysian, 40

He is a Non-Executive Director of the Group and was appointed to the Board on 8 January 2007.

He also sits on the Audit and Remuneration Committees. Mr Lai is the Managing Partner and co-founder of Affinity Equity Partners.

Prior to that, from 1996, Mr Lai was President for UBS Capital Asia, where he was responsible for the day-to-day operations of the private equity business in Asia. Prior to joining UBS, he was a Director at Prudential Asset Management Asia, and before that he was with Suez Apac, the private equity arm of Banque Indosuez.

He is a Non-Executive Director of the Group and was appointed to the Board on 8 January 2007.

Mr Mok is a Partner of Affinity Equity Partners.

Prior to that, he was a Partner at UBS Capital Asia which he joined in 1997, having previously worked with CF East Asia, a boutique financial advisory practice. Prior to joining CF East Asia, Mr Mok spent six years in business development and finance roles with Eastman Holdings, an engineering group in South East Asia with interests in marine-related construction services and factory automation. Mr Mok holds a Bacherlor of Science Degree in Industrial & Management Engineering and an MBA degree from Rensselaer Polytechnic Institute in New York, USA.

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He is a Non-Executive Director of the Group and was appointed to the Board on 8 January 2007.

Mr Fung has over eight years of private equity experience in the region and is an Executive Director at Affinity Equity Partners, an independently owned buyout fund manager which manages US$4 billion in funds and assets.

Mr Fung holds a degree in Accountancy with First Class Honours from Nanyang Technological University, Singapore.

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Mr Lai holds a degree in Accountancy with First Class Honours from the National University of Singapore and is a Fellow member of the Institute of Certified Public Accountants, Singapore and Australia.

Fung Hwee Ling, Singaporean, 36

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Mr Lai has over 15 years of private equity experience in the region. He has also worked for investment banking house Morgan Grenfell, where he specialised in structured and project finance.

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board of directors

from left to right: Lim Jiew Keng, Liow Keng Teck, Goon Kok Loon

Lim Jiew Keng, Singaporean, 67

Goon Kok Loon, 64

He is a Non-Executive and Independent Director, Chairman of the Audit Committee and a member of the Nomination Committee. Mr Lim has a Bachelor of Social Science degree (Economics, Honours) from the University of Singapore and had completed an Advanced Management Programme at Duke University (USA). Currently a director and senior consultant at BSL Consultants Pte Ltd, Mr Lim has extensive experience as a senior banker in the corporate and investment fields. Besides his appointments with the Company, he also sits on the boards of several other publicly listed companies.

He is a Non-Executive and Independent Director and Chairman of the Remuneration Committee.

Mr Goon holds a Degree in Electrical Engineering (First Class Honours) from the University of Liverpool (UK) and is a Fellow of the Chartered Institute of Logistics & Transport, FCILT. Mr Goon was President (International Business) in PSA Corporation Ltd when he left in 2003. He is currently Chairman of Global Engineering & Maritime Services Pte Ltd, an engineering and marine services consultant company. In addition, Mr Goon sits on the Boards of SPC Ltd, Venture Holdings Ltd, Yongnam Holdings Ltd, and Jurong Port Pte Ltd.

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Liow Keng Teck, Singaporean, 66

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He is a Non-Executive and Independent Director, Chairman of the Nomination Committee and a member of both the Audit and Remuneration Committees. Mr Liow has a Degree in Mechanical Engineering (Honours) from the University of Singapore and is also a registered Professional Engineer (Singapore). Before going into private practice as an engineering consultant in 1997, Mr Liow was with the Public Utilities Board, as Managing Director of Development Resources Pte Ltd, its engineering consultancy arm. Mr Liow also sits on the boards of International Capital Investment Ltd, Manhattan Resources Ltd and several unlisted companies. Mr Liow is also a member of the Singapore Institute of Directors.

key executives

CORPORATE SERVICES

SHIPBUILDING SERVICES

Admin / HR

Shipbuilding

Teng Boon Bee Senior Manager

Lau Chor Hua Senior Manager

Sean Ong Soon Onn Manager (Batam Yard)

Foo Wah Boon Manager

Finance

Tan Hin Seng, Andy Manager (Batam Yard)

Goh Shu Yen, Janice Financial Controller

Teo Eng Guan Manager (Batam Yard)

Quek Geok Kheng, Jenny Manager

Projects

Legal / Contract

Wong Sun Senior Manager

Cheng Kwong Wing Manager

Lau Boon Hwee Manager

Internal Audit R Dharmarajan Manager Purchasing Tan Kok Ann, Richard Manager

OFFSHORE SHIPPING Marketing Tan Tee Suan, Philip Assistant Manager

Ng Kian Lam Manager

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Engineering Support

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Capt. Baharrudin Bin Ali Manager

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Operations / Crewing

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review of operations Offshore Shipping

Supporting the offshore market

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The Division operates a fleet of diversified offshore support vessels. By global standards already very young, with vessels averaging only 5.5 years old, the fleet is continually upgraded with newer and bigger vessels from the Group’s shipbuilding arm. Our commitment to good service is backed by our ability to provide modern and highly sophisticated vessels and the people to put them into operational readiness at all times.

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Offshore Shipping

The Division’s revenue had shown a growth of 18%, accounting for 23% of the Group’s total revenue and 55% of its net profit after tax.

The increase in revenue of the Division was achieved on the back of a higher fleet utilization rate and better charter rates. During the year, we had added four anchor handling tug supply vessels (AHTS) and one deck barge into the fleet but had also disposed eight vessels which were mainly the older tugboats. Though the operating fleet size had reduced to 28 as at the end of the financial year, compared to 33 a year ago, the fleet mix had improved, with proportionately more of the higher valued vessels. The fleet as at 30 June 2007 comprised of 10 AHTS, five tugs, three platform supply vessels (“PSV”), six utility supply vessels, three deck barges and one accommodation/crane barge. The improved fleet

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The Division operates a relatively young fleet of offshore support vessels, averaging 5.5 years, compared to the highly aged profile of the world fleets of such vessels, a large proportion of which are over 20 years. These vessels are primarily involved in assisting other offshore structures and equipment including the positioning of rigs, the handling of anchors and the supply logistics of operating platforms. With the surge of offshore oil and gas exploration and production activities, coupled with the shortage of newer vessels in the

Throughout the year, we had received a very high level of enquiries for our vessels from customers seeking chartering commitments. There were also no shortage of buyers who were interested in our relatively young operating vessels to renew or enlarge their own fleets. Our chartering customers have been diversified, covering Asia, Middle East, Australia, West Africa and stretching to the Russian Sakhalin field. On the other hand, buyers of our vessels tended to be internationally spread with many US and European owners included among our customer base.

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Opportunities were abound in the offshore oil and gas industry, where upstream and offshore facilities operating and capital expenditures continued to rise. From 1996-2006, the industry grew at a compounded annual growth rate of 9.8% and is expected to hit US$350 billion by 2010. The deep floating platforms are also expected to experience high growth over the next few years. The step up in the oil production programmes have directly benefited companies dealing with its supporting equipment and services. The market for offshore supply vessels (“OSV”) had accordingly been good with ship owners achieving high utilisation and charter rates for them.

aged global fleet, our vessels remained in high demand throughout the financial year under review. We had strategically focused our efforts on achieving an optimal fleet of higher capacity offshore support vessels. This was done through the disposal of the smaller and older tugboats while at the same time adding higher valued vessels from our new building programme to the fleet.

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The Offshore Shipping Division continued to perform well given the robust and vibrant state of the oil and gas industry during the financial year under review. Energy prices remained exorbitant, particularly crude oil which had remained on average above US$65 per barrel during the period. Such high prices were fuelled by growing consumption demand following strong economic growth, particularly in the US and Asia. Also contributing to this were threats of political unrest in countries with oil producing capacities such as Nigeria and concerns over the lingering possibility of a US-Iran military confrontation.

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Offshore Shipping

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composition, coupled with the upward trend of the oil and gas sector, had enabled the Division to improve its average daily charter revenue earned per vessel by 27% to $8,249 during this financial year, from $6,493 during the last financial year. The Division’s overall fleet utilization improved to 81%, from 79% a year ago. The lower utilization rate of 62% for the five tugs and 76% for the six utility supply vessels had weighed down the higher utilization rates achieved for the other vessel types, including 100% for the 10 AHTS and 100% for the three PSV in the fleet.

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For the Division’s total chartering revenue, the oil and gas sector accounted for 84%, the highest usage of the Division’s vessels. We had the civil and marine engineering sector contributing 14% with the mining and other sectors making up the balance 2%. The Division’s revenue was derived from a a mix of 52% time charter, 47% bareboat charter of its vessels with the remaining 1% coming from mobilization fees. Owners are responsible for a higher operating scope including the provision of crew, insurance and maintenance in a time charter arrangement whereas all these expenses are for the charterer’s account under a bare boat charter.

On the geographical spread of where the vessels were employed, customers from the Middle-East region, Saudi Arabia and Qatar accounted for the largest market share of 29%. The ASEAN countries, comprising Malaysia, Thailand and Indonesia collectively accounted for 27% of the total charter revenue. The balance of the charter revenue was contributed by customers from distant places including West Africa and Sakhalin Russia. The Division had about 28% of its chartering revenue from shorter term charters with duration of six months or below, with the

balance 72% from longer term charters in excess of six months.

The Division contributed $66.6 million or 55% of the Group’s total net profit after tax, 57% higher than the year before. Last year, it contributed $42.5 million, amounting to 40% of the Group’s total net profit. This was mainly attributable to improved charter rates, higher average vessel utilization and higher capital gains from the disposal of the older vessels. It recorded a higher capital gain of $38.6 million from the sale of eight vessels as compared to $25.7 million from the sale of nine vessels in the previous year. The better mix in the vessels disposed in the year under review resulted in the relatively higher disposal gains.

Going forward, we expect the demand for offshore industry equipment including OSVs, to remain strong. There is a general expectation of a continuing healthy and active oil and gas industry. The constraints imposed by the ageing vessels in the global fleet under the small and medium categories should be advantageous to fleet owners with relatively new vessels. The renewal and expansion efforts by the major fleet owners were hampered by the shortage of shipyard capacities as well as long lead times in the supply of ship engines and other key equipment. A typical mid-sized anchor handler new building is now taking about thirty months to complete whereas it was averaging 16 months a couple of years ago.

We can hence expect the Division’s existing fleet to remain actively utilized with some upside on charter rate improvements for vessels which will be renewing their charter terms. The current fleet will continue to be upgraded through the addition of new vessels.

review of operations Shipbuilding Division

Catching the building cycle

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With an established record of building quality offshore support vessels, the Division is well positioned to participate in the expansion and renewal of the global fleet. Its shipyards operating out of Singapore, Batam and China provide the Division with the capacity to sustain an aggressive new building programme. The demand for such new buildings is simply very good.

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Shipbuilding Division

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It has been a brisk year for the Shipping Division.

With the demand for crude oil increasing due to the strong economic fundamentals and crude oil price continuing to rise, there had been significantly more enquiries for new buildings of offshore support vessels (OSVs) or to buy off our existing fleet. Fleet owners and operators were eager to renew or add to their existing fleet as demand for OSV continued to increase in support of the booming activities in the offshore oil and gas exploration and production sector.

During the financial year under review, the Division took completion delivery of 11 vessels.

Three of the vessels were completed by the Group’s own yards. They included two Anchor Handling Tug Supply Vessel (AHTS) of 5,500 bhp and one AHTS of 15,000 bhp. The remaining eight vessels were completed by third party yards under outsourcing arrangements. The vessels completed included six AHTS ranging from 5,150 bhp to 5,500 bhp, one multi-purpose ROV Support Vessel and one deck cargo barge.

The acute shortage of good shipyards and the long lead times for ship engines and other key equipment were hampering the speed and quality of new buildings. The ageing profile of the existing OSV fleet did not help, particularly for the small and medium size anchor handlers and platform supply vessels of between 4,000 and 12,000 brake horse power (bhp). With the growing emphasis by major users on the health, safety and environmental risks factors, the preferences for newer vessels have become more pronounced. The higher operating costs associated with the older vessels also deter such vessels from being stretched beyond their economic life.

Of the 11 completed new buildings, six were sold to external customers and the remaining five were added to the Group’s existing offshore fleet.

The vessels were sold to global buyers including US, European and Asian. The remaining vessels were chartered to customers in the Middle East, US and Europe.

Since several years back, the Group had anticipated the demand for OSVs to grow and had embarked on an extensive building programme to address its internal chartering fleet renewal and expansion needs as well as to meet the strong demand for such vessels in the global sale and purchase market. This Division builds vessels to cater to both internal and external needs. The building activities are carried out by the Group’s two shipyards in Singapore and Batam. In order to meet the market demands, it has also outsourced a large proportion of its new buildings to third party shipyards which will build the hull. They will also be responsible for installation of the main machinery and deck equipment which will be provided by the Group.

The Group recognizes shipbuilding revenue on progressive work done during the reporting period based on the percentage of completion method for vessels under construction which have secured sale contracts from external parties.

While it was stated above that 11 vessels were physically completed during the financial year under review, some of the revenue of these had already been partially recognized in previous financial years. Vessels completed which are added to the existing chartering fleet would not have any effective revenue or profit recognition at Group level because they were not sold to external parties.

The Division recorded revenue of $236.9 million, 4% lower than the previous year and a contribution of 77% to total Group revenue.

During the year, there was progressive revenue recognition for 15 vessels under construction at an average rate of 60% of their selling prices. In comparison, for the previous financial year, such progressive revenue recognition was applicable to 16 vessels under construction with an average

Shipbuilding Division

Going forward, the Group will be seeking to expand its in-house shipyard capacity. In this regard, the existing Batam shipyard will be enhanced to take on five more berths to its present five. When this upgrading process is completed in about a year and a half from now, it will enable the shipyard to increase its output significantly. Also on the plan is the acquisition of a shipyard in China which will provide the Group with an extended footprint in this relatively low cost country. An announcement by the Company on the acquisition of this Nantong Shipyard has been made on the 10 September 2007.

When fully developed, this China Shipyard will be capable of providing the Group with a doubling up of its existing building capacity. The benefit from the better economy of scale from running the three shipyards will ensure that our shipbuilding operations remain competitive. It will also allow the Group the flexibility to position its resources and up the value chain of its production. The China and Batam shipyards will be capable of handling the moderate range of vessels and free up the Singapore shipyard to take on more sophisticated ship design constructions.

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The Division is strategically focused to build more quality vessels to meet the internal chartering needs and the global sale and purchase requirements. As at the beginning of the current financial year, the Group had a total of 66 committed new buildings with most of them undergoing various stages of construction.

Out of these, 18 vessels are expected to be completed during the current financial year ending 30 June 2008. The remaining 48 vessels are due for completion in the following three financial years. Of the total 66 vessels under the new building programme, 53 are AHTS with engine capacities ranging from the smaller 5,000 bhp to the larger 16,000 bhp series. The balance committed new buildings are two platform supply vessels, four subsea operation vessels and seven units of accommodation crane barge. Of these new buildings, 28 units will be constructed at the Group’s own shipyards and the balance 38 vessels will be completed at the outsourced Chinese shipyards.

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The Division contributed $52.1 million or 43% of the Group’s total net profit after tax. In the previous financial year, the Division recorded $61.7 million profit or 58% of the Group’s total net profit after tax.

Under its business model, the Group builds vessels primarily for its internal fleet expansion. By improving the chartering fleet mix, the Group will be able to charter at better rates. At the same time, the Group can also cater to the demands of fleet owners or operators who may wish to purchase such vessels outright. The practice of building first and only determining the end usage of each vessel at a later stage nearer its completion, provides flexibility to the Group to reap the benefits of chartering rate and selling price upsides. Of the new buildings, most of the 18 vessels scheduled for completion in the current financial year have already been committed for sale or charter. We have also seen strong demand for those vessels which are only going to be completed in the following financial year FY09 and several units from this batch have been committed.

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rate of 88%. In addition, in accordance with the guidelines provided under the Financial Reporting Standard (FRS) No. 11 covering construction contracts which outcome cannot be estimated reliably, the Group had taken revenue and cost recognition for five vessels which were being built in third party shipyards in FY05 only to the extent of their contract costs which were incurred up to that point in time. Subsequently, when these vessels were sold in the last financial year, the revenue of $19 million which was deferred from FY05 was included in last year’s financials.

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review of operations Conventional Shipping

Keeping in view Although downsized to only one remaining vessel, the Division has been operating profitably.

It has retained its learning curve and continues to keep in view future market possibilities in this segment of shipping.

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The Group had consciously taken a strategic decision to scale down this Division several years back, at the time when the market for such vessels had appeared less promising than the offshore vessel market and also considering the old age of the vessels in this fleet. It was a deliberate move to reallocate the Group’s resources and efforts to the higher growth offshore vessel market.

16

For the year under review, the Division recorded a net profit of $1.7 million from its single remaining vessel, a small old tanker. The Management intends to retain its sole remaining vessel until the completion of its committed long term bare-boat charter in December 2008.

review of operations Corporate Affairs And Human Resources

Work Safety and Training We recognize that product and service quality standards which are in compliance with ISO 9001:2000 are important for business success.

We have also adopted the Occupational Health and Safety Management System (OHSAS)

Rewards and Compensation The Group has continually reviewed and enhanced its rewards and compensation packages to motivate its employees for optimal performances. We understand the critical relationship between the quality of our human resources and the success of our business efforts. This is particularly so in the current buoyant state of the shipbuilding industry in which there is a dire shortage of experienced and skilled workers. We also provide our staff with the opportunity to participate in and benefit from the successes of the Group through our share option scheme.

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We are committed to promote greater camaraderie among our employees. Every year, we organize group functions to facilitate team-building spirit among all levels of our staff and employees. Through such events, the employees get to socialise and have a better understanding of one another’s job scope. In August 2007, we organized our annual subsidized incentive trip to Korea in which over 100 employees had participated.

In the marine industry that is characterized by rapid changes and competition, we constantly work closely with staff to develop their fullest potential. We provide opportunities for them to develop career paths and at the same time, identify the training and development needs of each individual.

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Team Work

18001:1999 to reduce the workplace accidents and injuries. The Group is committed to continuous training, upgrading as well as reskilling of employees to maintain the high standards required for marine security and safety, quality and environmental impacts. We scheduled periodical training for shipyard workers and vessel crewmen to attend various occupational safety and health, job knowledge and skills upgrading programmes to improve productivity and efficiency. We also held monthly safety meetings, involving operations and subcontractors to promote work safety.

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As at 30 June 2007, the Group had a direct staff strength of over 400 employees. In addition, the Group works closely with subcontractors who specialize in the various phases of the ship building process to meet its business needs.

In 2007, we continued to place strong emphasis on improving our human resources. We believe that employees who are given opportunities to learn and work in a close-knit and conducive working environment will be more motivated and committed to excellence. The Group’s continued success over the years would not have been possible without our employees’ contributions and unstinting support.

17

Corporate Affairs And Human Resources

Investor Relations

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The Group devotes time and efforts to maintain a clear and transparent communication channel with our shareholders and investing community to gain better understanding and confidence from the investing public and the business community in general. It does not practice selective disclosure and all information on the Group’s new initiatives have been disseminated to the shareholders and investing community promptly. Such news were made also available on the Group’s website.

18

A comprehensive programme for investor relations ensures that the Group has appropriate contact with institutional and private investors and shareholders through regular meetings and briefings. Senior management have made themselves available to the analysts and sales representatives of the major securities and research houses. In return, such analysts and research houses provided an invaluable service in covering our Group and in most cases have provided positive recommendations on our shares. Throughout the year, we have had very frequent one-to-one meetings with foreign based fund managers, clearly indicating the high level of foreign interests in the Group.

Our corporate calendar for the current financial year is as follows: Annual General Meeting FY07 Friday, 26 October 2007 Announcement of Q1 results Wednesday, 7 November 2007 Announcement of Q2 results Thursday, 14 February 2008 Announcement of Q3 results Wednesday, 7 May 2008 Announcement of final results Friday, 22 August 2008 Annual General Meeting FY08 Friday, 24 October 2008

report of corporate governance

Jaya Holdings Limited (the “Group” or “Company”) is committed to maintaining a high standard of corporate governance within the Group and adopts practices based on the Code of Corporate Governance 2005 (the “Code”) where it is applicable and practical to the Group and the Best Practices Guide issued by the Singapore Exchange Securities Trading Limited (the “SGX-ST”). Good corporate governance establishes and maintains a legal and ethical environment in which the Group strives to preserve the interests of all stakeholders.

For effective corporate governance, the Group has put in place the following self-regulatory and monitoring mechanisms: BOARD OF DIRECTORS The Board of Directors oversees the business affairs of the Group, reviews and approves the financial objectives and the strategies to be implemented by management and monitors standards of performance and issues of policy, both directly and through its committees, or by means of delegation to management personnel. The Board has the overall responsibility for corporate governance, strategic direction and overseeing the investments of the Group.

The Board currently has nine members, comprising seven non-executive Directors (including the Chairman) and two executive Directors. Three of the seven non-executive Directors are considered independent by the Nomination Committee.

Following the acquisition of a 55.9% stake in the Company by Nautical Offshore Services (“NOS”), Mr Tang Kok Yew, Mr Chan Fook Kong, Mr Lai Tak Seng, Mr Mok Weng Sun and Mr Fung Hwee Ling were appointed to the Board on 8 January 2007. On the same date, Mr Eka Tjandranegara, Mr Pang Yoke Min, Mr Khong Lai Cheong, Mr Lee Tuck Onn, Mr K Sekhar S Krishnan, Mr Mohamad Shukri Baharom and Mr Michael Wong Pakshong stepped down as executive/non-executive Directors. Mr Ng Pock Yin had also resigned as alternate Director to Mr K Sekhar S Krishnan on the same day. On 4 April 2007, Mr Goon Kok Loon was appointed an independent Director of the Company.

The nature of each director’s appointment on the Board and its Committees are set out below: Committee Membership Director

Nature of Board Membership

Tang Kok Yew

Non-Executive Chairman

Chan Mun Lye

Chief Executive Officer

Chairman

Chan Fook Kong

Executive Director

Member

Lai Tak Seng

Non-Executive Director

Mok Weng Sun

Non-Executive Director

Fung Hwee Ling

Non-Executive Director

Lim Jiew Keng

Independent Director

Chairman

Member

Liow Keng Teck

Independent Director

Member

Chairman

Goon Kok Loon

Independent Director

Audit

Nomination

Remuneration

Executive

Member

Member

Member

Member

Member Chairman

The Company Secretary attends all Board meetings and ensures that Board procedures are followed. The Company Secretary also ensures that requirements of the Companies Act and all the rules and regulations of the SGX-ST are complied with.

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The roles of the Non-Executive Chairman and the Chief Executive Officer (“CEO”) are separate. There is a clear division of responsibilities between the two directors. The Non-Executive Chairman plays a pivotal role in steering the strategic direction and growth of the business, sets out the agenda for each Board meeting in consultation with the CEO and ensures information flow between Management and the Board, while the CEO focuses his attention on the day-to-day running of the operations.

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To enable the Board to fulfill its responsibilities, Management provides the Board with regular management and financial reports containing complete, adequate and timely information prior to Board meetings. Should the directors, whether as a group or individually, need independent professional advice, the Company will, upon direction by the Board, appoint a professional advisor selected by the Group or the individual to render the advice.

Newly appointed directors are briefed by Management on the business activities of the Group and its strategic direction and will also be updated on major events of the Company.

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The Board is made up of individuals with a good balance of professional, technical and financial backgrounds. The directors take a keen interest in the Group’s business strategies and are committed to increasing the level of corporate governance in the Group so as to enable the Board to carry out such functions more effectively.

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report of corporate governance

EXECUTIVE COMMITTEE The Executive Committee was formed on 17 March 1998 with a view to assist the Board and is responsible for supervising the management of the Group’s operations within limits of the executive power delegated by the Board. As at the date of this report, the Executive Committee comprises the Chief Executive Officer, Mr Chan Mun Lye, the Executive Director, Mr Chan Fook Kong and the Non-Executive/Non-Independent Director, Mr Lai Tak Seng.

The Executive Committee carries out any instructions which the Board gives from time to time and meets regularly to review the progress of corporate development projects and business performance. It also manages the day-today affairs of the Group and its subsidiaries.

AUDIT COMMITTEE As at the date of this report, the Audit Committee comprises three members, all of whom are non-executive/ independent and non-independent Directors. They are: Lim Jiew Keng Chairman/Independent Lai Tak Seng Non-independent - appointed on 12 Feb 2007 Liow Keng Teck Independent The Audit Committee meets at least four times a year and performs the following functions: (i) reviews with the external auditors their audit plans, audit reports, findings and recommendations to the Board; (ii) reviews the draft financial statements of the Company and the Group in conjunction with the external auditors’ comments thereon prior to their submission to the Board of Directors; (iii) reviews the reports of the internal auditor; (iv) reviews the internal control procedures of the Company; (v) reviews interested person transactions in accordance with the requirements of the SGX-ST’s Listing Manual; (vi) reviews the external auditors’ management letter and the response from management; and (vii) carries out special purpose projects to assist management in performing evaluation and decision making.

The Audit Committee, having reviewed all non-audit services provided by the external auditors, Messrs Ernst & Young, to the Group, is satisfied that the nature and extent of such services would not affect their independence and has recommended the re-appointment of Messrs Ernst & Young as auditors at the forthcoming Annual General Meeting.

To carry out its functions, the Audit Committee reports regularly to the Board and interacts with the external auditors and senior management staff. It also meets with the external auditors without the presence of management staff at least once a year.

As at the date of this report, the Company has approved the implementation of a whistle blowing policy which will provide well-defined and accessible channels in the Group through which the employees may raise concerns about improper conduct within the Group and possible improprieties in matters of financial reporting, operations or other matters. The staff can disclose directly to the Chairman of the Audit Committee, or through the Internal Audit Office. The Audit Committee will ensure independent investigation of such matters and ensure appropriate follow-up action.

The Remuneration Committee was established on 3 June 2002. As at date of this report, it comprises the following three members: Goon Kok Loon Chairman/Independent - appointed 4 Apr 2007 Lai Tak Seng Non-independent - appointed 12 Feb 2007 Liow Keng Teck Independent

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REMUNERATION COMMITTEE

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During the year, the Remuneration Committee had reviewed and approved: (i) the executive directors’ and senior managers’ remuneration packages; and (ii) the directors’ fees payable to the non-executive directors, having regard to the roles that each director plays.

The directors’ fees are submitted for shareholders’ approval at the Annual General Meeting.

The Remuneration Committee also determines the eligibility of participants in the Jaya Employees’ Share Option Scheme (“Scheme”) and the number of options to be offered to each participant in accordance with the terms and conditions of the Scheme.

report of corporate governance

A summary of Directors’ remunerations for financial year ended 30 June 2007 is as follows: Other Remuneration Band & Name of Director Salary Fees Bonus benefits Total

% % % % % $500,000 and above Chan Mun Lye Chan Fook Kong Pang Yoke Min (resigned 8 Jan 2007) Khong Lai Cheong (resigned 8 Jan 2007)

8 7 11 8

1 – 2 1

90 92 85 89

1 1 2 2

100 100 100 100

Below $250,000 Tang Kok Yew (appointed 8 Jan 2007) Lai Tak Seng (appointed 8 Jan 2007) Mok Weng Sun (appointed 8 Jan 2007) Fung Hwee Ling (appointed 8 Jan 2007) Lim Jiew Keng Liow Keng Teck Goon Kok Loon (appointed 4 Apr 2007) Eka Tjandranegara (resigned 8 Jan 2007) Lee Tuck Onn (resigned 8 Jan 2007) K Sekhar S Krishnan (resigned 8 Jan 2007) Mohd Shukri Baharom (resigned 8 Jan 2007) Michael Wong Pakshong (resigned 8 Jan 2007)

– – – – – – – – 35 – – –

100 100 100 100 100 100 100 100 11 100 100 100

– – – – – – – – 8 – – –

– – – – – – – – 46 – – –

100 100 100 100 100 100 100 100 100 100 100 100

The remuneration of five officers, not being directors, who received the highest emoluments during the financial year ended 30 June 2007 is provided in the following table: Other Remuneration Band & Number of Officers Salary Bonus benefits Total

% % % % Below $250,000 5

49

45

6

100

The remuneration details disclosed above for directors and officers do not include any benefit from share options granted to them during the year under the Group’s Employees’ Share Option Scheme.

There were no employees who are immediate family members of a director of the Company whose remuneration exceeds $150,000 during the financial year.

The Nomination Committee is responsible for reviewing and making recommendations in the appointment and reappointment of directors to the Board, based on the criteria set out in the selection matrix which was adopted by the Nomination Committee in 2006.

The Nomination Committee also determines the independence of each director and assesses the effectiveness of the Board as a whole.

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Liow Keng Teck Chairman/Independent Tang Kok Yew Non-independent - appointed 12 Feb 2007 Lim Jiew Keng Independent

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The Nomination Committee was established on 3 June 2002 and comprises the following three members:

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NOMINATION COMMITTEE

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report of corporate governance

ASSESSMENT OF INTERNAL CONTROLS The Board has ultimate responsibility for the systems of internal control maintained by the Group and for reviewing their effectiveness. The systems are intended to provide reasonable assurance, but not an absolute guarantee, against material financial misstatement or loss, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulation and best practices, and the identification and containment of business risks.

During the financial year being reported on, the Audit Committee, on behalf of the Board, has reviewed the effectiveness of the Group’s framework of internal controls, the principal features of which are as follows: Control environment The key features of the control environment include the terms of reference for each of the Board committees, a clear organisational structure, with documented delegation of authority from the Board to executive management and defined procedures for the approval of major transactions and capital allocation.

Risk identification and assessment The Group’s systems of internal control have a key role in the identification and management of risks that are significant to the achievement of its business objectives. The Board has in place a system of business risk management, which has been integrated throughout the Group into the business planning and monitoring processes. The overall risk management process and results are reviewed formally by the Audit Committee and the Board.

Control procedures and monitoring systems The Group has a well-developed system of planning and monitoring. Performance against the plan is regularly monitored using a prudent basis of financial reporting and accounting policies applied consistently throughout the Group. There is regular liaison between executive directors and operational management and the Board receives regular presentations from the management responsible for each principal business operation.

The Group has well-established internal audit, risk management and compliance functions. There are formal procedures in place for both internal and external auditors to report independently conclusions and recommendations to management and to the Audit Committee.

SECURITIES TRANSACTIONS The Group has a policy on share dealings which sets out the implications of insider trading and has put in place a self regulatory and monitoring mechanism which mirrors substantially the provisions of the Best Practices Guide issued by the SGX-ST. The Group has adopted a code of conduct for dealings in securities of the Company by employees, so that directors and staff comply with the guidelines of the Best Practices Guide.

INTERESTED PERSON TRANSACTIONS

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Pursuant to Rules 907 and 920(1) of the SGX-ST Listing Manual, the following is the aggregate value of transactions conducted pursuant to the shareholders’ mandate.

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Name of interested person

Aggregate value of all interested person transactions during the financial year under Aggregate value of all review (excluding transactions interested party transactions conducted less than $100,000 and transactions under shareholders’ mandate conducted under shareholders’ pursuant to Rule 920 (excluding mandate pursuant to Rule 920) transactions less than $100,000)

Sime Darby Bhd $NIL Group of Companies

$505,224 (procurement of equipment)

Sime Darby Bhd $NIL $143,520 Group of Companies (provision of offshore vessel chartering)

There are no further interested person transactions transacted with the Sime Darby Group of Companies, following the completion of Nautical Offshore Services’ acquisition of all the shares held by Sime Darby Eastern Limited in the Company on 1 November 2006.

report of corporate governance

MEETING ATTENDANCE Directors’ attendance at Board and Board Committee Meetings Audit Nomination Remuneration Meetings of : Board Committee Committee Committee No. of meetings held in the financial year ended 30 June 2007

6

4

2

2

Name & Attendance of Director Tang Kok Yew (appointed 8 Jan 2007) Chan Mun Lye Chan Fook Kong (appointed 8 Jan 2007) Lai Tak Seng (appointed 8 Jan 2007) Mok Weng Sun (appointed 8 Jan 2007) Fung Hwee Ling (appointed 8 Jan 2007) Lim Jiew Keng Liow Keng Teck Goon Kok Loon (appointed 4 Apr 2007) Eka Tjandranegara (resigned 8 Jan 2007) Pang Yoke Min (resigned 8 Jan 2007) Khong Lai Cheong (resigned 8 Jan 2007) Lee Tuck Onn (resigned 8 Jan 2007) K Sekhar S Krishnan (resigned 8 Jan 2007) Mohd Shukri Baharom (resigned 8 Jan 2007) Michael Wong Pakshong (resigned 8 Jan 2007)

2 6 2 2 2 2 5 6 1 2 3 3 4 4 1 3

– – – 2 – – 4 4 – – – – – 2 – –

– – – – – – 2 2 – – 2 – – 2 – 1

– – – 1 – – 1 2 – 1 1 – – 1 – –

On behalf of the Board:

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Singapore 18 September 2007

an n ua l re p o r t 20 0 7

Chan Mun Lye Chan Fook Kong Director Director

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statutory and financial reports 25 directors' report 29 statement by the directors 30 independent auditors' report 31 consolidated profit and loss account 32 balance sheets 33 consolidated statement of changes in equity 35 consolidated cash flow statement 37 notes to the financial statements 70 shareholders' information 72 notice of annual general meeting 75 proxy form

directors’ report

The Directors are pleased to present their report to the members together with the audited consolidated financial statements of Jaya Holdings Limited (the “Company”) and subsidiary companies (the “Group”) for the financial year ended 30 June 2007 and the balance sheet of the Company as at 30 June 2007.

Directors of the Company The Directors of the Company in office at the date of this report are: Tang Kok Yew

(Chairman – appointed 8 Jan 2007)

Chan Mun Lye

(Chief Executive Officer)

Chan Fook Kong

(Appointed 8 Jan 2007)

Lai Tak Seng

(Appointed 8 Jan 2007)

Mok Weng Sun

(Appointed 8 Jan 2007)

Fung Hwee Ling

(Appointed 8 Jan 2007)

Lim Jiew Keng Liow Keng Teck Goon Kok Loon

(Appointed 4 Apr 2007)

Arrangements to enable Directors to acquire shares and debentures Except as disclosed in this report, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose object is, to enable the Directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ interests in shares and debentures The following Directors who held office at the end of the financial year had, according to the register of Directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, interests in shares and options of the Company and its related corporations as stated below:

Directors’ contractual benefits Except as disclosed in the financial statements, since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the Director, or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

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Ordinary shares held in the name The Company of Director and/or nominees

Chan Mun Lye 25,219,321 5,173,587 5,173,587 Chan Fook Kong (Appointed 8 Jan 2007) 2,246,000 2,480,000 2,480,000 Lim Jiew Keng 125,000 425,000 425,000 Liow Keng Teck 725,000 895,000 895,000 Goon Kok Loon (Appointed 4 Apr 2007) 10,000 10,000 10,000

Options granted to Director to subscribe The Company for ordinary shares

Chan Mun Lye 632,000 400,000 400,000 Chan Fook Kong (Appointed 8 Jan 2007) 234,000 400,000 400,000 Lim Jiew Keng 495,000 445,000 445,000 Liow Keng Teck 395,000 250,000 250,000

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At beginning At end of the financial of the year/ date of financial At appointment year 21.7.2007

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Name of Director

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directors’ report

Share options Jaya Employees’ Share Option Scheme (formerly known as the Jaya Executives’ Share Option Scheme): (i)

The Jaya Employees’ Share Option Scheme (the “ESOS”) was approved by the shareholders of the Company at the Extraordinary General Meeting held on 5 September 1994. At the Extraordinary General Meeting held on 28 September 2001, the shareholders approved certain modifications to the ESOS to bring the rules of the ESOS approved on 5 September 1994 in line with the amendments introduced by the Companies (Amendment) Act 1998 (“CAA”) and the amendments to the Listing Manual issued by the Singapore Exchange Securities Trading Limited (“SGX-ST”) on 6 April 1999.

(ii) The ESOS, as modified, caters to a larger pool of participants, namely, selected full-time employees, Executive Directors and Non-Executive Directors of the Group. Participants of the Group who are eligible to participate in the ESOS are not eligible to participate in any other employee share ownership scheme implemented by the Company, and its subsidiary and associated companies.

The options granted to participants are only exercisable after the first anniversary of the date of grant. The options granted to employees and Executive Directors of the Group have a life span of 10 years from the relevant date of grant whilst options granted to Non-Executive Directors of the Group have a life span of 5 years from the relevant date of grant. However, existing options granted prior to 18 November 1998 (being the date that the CAA became operational) only have a maximum life span of 5 years.

The subscription price of the options is determined based on the average of the closing prices of the Company’s ordinary shares on the SGX-ST for 5 consecutive trading days immediately preceding the date of grant (the “Market Price”) or its nominal value, whichever is higher. No discount has been applied to the Market Price in determining the subscription price.

The annual maximum allocation of ordinary shares under the ESOS is limited to 9,966,981 ordinary shares, out of which the annual maximum to be allocated to the Directors (both Executive and Non-Executive) and employees are 25% and 75% respectively.

(iii) The ESOS is administered by the Remuneration Committee which comprises the following Directors:

Goon Kok Loon (Chairman – appointed 4 Apr 2007)

Lai Tak Seng

Liow Keng Teck

(Appointed 12 Feb 2007)

(iv) From the commencement of the ESOS to 30 June 2007, no options have been granted under the ESOS to any controlling shareholders of the Company and/or its associates. (v) The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any rights to participate in any share issues of any other company in the Group.

Options Exercise price exercised per share 250 50,000 629,500 3,413,000 5,241,850

$0.151 $0.231 $0.769 $1.020 $1.238

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ESOS Grant Number 6

ESOS Grant Number 8

ESOS Grant Number 9

ESOS Grant Number 10

ESOS Grant Number 11

(vii) During the financial year, the following options were granted under the ESOS to subscribe for ordinary shares:

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(vi) During the financial year, the following options were exercised under the ESOS to subscribe for ordinary shares:

Options Exercise price Exercise

granted per share period

ESOS Grant Number 12 500,000 $1.456 30 April 2008

to 29 April 2012

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8,850,000 $1.456

No option has been granted at a discount to the Market Price.

30 April 2008 to 29 April 2017

directors’ report

Share options (cont’d) (viii) During the financial year, 257,400 and 100,000 options under ESOS Grant Number 11 and ESOS Grant Number 12 respectively were cancelled due to resignation of employees. 250 options under ESOS Grant 6, 28,000 options under ESOS Grant 10 and 526,500 options under ESOS Grant 11 were cancelled due to the acceptance of the Options Proposal by optionholders pursuant to the mandatory conditional cash offer to acquire all of the issued ordinary shares in the capital of the Company other than those already owned, controlled or agreed to be acquired by Nautical Offshore Services. (ix) Outstanding options to subscribe for ordinary shares as at 30 June 2007 comprise: Outstanding Exercise price Exercise

options per share period

ESOS Grant Number 9 331,500 $0.769 10 December 2004

to 9 December 2013

ESOS Grant Number 10 583,000 $1.020 6 December 2005

to 6 December 2014

ESOS Grant Number 11 195,000 $1.238

2,768,750 $1.238

ESOS Grant Number 12 500,000 $1.456

25 November 2006 to 24 November 2010

8,750,000 $1.456

30 April 2008 to 29 April 2017

25 November 2006 to 24 November 2015 30 April 2008 to 29 April 2012

13,128,250

(x) Directors granted options under the ESOS were as follows:

(xi) There are no participants who receive 5% or more of the total number of options available under the ESOS during the financial year.

During the financial year, no options are granted to take up unissued ordinary shares of the subsidiary companies and no ordinary shares of the subsidiary companies are issued by virtue of the exercise of an option to take up unissued ordinary shares.

At the end of the financial year, there are no other unissued ordinary shares of the Company and its subsidiary companies under options except as disclosed above.

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400,000 400,000 445,000 250,000

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Aggregate options outstanding at end of the financial year under review

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Aggregate options Aggregate options

granted since exercised since

commencement commencement Options granted of the ESOS to of the ESOS to

during the end of the end of the

financial year financial year financial year Directors under review under review under review

Chan Mun Lye 400,000 2,192,000 1,792,000

Chan Fook Kong 400,000 634,000 234,000

Lim Jiew Keng 250,000 1,370,000 925,000

Liow Keng Teck 250,000 1,370,000 1,120,000

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directors’ report

Audit Committee The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50, including the following: (i)

reviews with the external auditors their audit plans, audit reports, findings and recommendations to the Board;

(ii) reviews the draft financial statements of the Company and the Group in conjunction with the external auditors’ comments thereon prior to their submission to the Board of Directors; (iii) reviews the reports of the internal auditor; (iv) reviews the internal control procedures of the Company; (v) reviews interested person transactions in accordance with the requirements of the Singapore Exchange Securities Trading Limited (“SGX-ST”)’s Listing Manual; (vi) reviews the external auditors’ management letter and the response from management; and (vii) carries out special purpose projects to assist management in performing evaluation and decision making.

The Audit Committee, having reviewed all non-audit services provided by the external auditors to the Group, are satisfied that the nature and extent of such services would not affect the independence of the external auditors.

To carry out its functions, the Audit Committee reports regularly to the Board and interacts with the external auditors and senior management staff. It also meets with the external auditors without the presence of management staff at least once a year.

Further details regarding the Audit Committee are detailed in the Report of Corporate Governance as set out in the Annual Report of the Company.

Auditors Ernst & Young have expressed their willingness to accept re-appointment as auditors.

On behalf of the Board:

Chan Mun Lye Chan Fook Kong

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a nn ua l re po r t 2 0 07

Director

28

Singapore 18 September 2007

Director

statement by the directors Pursuant to Section 201(15)

We, Chan Mun Lye and Chan Fook Kong, being two of the Directors of Jaya Holdings Limited, do hereby state that, in the opinion of the Directors: (i)

the accompanying balance sheets, consolidated profit and loss account, consolidated statement of changes in equity and consolidated cash flow statement together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2007, and of the results of the business, changes in equity and the cash flows of the Group for the financial year ended on that date; and

(ii) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Board:

Chan Mun Lye Chan Fook Kong Director

Director

Singapore

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a nn ua l re po r t 2 0 07

18 September 2007

29

independent auditors’ report To the Members of Jaya Holdings Limited

We have audited the accompanying financial statements of Jaya Holdings Limited (the “Company”) and its subsidiary companies (the “Group”) set out on pages 31 to 69, which comprise the balance sheets of the Group and the Company as at 30 June 2007, the consolidated statement of changes in equity, consolidated profit and loss account and consolidated cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Directors’ responsibility for the financial statements The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 and Singapore Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, (i)

the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2007 and the results, changes in equity and cash flows of the Group for the year ended on that date; and

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an n ua l re p o r t 2 00 7

(ii) the accounting and other records required by the Act to be kept by the Company and by those subsidiary companies incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

30

ERNST & YOUNG Certified Public Accountants

Singapore 18 September 2007

consolidated profit and loss account for the financial year ended 30 June 2007

Group

Note

Revenue 4 Cost of sales

307,638 (199,047)

306,190 (186,947)

Gross profit Other operating income 5 General and administrative expenses Other operating expenses Finance costs 6 Share of profits of associated companies, net of tax

108,591 43,394 (13,540) (1,362) (2,653) 695

119,243 29,122 (14,411) (3,382) (3,769) 1,065

Profit before taxation Taxation

135,125 (14,373)

127,868 (20,500)

Profit after taxation

120,752

107,368

Attributable to: Equity holders of the Company Minority interests

120,774 (22)

107,328 40

120,752

107,368

15.80 15.78

14.20 14.17

9 9

2006 $’000

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Earnings per share (cents) – Basic – Diluted

7 8

2007 $’000

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

31

balance sheets as at 30 June 2007

Group Company Note 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Fixed assets 10 264,320 249,038 – – Investments Subsidiary companies 11 – – 43,349 43,833 Associated companies 12 28,265 28,730 3,866 4,626 Other investments 233 444 106 317 Current assets Assets held for sale 10 31,036 8,862 – – Stocks and work-in-progress 13 176,406 152,539 – – Trade debtors 14 17,875 16,080 57 11 Other debtors and deposits 15 5,589 8,022 4,851 5,738 Prepayments 16 47,621 – 61 – Derivative financial instruments 17 262 1,171 – – Amounts due from subsidiary companies 18 – – 248,683 181,716 Fixed deposits 19 21,672 41,938 – – Cash and bank balances 19 7,560 7,531 389 791

308,021 236,143 254,041 188,256 Current liabilities Trade creditors and accruals 20 114,034 65,656 239 258 Other creditors 21 53,523 38,423 24,610 25,442 Amounts due to subsidiary companies 18 – – 5,519 3,464 Bank borrowings 22 30,997 43,400 – – Provision for taxation 21,544 22,855 208 249

220,098 170,334 30,576

Net current assets 87,923 65,809 223,465 Bank borrowings 22 – (21,000) – Deferred taxation 23 (2,905) (3,690) –

158,843 – –

Net assets

207,619

377,836

319,331

270,786

29,413

Equity attributable to equity holders of the Company Share capital 24 123,164 111,494 123,164 111,494 Foreign currency translation reserve (418) (283) – – Capital reserve 25 820 1,321 820 1,321 Revenue reserve 26 254,177 206,087 146,802 94,804 377,743 93

318,619 712

270,786 –

207,619 –

377,836

319,331

270,786

207,619

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Minority interests

32

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

consolidated statement of changes in equity for the financial year ended 30 june 2007

Attributable Foreign to equity Capital currency holders Share Share redemption translation Capital Revenue of the Minority Total Group capital (1) premium reserve reserve reserve reserve Company interests equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 July 2005,

as restated 75,300 28,675 333 (139) 873 150,139 255,181 699 255,880 Foreign exchange

translation

adjustment – – – (144) – – (144) (2) (146) –

–

–

(144)

–

–

–

–

– 107,328 107,328

40 107,368

–

–

(144)

– 107,328 107,184

38 107,222

–

–

–

– (51,380) (51,380)

–

(51,380)

(35,168)

–

–

–

–

–

–

–

–

(333)

–

–

–

–

–

–

747

–

–

(747)

–

–

–

–

–

–

–

1,195

–

1,195

–

1,195

5,746

–

–

–

–

6,439

–

6,439

–

–

–

–

–

–

(25)

(25)

–

–

111,494

(283)

(144)

1,321 206,087 318,619

(2)

(146)

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Balance at

30 June 2006

–

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Total recognised income

and expenses for

the financial year – Dividends on ordinary

shares (Note 27) – Transfer of share

premium to

share capital 35,168 Transfer of capital

redemption reserve

to share capital 333 Transfer of capital reserve

to share premium – Cost of share-based

payment on

adoption of FRS 102 – Issuance of shares in

respect of options

exercised under the

Employees’ Share

Option Scheme 693 Cash paid to minority

shareholders

upon liquidation

of subsidiary

companies –

–

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Net income recognised

directly in equity Net profit for the

financial year

33

consolidated statement of changes in equity for the financial year ended 30 june 2007 (cont’d)

Attributable Foreign to equity Capital currency holders Share Share redemption translation Capital Revenue of the Minority Total Group capital (1) premium reserve reserve reserve reserve Company interests equity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Balance at 1 July 2006 Foreign exchange

translation

adjustment Net income recognised

directly in equity Net profit for the

financial year

111,494

–

–

(283)

–

–

–

(135)

–

–

(135)

–

(135)

–

–

–

(135)

–

–

(135)

–

(135)

–

–

–

–

– 120,774 120,774

(22) 120,752

–

–

(135)

– 120,774 120,639

(22) 120,617

–

–

–

– (72,684) (72,684)

–

–

–

702

–

–

–

–

(1,203)

–

–

–

–

–

–

Total recognised

income and

expenses for

the financial year – Dividends on ordinary

shares (Note 27) – Cost of share-based

payment – Issuance of shares in

respect of options

exercised under the

Employees’ Share

Option Scheme 11,670 Cash paid to minority

shareholders

upon liquidation

of a subsidiary

company – Disposal of a subsidiary

company –

1,321 206,087 318,619

712 319,331

–

(72,684)

702

–

702

–

10,467

–

10,467

–

–

–

(127)

(127)

–

–

–

(470)

(470)

Balance at

30 June 2007 123,164 – – (418) 820 254,177 377,743

93 377,836

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(1) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.

34

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

consolidated cash flow statement

135,125

127,868

15,904 2,653 (2,275) (38,605) (961) 49 – (262) (695) 702 324 – 717 – (184) (11) 40 (505)

15,622 3,769 (2,308) (25,663) – – 2 (1,171) (1,065) 1,195 102 16 4 (159) (509) – – (614)

Operating cash flow before reinvestment in working capital (Increase)/decrease in debtors Decrease in stocks and work-in-progress Increase in creditors

112,016 (48,967) 14,294 64,042

117,089 15,702 26,111 5,651

Cash generated from operations Interest received Interest paid Income tax paid

141,385 2,302 (2,004) (16,469)

164,553 2,102 (4,000) (4,258)

Net cash generated from operating activities

125,214

158,397

Cash flow from operating activities Profit before taxation Adjustments for:

Depreciation of fixed assets

Interest expense

Interest income

Gain on disposal of fixed assets

Gain on disposal of investment in a subsidiary company

Loss on disposal of other investments

Fixed assets written off

Unrealised gain on derivative financial instruments

Share of profits of associated companies

Share-based payment expenses

Provision for impairment of investment in an associated company

Trade bad debts written off

Allowance for doubtful debts - trade

Write back of allowance for doubtful debts - trade

Write back of creditors’ balances

Waiver of debts by a subsidiary company’s shareholders

Write off of amount due from associated companies

Foreign currency translation difference

>

2006 $’000

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2007 $’000

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for the financial year ended 30 June 2007

35

consolidated cash flow statement for the financial year ended 30 June 2007 (CONT’D)

2007 $’000

2006 $’000

Cash flow from investing activities Purchase of fixed assets Proceeds from disposal of fixed assets Dividend received from an associated company Repayment from associated companies Proceeds from disposal of investment in a subsidiary company (Note (ii)) Proceeds from disposal of other investments

(160,082) 107,116 – 1,205 2,058 162

(143,937) 84,223 18 2,127 – 46

Net cash used in investing activities

(49,541)

(57,523)

Cash flow from financing activities Bank borrowings obtained Repayment of bank borrowings Dividends paid Cash paid to minority shareholders upon liquidation of a subsidiary company Repayment of loan obtained from minority shareholders of a subsidiary company Proceeds from issuance of new ordinary shares

75,357 (108,760) (72,684) (127) (163) 10,467

133,595 (183,883) (51,380) (25) – 6,439

Net cash used in financing activities

(95,910)

(95,254)

Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year

(20,237) 49,469

5,620 43,849

Cash and cash equivalents at end of financial year (Note (i))

29,232

49,469

(i) Cash and cash equivalents

Cash and cash equivalents included in the consolidated cash flow statement comprise the following balance sheet amounts:

Cash and bank balances

Fixed deposits

2007 $’000

2006 $’000

7,560 21,672

7,531 41,938

29,232

49,469

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Cash and cash equivalents consist of cash on hand, current accounts with banks and fixed deposits.

Sundry deposits

Cash and bank balances

2007 $’000

2006 $’000

1,546 21

– –

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Net assets disposed Gain on disposal Minority interest

1,567 961 (470)

– – –

Sale consideration

2,058

–

(ii) Disposal of investment in a subsidiary company

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The effects of disposal of investment in a subsidiary company are set out below:

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

notes to the financial statements for the financial year ended 30 June 2007

1. Corporate information

Jaya Holdings Limited (the “Company”) is a limited liability company incorporated in the Republic of Singapore. The registered office of the Company is located at 13 Tuas Crescent, Singapore 638707, which is also its principal place of business.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies are stated in Note 3. There have been no significant changes in the nature of these activities during the financial year.

With effect from 5 December 2006, Nautical Offshore Services, a limited company incorporated in the Cayman Islands, became the holding company and Affinity Asia Pacific Fund II LP, a limited partnership, became the ultimate holding entity.

2. Summary of significant accounting policies 2.1 Basis of preparation

The consolidated financial statements of the Group and the balance sheet of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) as required by the Singapore Companies Act.

The financial statements have been prepared on a historical cost basis, except for derivative financial instruments that have been measured at their fair values.

The financial statements are presented in Singapore Dollars (SGD or $) and all values are rounded to the nearest thousand ($’000) except when otherwise indicated.

The accounting policies have been consistently applied by the Group and the Company and are consistent with those used in the previous financial year.

2.2 FRS and INT FRS not yet effective The Group and the Company have not applied the following FRS and Interpretation of Financial Reporting Standards (“INT FRS”) that have been issued but not yet effective:

1 January 2007 1 January 2009 1 January 2007 1 January 2007 1 January 2009 1 November 2006 1 March 2007 1 January 2008

The Directors expect that the adoption of the above pronouncements will have no material impact to the financial statements in the period of initial application, except for the amendments to FRS 1, FRS 23, FRS 107 and FRS 108 as indicated below: (a) Amendment to FRS 1 (revised), Presentation of Financial Statements (Capital Disclosures)

The amendment to FRS 1 requires the Group to make new disclosures to enable users of the financial statements to evaluate the Group’s objectives, policies and processes for managing capital. The Group will apply the amendment to FRS 1 from annual periods beginning 1 July 2007.

an n ua l re p o r t 20 0 7

Effective date (Annual periods beginning on or after)

>

FRS 1 : Amendment to FRS 1 (revised), Presentation of

Financial Statements (Capital Disclosures)

FRS 23 : Borrowing Costs

FRS 40 : Investment Property

FRS 107 : Financial Instruments: Disclosures

FRS 108 : Operating Segments

INT FRS 110 : Interim Financial Reporting and Impairment

INT FRS 111 : Group and Treasury Share Transactions

INT FRS 112 : Service Concession Arrangements

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notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d)

2.2 FRS and INT FRS not yet effective (cont’d) (b) FRS 23, Borrowing Costs

(c) FRS 107, Financial Instruments : Disclosures

FRS 23 removes the option to recognise immediately as an expense borrowing costs that are attributable to qualifying assets, i.e. assets that necessarily take a substantial period of time to get ready for their intended use or sale. The Group will adopt the transitional provisions of this standard and apply this standard prospectively from annual period beginning 1 July 2009. Accordingly, borrowing costs on the Group’s vessels under construction that meet the definition of qualifying assets will be capitalised. No adjustments will be made for borrowing costs incurred to the date of application that have been expensed off.

FRS 107 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. The Group will apply FRS 107 from annual periods beginning 1 July 2007.

(d) FRS 108, Operating Segments

FRS 108 requires an entity to adopt a “management perspective approach” in reporting financial and descriptive information about its reportable segment. Financial information is required to be reported on the basis that it is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments. FRS 108 introduces additional segmental disclosures to be made to improve the information about operating segments. The Group will apply FRS 108 from annual periods beginning 1 July 2009.

2.3 Significant accounting estimates and judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. (a) Key sources of estimation uncertainty

(i)

Depreciation of fixed assets – Vessels

Vessels are depreciated on a straight-line basis over their estimated useful lives which are calculated to write-down their cost to their estimated residual values at the end of their useful lives. These estimates regarding the useful lives (of 8 to 15 years) and residual values of the vessels are made by the Company based on past experience and industry trends. The useful lives and residual values are reviewed on an annual basis.

The carrying amount of the Group’s vessels as at 30 June 2007 approximated $144,995,000 (2006: $213,714,000).

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The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:

38

(ii) Income taxes

The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s tax payables as at 30 June 2007 was $21,544,000 (2006: $22,855,000).

notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.3 Significant accounting estimates and judgements (cont’d)

(a) Key sources of estimation uncertainty (cont’d)

(iii) Construction contracts

The Group recognises contract revenue to the extent of contract costs incurred where it is probable those costs will be recoverable or based on the stage of completion method. The stage of completion for fixed price contracts is measured by reference to the contract costs incurred to date to the estimated total costs for the contract. Judgement is required in determining the stage of completion, the extent of the contract cost incurred, the estimated total contract revenue and contract cost, as well as the recoverability of the contracts. Total contract revenue also includes an estimation of the recoverable variation works that are recoverable from the customers. In making the judgement, the Group evaluates by relying on past experience and reference to professional surveys of work performed.

(b) Critical judgements made in applying accounting policies

The following judgement is made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements:

Operating lease commitments – As lessor

The Group has entered into charter party agreements on its fleet of vessels. In some instances, options have been granted for the customers to purchase the vessels during or at the end of the leases. The Group has determined that it retains all the significant risks and rewards of ownership of these vessels and have accounted for these as operating leases.

Subsidiary companies are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Acquisitions of subsidiary companies are accounted for using the purchase method of accounting.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. The goodwill is accounted for in accordance with the accounting policy for goodwill stated in Note 2.7 below.

Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised in the profit and loss account on the date of acquisition.

Minority interests represent the portion of profit or loss and net assets in subsidiary companies not held by the Group. They are presented in the consolidated balance sheet within equity, separately from the parent shareholders’ equity, and are separately disclosed in the consolidated profit and loss account. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination.

Assets, liabilities and results of overseas subsidiary companies are translated into Singapore Dollars on the basis outlined in Note 2.18 below.

The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

>

The accounting year of the Company and all its subsidiary companies ends on 30 June. The consolidated financial statements comprise the financial statements of the Company and all its subsidiary companies after the elimination of all material intragroup transactions and resulting unrealised profits.

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2.4 Basis of consolidation

39

notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.5 Subsidiary companies

A subsidiary company is an entity in which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The Group generally has such power when it directly or indirectly holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the Board of Directors.

Investments in subsidiary companies are stated in the financial statements of the Company at cost less impairment loss.

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2.6 Associated companies

40

An associated company is defined as an entity, not being a subsidiary company, in which the Group has significant influence. This generally coincides with the Group having 20% or more of the voting power, or has representation on the board of directors.

The Group’s investments in associated companies are accounted for under the equity method. Under the equity method, the investment in associated company is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associated company. The Group’s share of the profit or loss of the associated company is recognised in the consolidated profit and loss account. Where there has been a change recognised directly in the equity of the associated company, the Group recognises its share of such changes.

After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associated company. The associated company is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associated company.

Goodwill relating to an associated company is included in the carrying amount of the investment.

Any excess of the Group’s share of the net fair value of the associated company’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associated company’s profit or loss in the period in which the investment is acquired.

When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company.

The most recent available audited financial statements of the associated companies are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not co-terminous with those of the Group, the share of results is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the accounting period. Consistent accounting policies are applied for like transactions and events in similar circumstances.

In the Company’s separate financial statements, investments in associated companies are accounted for at cost less impairment losses.

2.7 Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.7 Goodwill (cont’d) For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated:

•

Represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and

•

Is not larger than a segment based on either the Group’s primary or the Group’s secondary reporting format.

A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit. Where the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. Impairment losses recognised in respect of the cash-generating unit (or group of cash-generating units) are allocated first to reducing the carrying amount of any goodwill allocated to the cash-generating unit (or group of cash-generating units) and then, to reduce the carrying amount of the other assets in the cash-generating unit (or group of cash-generating units) on a pro-rata basis.

Where goodwill forms part of a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cashgenerating unit retained.

Revenue from shiprepair and shipbuilding contracts is recognised using the percentage of completion basis. The percentage of completion for a given contract is determined after considering the relationship of the value of work done to-date to total contracted revenue (see Note 2.26).

Revenue from shipchartering activities is recognised in the profit and loss account based on the duration of the contracts.

Revenue from vessel sale arises when a vessel which is recorded as a fixed asset by the Group for its chartering business is sold within one year of commissioning.

Both revenue from vessel sale and gain on disposal of fixed assets are recognised upon the transfer of significant risk and rewards of ownership of the vessels to the customer, which generally coincides with delivery and acceptance of the vessels sold. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of vessels.

Dividend income is recognised when the shareholders’ rights to receive the payment are established.

Interest income is recognised on a time proportion basis using the effective interest method.

2.9 Employee benefits (a) Defined contribution plans

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2.8 revenue recognition

The Group participates in national pension schemes as defined by the laws of the countries in which it has operations. As required by law, the Group’s companies in Singapore make contributions to the state pension scheme, the Central Provident Fund (“CPF”), a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as compensation expense in the same period as the employment that gives rise to the contribution.

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notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.9 Employee benefits (cont’d)

(b) Employee leave entitlements

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(c) Equity-related compensation benefits

Pursuant to the Jaya Employees’ Share Option Scheme, certain employees and Directors receive remuneration in the form of share-based payment transactions, whereby employees and Directors render services as consideration for share options (“equity settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which the share options are granted. In valuing the share options, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (‘market conditions’), if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in the employee share option reserve (known as “capital reserve” in these financial statements), over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The Group has taken advantage of the transitional provisions of FRS 102 in respect of equity-settled awards and has applied FRS 102 only to equity-settled awards granted after 22 November 2002 that had not vested on or before 1 January 2005.

2.10 Fixed assets

Fixed assets are stated at cost less accumulated depreciation and less accumulated impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the profit and loss account. The cost of restorations is included in the carrying amount of an asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group and depreciated over the remaining useful life of the asset.

When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit and loss account. Depreciation on the relevant assets is charged to the profit and loss account on the basis outlined in Note 2.11 below.

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Employee entitlements to annual leave are recognised as a liability when they accrue to employees. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.10 Fixed assets (cont’d)

The carrying amounts of fixed assets are reviewed for impairment at each balance sheet date to assess whether they are recorded in excess of their recoverable amounts, and if carrying values exceed these recoverable amounts, assets are written down.

2.11 Depreciation

Depreciation is calculated on the straight-line method to write off the cost of the fixed assets over their estimated useful lives as follows:

Vessels

-

Leasehold land and buildings

- Over the remaining life of the lease of 5 to 23 years

8 to 15 years

Slipways, jetty, winch and timberway

-

5 years

Cranes and motor vehicles

-

5 years

Other assets

-

4 to 10 years

Construction-in-progress relates mainly to vessels under construction. They are stated at cost and are not subject to depreciation charge until they are completed and in use.

The residual values, useful lives and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of fixed assets.

2.12 Stocks and work-in-progress

Stocks consist mainly of steel, consumables and other materials used for shipbuilding, repair and conversion and are stated at the lower of cost and net realisable value. Cost is primarily determined on a first-in-first-out basis and includes all cost in bringing the stocks to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale, and after making due allowance for all damaged, obsolete and slow-moving items.

Work-in-progress comprises uncompleted shipbuilding, repair and fabrication contracts. It is stated at the lower of cost and net realisable value. Cost is made up of material, direct labour, subcontractors’ costs, appropriate allocation of fixed and variable production overheads and other directly related expenses. Provision is made for anticipated losses, if any, on work-in-progress when the possibility of loss is ascertained.

Trade and other debtors, including amounts due from subsidiary and associated companies are classified and accounted for as loans and receivables. The accounting policy for this category of financial assets is stated in Note 2.22 (b) below.

An allowance is made for uncollectible amounts when there is objective evidence that the Group will not be able to collect the debt in full. Bad debts are written off when identified. Further details on the accounting policy for impairment of financial assets are stated in Note 2.24.

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2.14 Cash and cash equivalents

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2.13 Trade and other debtors

Cash and cash equivalents comprise cash on hand and at banks including fixed deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Cash and short term term deposits carried in the balance sheets are classified and accounted for as loans and receivables. The accounting policy for this category of financial assets is stated in Note. 2.22.

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notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.15 Trade and other creditors

Liabilities for trade and other creditors, which are normally settled within the credit terms, are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through the amortisation process.

2.16 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) where as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

2.17 Income taxes

(a) Current tax

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44

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

(b) Deferred tax

Deferred taxation is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiary and associated companies except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry forward of unused tax assets and unused tax losses can be utilised.

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amounts of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

Deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same tax authority.

notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.17 Income taxes (cont’d)

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

•

Where the sales tax incurred on a purchase of assets or services is not recoverable from the tax authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

•

Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the tax authority is included as part of receivables or payables in the balance sheet.

2.18 Foreign currency translation

Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (“the functional currency”). The consolidated financial statements and balance sheet of the Company are presented in Singapore Dollars, which is the functional currency of the Company.

Transactions in foreign currencies are measured in Singapore Dollars and recorded at exchange rates approximating those ruling at the transaction dates. Foreign currency monetary assets and liabilities are translated using the exchange rates ruling at balance sheet date. Non-monetary assets and liabilities are translated using the exchange rates ruling at the transaction dates or, in the case of items carried at fair value, the exchange rates that existed when the values were determined. All resultant exchange differences are recognised in the profit and loss account.

Assets and liabilities of foreign entities are translated into Singapore Dollars at exchange rates ruling at balance sheet date. Revenue and expenses are translated at average exchange rates for the year, which approximate the exchange rates at the dates of the transactions. All resultant exchange differences are taken directly to foreign currency translation reserve. On disposal of a foreign entity, accumulated exchange differences are recognised in the profit and loss account as a component of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the acquiring entity and are recorded at the exchange rate at the date of the transaction.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in the profit and loss account when the liabilities are derecognised as well as through the amortisation process.

2.20 Borrowing costs

Borrowing costs are generally expensed as incurred. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are being incurred. Borrowing costs are capitalised until the assets are ready for their intended use.

If the resulting carrying amount of the asset exceeds its recoverable amount, an impairment loss is recorded.

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All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

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2.19 Interest bearing loans and borrowings

45

notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.21 Leases

(a) Operating lease – when the Group is a lessee

Leases where the lessor effectively retains substantially all the risks and rewards of ownership of the leased item are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

(b) Operating lease – when the Group is a lessor

Assets leased out under operating leases are included in fixed assets and are stated at cost less accumulated depreciation and accumulated impairment loss.

2.22 Financial assets

Financial assets are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.

Currently, the Group does not designate any financial assets as held-to-maturity or available-for-sale.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year-end.

(a) Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivative financial instruments are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on financial assets classified as at fair value through profit or loss are recognised in the profit and loss account.

(b) Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Such assets are carried at amortised cost using the effective interest method, less impairment losses. Gains and losses are recognised in the profit and loss account when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

The Group uses derivative financial instruments such as foreign exchange forward contracts to hedge its risks associated with foreign currency fluctuations.

Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value at each balance sheet date.

Derivative financial instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The fair value of foreign exchange forward contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

Any gains or losses arising from changes in fair value on derivative financial instruments are taken to the profit and loss account for the year.

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2.23 Derivative financial instruments

46

notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.24 Impairment (a) Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. (i) Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in the profit and loss account.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the profit and loss account, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(ii) Assets carried at cost

The Group assesses at each reporting date whether there is an indication that an asset may be impaired.

If any such indication exists, or when annual impairment testing for an asset (i.e. an intangible asset with an indefinite useful life, an intangible asset not yet available for use, or goodwill acquired in a business combination) is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses of continuing operations are recognised in the profit and loss account.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses recognised for an asset other than goodwill may no longer exist or may have decreased.

If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount.

That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Reversal of an impairment loss is recognised in the profit and loss account. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

The Group does not reverse in a subsequent period, any impairment loss recognised for goodwill.

an n ua l re p o r t 20 0 7

(b) Impairment of non-financial assets

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If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

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notes to the financial statements for the financial year ended 30 June 2007

2. Summary of significant accounting policies (cont’d) 2.25 Derecognition of financial assets and liabilities

(a) Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:

•

The contractual rights to receive cash flows from the asset have expired;

•

The Group retains the contractual rights to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or

•

The Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset, the difference between the carrying amount and the sum of (a) the consideration received (including any new asset obtained less any new liability assumed) and (b) any cumulative gain or loss that has been recognised directly in equity is recognised in the profit and loss account.

(b) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit and loss account.

2.26 Construction contracts

Contract revenue and contract costs are recognised as revenue and expenses, respectively, by reference to the stage of completion of the contract activity at the balance sheet date, when the outcome of a construction contract can be estimated reliably. An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue.

Revenue arising from fixed price contracts is recognised in accordance with the percentage of completion method. The stage of completion is measured by reference to surveys of work performed. Where the contract outcome cannot be measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

A segment is a distinguishable component of the Group that is engaged in providing services/products (business segment), or in providing such services/products within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.

Inter-segment pricing, if any, is determined on an arm’s length basis.

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2.27 Segment reporting

48

notes to the financial statements for the financial year ended 30 June 2007

3. Group companies

The subsidiary and associated companies as at 30 June 2007 and 2006 are as follows: Percentage of Name of company equity held (Country of incorporation) Principal activities Cost of investment by the Group

2007 2006 2007 2006

$’000 $’000 % %

# Crescent Shipping Pte Ltd Dormant 100 100 (Singapore)

100

100

# Jaya Logistics Pte Ltd Dormant 90 90 (Singapore)

100

100

90

90

# Jaya Container Lines Pte Ltd Dormant (Singapore)

900

900

Jaya Venus Pte Ltd Liquidated – 425 – 85 (Singapore)

Seadex Pte Ltd Liquidated – 400 – 80 (Singapore)

# Jaya Shipmanagement Dormant 70 70 70 70 Pte Ltd (Singapore)

Verbena Pte Ltd Dormant 449 449 100 100 (Singapore)

Unquoted shares, at cost (Note 11) 35,574 36,399

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100

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# Jaya Century Pte Ltd Dormant 2,679 2,679 100 (Singapore)

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Subsidiary companies of Jaya Holdings Limited

# Jaya Offshore Pte Ltd Shipchartering and 200 200 100 100 (Singapore) shipmanagement

# Java Marine Lines Pte Ltd Shipowning and 26,905 26,905 100 100 (Singapore) shipchartering

# Jaya Shipbuilding and Ownership of shipyard and 3,637 3,637 100 100 Engineering Pte Ltd the building and repairing (Singapore) of ships

Jaya Offshore (H. K.) Limited Dormant 44 44 100 100 (Hong Kong)

# Xinet Pte Ltd Dormant 500 500 100 100 (Singapore)

49

notes to the financial statements for the financial year ended 30 June 2007

3. Group companies (cont’d) Percentage of Name of company equity held (Country of incorporation) Principal activities Cost of investment by the Group

2007 2006 2007 2006

$’000 $’000 % % Subsidiary companies of Jaya Offshore Pte Ltd

# Airia Jaya Marine (S) Shipowning, shipchartering 100 100 Pte Ltd and shipmanagement (Singapore)

# Jaya International Shipowning and shipchartering Transport Pte Ltd 100 100 (Singapore)

^ P.T. Jaya Asiatic Shipyard Ownership of shipyard and (Indonesia) the building and repairing of ships 95 95 Subsidiary company of Jaya Shipmanagement Pte Ltd

#* Jaya Pacific Line Pte Ltd Dormant 49 49 (Singapore)

Subsidiary company of Jaya Offshore (H.K) Limited ## Zhuhai Jaya Shipbuilding Dormant Company Limited (Disposed of on 2 March 2007) – 70 (People’s Republic of China)

Associated companies of Jaya Holdings Limited

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Jaya-TDS Shipping Ltd Shipowning and shipchartering 4 4 (Mauritius) (In voluntary liquidation)

Jaya DMS Marine Pte Ltd Shipowning and shipchartering 124 124 (Singapore)

DMS Jaya Marine W.L.L. Shipowning and shipchartering 46 46 (Qatar)

50

Asia Power Systems Corporation Dormant (British Virgin Islands)

@

Unquoted shares, at cost (Note 12)

174

@

50

50

50

50

49

49

50

50

174

notes to the financial statements for the financial year ended 30 June 2007

3. Group companies (cont’d) Percentage of Name of company equity held (Country of incorporation) Principal activities by the Group

2007 2006

% % Associated company of

Jaya Offshore Pte Ltd

Sanergy Jaya Marine Pte Ltd Shipowning, shipchartering 50 50

(Singapore) and shipmanagement

Associated company of

Java Marine Lines Pte Ltd

Batamindo Carriers Pte Ltd Ship and boat chartering services (Singapore)

35

35

# Audited by Ernst & Young, Singapore. ## Audited by Zhuhai Li Xin Partnership, Certified Public Accountants, People’s Republic of China. ^ No statutory requirement in the country of incorporation. * Deemed to be a subsidiary as the Group controls the composition of the board of directors of the entity. @ Cost of investment is less than $1,000.

4. Revenue Group

Charter income

Shipbuilding and shiprepair income/vessel sale

70,775 236,863

60,460 245,730

307,638

306,190

Total revenue

2007 $’000

2006 $’000

5. Other operating income Group

2007 $’000

Interest income on:

Fixed deposits

Bank accounts

Trade debtors

Associated company Gain on disposal of fixed assets Waiver of debts by a subsidiary company’s shareholders Gain on disposal of investment in a subsidiary company Sundry income

1,837 11 73 354 38,605 11 961 1,542

1,351 10 – 947 25,663 – – 1,151

43,394

29,122

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2006 $’000

51

notes to the financial statements for the financial year ended 30 June 2007

6. Finance costs

Interest expense on bank borrowings

2007 $’000

Group

(2,653)

2006 $’000

(3,769)

7. Profit before taxation

This is stated after (charging)/crediting:

Wages, salaries, bonuses and other staff related expenses Employer’s contribution to defined contribution plans Share-based payment expenses Non-audit fees paid to auditors of the Company Allowance for doubtful debts – trade Trade bad debts written off Write back of allowance for doubtful debts – trade Write off of amount due from associated companies Loss on disposal of other investments Allowance for stock obsolescence Fixed assets written off Provision for impairment of investment in an associated company Unrealised gain on derivative financial instruments Depreciation of fixed assets

Foreign exchange loss *

2007 $’000

Group

(27,388) (1,022) (702) (74) (717) – – (40) (49) – – (324) 262 (15,904) (1,624)

2006 $’000

(27,957) (808) (1,195) (109) (4) (16) 159 – – (2) (2) (102) 1,171 (15,622) (3,382)

* Foreign exchange loss is disclosed as part of other operating expenses in the profit and loss account.

8. Taxation

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52

Provision for taxation in respect of profit for the financial year:

Current taxation

Deferred taxation

Underprovision of taxation in respect of prior years:

Current taxation

Deferred taxation

2007 $’000

Group

2006 $’000

(15,154) 785 (14,369)

(18,054) (1,519) (19,573)

(4) – (4) (14,373)

(856) (71) (927) (20,500)

notes to the financial statements for the financial year ended 30 June 2007

8. Taxation (cont’d)

A reconciliation of the domestic statutory tax rate to the effective tax rate applicable to profit before taxation for the financial years ended 30 June is as follows:

Domestic statutory tax rate Tax effect of:

Exempt income

Expenses not deductible for tax purpose

Underprovision of taxation in respect of prior years

Deferred tax assets not recognised

Lower tax rates of overseas subsidiary companies

Effect of change in tax rate

Others

%

%

(18.0)

(20.0)

10.0 (3.1) – – 0.1 0.3 0.1

6.3 (1.3) (0.7) (0.3) 0.1 – (0.1)

(10.6)

Effective tax rate

(16.0)

On 15 February 2007 the Singapore Government announced a revision in the Singapore corporate tax rate from 20% to 18%. This change takes effect from Year of Assessment 2008 and has been reflected in the provisions for current and deferred tax.

The taxation charge is computed on the net profit derived from operations, excluding Singapore tax-exempt dividend income and those related to shipping operations which are exempted from taxation by virtue of Section 13A of the Singapore Income Tax Act.

As at 30 June 2007, certain subsidiary companies have unabsorbed tax losses and unutilised capital allowances amounting to approximately $1,500,000 (2006: $3,723,000) and $Nil (2006: $1,882,000) respectively available for set off against future taxable income, subject to agreement with the relevant tax authorities, and there being no substantial change in shareholders in accordance with the relevant provisions of the Singapore Income Tax Act.

9. Earnings per share

Basic earnings per share is calculated by dividing the net profit of the Group attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the financial year.

Diluted earnings per share is calculated by dividing the net profit of the Group attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the financial year (adjusted for the effect of dilutive options).

The following reflects the information used in the basic and diluted earnings per share computations for the financial years ended 30 June: Group

Net profit attributable to ordinary shareholders for basic and diluted earnings per share

120,774

107,328

‘000

‘000

basic earnings per share

764,463

755,852

Effect of dilutive securities: Share options

885

1,769

Adjusted weighted average number of ordinary shares applicable to 765,348

757,621

diluted earnings per share

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Weighted average number of ordinary shares in issue applicable to

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2006 $’000

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2007 $’000

53

notes to the financial statements for the financial year ended 30 June 2007

10. Fixed assets Slipways, Cranes Leasehold jetty, and land and winch and motor Other Construction Vessels buildings timberway vehicles assets -in-progress Total Group $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost At 1 July 2005 186,446 9,192 86 4,368 7,241 66,818 274,151 Transfer from/(to) fixed assets under construction 139,028 – – – – (139,028) – Transfer to asset held for sale (13,948) – – – – – (13,948) Transfer to work-in-progress (16,908) – – – – (18,603) (35,511) Reclassification – 142 – – (142) – – Additions 23,458 347 – – 549 119,583 143,937 Disposals (71,725) – – (13) (12) – (71,750) Written off – – (86) – (207) – (293) Currency translation difference (251) – – – – – (251)

At 30 June 2006 and 1 July 2006 246,100 9,681 Transfer from/(to) fixed assets under construction 41,588 – Transfer to assets held for sale (94,395) – Transfer to work-in-progress (14,972) – Additions 9,942 244 Disposals (10,409) – Written off – – Currency translation difference (182) – At 30 June 2007

177,672

9,925

–

4,355

7,429

– – – – – – –

– – – 64 (30) – –

– – – 409 – (11) –

–

4,389

7,827

28,770 296,335 (41,588) – (23,432) 149,423 – – –

113,173 312,986

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Accumulated depreciation At 1 July 2005 36,510 4,757 86 4,027 5,215 – Transfer to asset held for sale (5,086) – – – – – Transfer to work-in-progress (188) – – – – – Depreciation charge for the year 14,482 491 – 205 444 – Disposals (13,167) – – (13) (10) – Written off – – (86) – (205) – Currency translation difference (165) – – – – –

54

– (94,395) (38,404) 160,082 (10,439) (11) (182)

50,595 (5,086) (188) 15,622 (13,190) (291) (165)

At 30 June 2006 and 1 July 2006 32,386 5,248 – Transfer to assets held for sale (9,666) – – Transfer to work-in-progress (244) – – Depreciation charge for the year 14,785 568 – Disposals (4,453) – – Written off – – – Currency translation difference (131) – –

4,219 – – 93 (30) – –

5,444 – – 458 – (11) –

– – – – – – –

47,297 (9,666) (244) 15,904 (4,483) (11) (131)

At 30 June 2007

4,282

5,891

–

48,666

32,677

5,816

–

Net book value At 30 June 2007 144,995 4,109 – 107 1,936 113,173 264,320 At 30 June 2006

213,714

4,433

–

136

1,985

28,770 249,038

notes to the financial statements for the financial year ended 30 June 2007

10. Fixed assets (cont’d)

Other assets comprise equipment tools, machinery, renovation, office equipment, furniture and fittings, plant and machinery, air-conditioners, computers, fire fighting equipment and marine logistics equipment.

In accordance with FRS 105, the Group transferred vessels with carrying value of $31,036,000 (2006: $8,862,000) committed for disposal from fixed assets to assets held for sale during the financial year.

The Group’s major properties are as follows: Location Approximate land area Tenure Usage 13 Tuas Crescent, 24,939 sq. m.

30-year lease Shipbuilding and Singapore 638707 commencing from administrative office

1 April 1981

Tanjung Uncang 130,138 sq. m.

30-year lease Shipbuilding, Pulau Batam commencing from shiprepair and

21 April 1993 administrative office

30,900 sq. m.

30-year lease Shipbuilding,

commencing from shiprepair and

29 February 1996 administrative office

20,000 sq. m.

25-year lease Shipbuilding,

commencing from shiprepair and

3 November 2003 administrative office

11. Subsidiary companies

Company 2007 2006 $’000 $’000

Unquoted shares, at cost Less: Provision for impairment in value of subsidiary companies

35,574 (2,848)

36,399 (3,189)

Long term loan to a subsidiary company

32,726 10,623

33,210 10,623

43,349

43,833

Details of the subsidiary companies are set out in Note 3.

Long term loan to a subsidiary company forms part of the Company’s net investment in the subsidiary company, is unsecured, interest-free and is not expected to be repayable in the foreseeable future.

Long term loan to an associated company

24,573 3,692

24,278 4,452

174 3,692

174 4,452

28,265

28,730

3,866

4,626

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Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Unquoted shares, at cost 1,599 1,599 174 174

Provision for impairment in investment (670) (346) – –

Share of post-acquisition profits (net of tax) 27,659 27,299 – –

Share of translation reserve (219) (144) – –

Elimination of unrealised profit (3,796) (4,130) – –

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12. Associated companies

55

notes to the financial statements for the financial year ended 30 June 2007

12. Associated companies (cont’d) Group

2007 2006

$’000 $’000 The summarised financial information of associated companies are as follows:

Total assets Total liabilities Total revenue Profit after taxation

Details of the associated companies are set out in Note 3.

77,448 19,129 9,644 596

80,682 21,107 9,170 1,466

Long term loan to an associated company forms part of the Company’s net investment in the associated company, is unsecured, interest-free and is not expected to be repayable in the foreseeable future.

13. Stocks and work-in-progress Group

Raw materials and consumables, at lower of cost and net realisable value Work-in-progress:

Cost and attributable profits

Less: Progress billings

Gross amount due from customers for contract work

206,904 (30,724)

225,065 (72,851)

176,180

152,214

176,406

152,539

2007 $’000

2006 $’000

226

325

14. Trade debtors Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

External parties 17,875 16,080 57 11

Included in the Group’s trade debtors are $15,585,000 (2006: $12,238,000) denominated in United States of America Dollars.

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15. Other debtors and deposits

56

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000 Deposits

Amount due from an associated company Advances to staff

Sundry debtors

43 4,635 55 856 5,589

1,572 5,455 50 945 8,022

– 4,635 1 215 4,851

1 5,455 – 282 5,738

Other debtors for the Group are stated after deducting an allowance for doubtful debts of $Nil (2006: $124,000).

In the previous financial year, deposits for the Group include the deposit paid for purchase of land to develop a new shipyard in Southern China amounting to $1,525,000 by a subsidiary company.

The amount due from an associated company is non-trade in nature, unsecured, bears interest at 7.00% (2006: 7.00%) per annum and is repayable on demand. The amount is denominated in United States of America Dollars.

notes to the financial statements for the financial year ended 30 June 2007

16. Prepayments Prepayments comprised advance payments to third party shipyards for shipbuilding projects which have not started.

17. Derivative financial instruments Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000 262

1,171

–

Foreign exchange forward contracts

–

The total notional amount of outstanding foreign exchange forward contracts to which the Group is committed as at 30 June are:

Group

2007 2006 Notional Notional

amount amount

$’000 $’000

Foreign exchange forward contracts:

- Bought contracts

Euros

Norwegian Kroner

- Sold contracts

United States of America Dollars

57,431 3,076

25,581 4,770

92,752

7,933

18. Amounts due from/(to) subsidiary companies

Amounts due from subsidiary companies are stated after deducting an allowance for doubtful debts of $15,000 (2006: $5,000).

The amounts due from/(to) subsidiary companies are non-trade in nature, unsecured, interest-free and repayable on demand. The amounts due from subsidiary companies relate mainly to advances for working capital use. The amounts due to subsidiary companies relate mainly to transfer of surplus funds from certain subsidiary companies to the holding company.

Included in the Group’s bank balances and deposits are: (a) $6,906,000 (2006: $11,995,000) denominated in United States of America Dollars, (b) $3,696,000 (2006: $12,243,000) denominated in Euros, and (c) $8,247,000 (2006: $15,087,000) denominated in Norwegian Kroner.

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Fixed deposits earn interest at effective interest rates ranging from 1.80% to 5.23% (2006: 0.31% to 5.01%) per annum and mature within 1 month (2006: 1 month) from the financial year-end. Short-term deposits are made for varying periods of between one day and three months depending on the cash requirements of the Group, and earn interests at the respective short-term deposit rates.

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19. Fixed deposits and cash and bank balances

57

notes to the financial statements for the financial year ended 30 June 2007

20. Trade creditors and accruals Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Trade creditors 51,386 25,943 59 152 Deposits from customers 35,113 17,011 – – Deferred Income 330 297 – –

Accruals 27,205 22,405 180 106

114,034

65,656

239

258

Included in the Group’s trade creditors are: (a) $13,582,000 (2006: $3,272,000) denominated in United States of America Dollars, (b) $2,720,000 (2006: $4,729,000) denominated in Norwegian Kroner, and (c) $14,740,000 (2006: $1,711,000) denominated in Euros.

The Group’s deposits from customers and deferred income are denominated in United States of America Dollars.

21. Other creditors Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Amount due to an associated company Amounts owing on purchase of fixed assets Deposits received – purchase option fee – sale of assets Advances from minority shareholders of subsidiary companies Sundry creditors Interest payable

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58

24,608 5,419

25,440 9,144

24,608 –

25,440 –

21,640 – 552 368 936

– 2,146 726 680 287

– – – 2 –

– – – 2 –

53,523

38,423

24,610

25,442

Amount due to an associated company is non-trade in nature, unsecured, interest-free and denominated in United States of America Dollars. The amount relates to a return of shareholders’ funds pending the completion of a voluntary shareholders’ liquidation exercise being undertaken by this associated company.

Purchase option fee relates to deposits received from charter hire customers that gives the customer the right to purchase the vessel after one year period of charter.

Advances from minority shareholders of subsidiary companies are non-trade in nature, interest-free, unsecured and repayable on demand.

Included in amounts owing on purchase of fixed assets are: (a)

$3,942,000 (2006: $7,094,000) denominated in United States of America Dollars,

(b) $446,000 (2006: $177,000) denominated in Euros.

notes to the financial statements for the financial year ended 30 June 2007

22. Bank borrowings Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000 30,997

64,400

–

Unsecured

–

Included in the Group’s bank borrowings are $9,997,000 (2006: $Nil) denominated in United States of America Dollars.

The bank borrowings are repayable as follows:

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Repayable within one year Repayable within two years

30,997 –

43,400 21,000

– –

– –

30,997

64,400

–

–

The unsecured bank borrowings bear interest at rates ranging from 3.26% to 6.83% (2006: 2.56% to 5.33%) per annum, which also approximate the effective interest rates and maturing on dates ranging from 5 July 2007 to 27 July 2007.

The interest rates for the bank borrowings are fixed upon entering into the loan agreements and are therefore not subjected to fluctuations in market interest rates.

23. Deferred taxation

Deferred taxation arises as a result of: Group

2007 $’000

Deferred tax liabilities - Differences in depreciation

2,905

3,690

Deferred tax assets not recognised relate to the following:

Unabsorbed tax losses

Unutilised capital allowances

371 –

1,053 376

371

1,429

Unrecognised deferred tax assets

2006 $’000

Deferred tax assets on unutilised capital allowances of certain subsidiary companies have not been recognised as net profit generated from these subsidiary companies are mainly exempted from taxation by virtue of Section 13A of the Singapore Income Tax Act. Accordingly, it is uncertain that there will be future taxable profit that will allow the deferred tax assets to be recovered.

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Unabsorbed tax losses arise mainly from non-exempt sources. The realisation of this potential future income tax benefit is subject to the agreement of the relevant tax authorities and compliance with the relevant provisions of the Singapore Income Tax Act. No deferred tax assets have been recognised as it is uncertain that there will be future taxable profit that will allow the deferred tax assets to be recovered.

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59

notes to the financial statements for the financial year ended 30 June 2007

24. Share capital

Issued and fully paid:

Balance at 1 July – 759,934,585 (2006: 753,000,085) ordinary shares

Ordinary shares issued during the financial year - 9,334,600 (2006: 6,934,500) ordinary

shares in respect of options exercised under the Employees’ Share Option Scheme

Transfer from share premium

Transfer from capital redemption reserve

Balance at 30 June - 769,269,185 (2006: 759,934,585) ordinary shares

Equity Compensation Benefits

Jaya Employees’ Share Option Scheme (the “ESOS”) (i)

Group and Company 2007 2006 $’000 $’000 111,494 11,670 – – 123,164

75,300 693 35,168 333 111,494

Holders of share options granted under the ESOS are entitled to subscribe for the number of ordinary shares in the Company at an exercise price and during the exercise period applicable to the share options. The shares allotted pursuant to the exercise of share options granted under the ESOS will rank pari passu with the existing issued shares of the Company.

(ii) The options granted to participants are only exercisable after the first anniversary of the date of grant. The options granted have a life span of 5 to 10 years from the date of grant and are to be settled by equity. (iii) From the commencement of the ESOS to 30 June 2007, no options have been granted under the ESOS to any controlling shareholders of the Company and/or its associates. (iv) The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any rights to participate in any share issues of any other company in the Group. (v) No option has been granted at a discount to the Market Price. (vi) There are no participants who received 5% or more of the total number of options available under the ESOS during the financial year. (vii) During the financial year, no options are granted to take up unissued ordinary shares of the subsidiary companies and no ordinary shares of the subsidiary companies are issued by virtue of the exercise of an option to take up unissued ordinary shares. (viii) At the end of the financial year, there are no other unissued ordinary shares of the Company and its subsidiary companies under options except as disclosed below.

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60

The options granted, exercised and cancelled under the ESOS during the financial year and the options outstanding at the end of the financial year are as follows:

Options cancelled through acceptance ESOS Exercise Options of the Options Options Grant price per outstanding Options Options Options cancelled/ outstanding Number share at 1.7.2006 granted Exercised Proposal lapsed at 30.6.2007 Exercise period

6 $0.151 500 – (250) (250) – – 15 December 2001 to 14 December 2010

8 $0.231 50,000 – (50,000) – – – 10 December 2003 to 9 December 2012

notes to the financial statements for the financial year ended 30 June 2007

24. Share capital (cont’d) Options cancelled through acceptance ESOS Exercise Options of the Options Options Grant price per outstanding Options Options Options cancelled/ outstanding Number share at 1.7.2006 granted Exercised Proposal lapsed at 30.6.2007 Exercise period

9 $0.769 100,000 – (100,000) – – – 10 December 2004 to 9 December 2008

861,000 – (529,500) – – 331,500

10 $1.02 600,000 – (600,000) – – –

10 December 2004 to 9 December 2013

3,424,000 – (2,813,000) (28,000) – 583,000

11 $1.238 780,000 – (390,000) (195,000) – 195,000

6 December 2005 to 6 December 2014

6 December 2005 to 6 December 2009

25 November 2006 to 24 November 2010

8,209,500 – (4,851,850) (331,500) (257,400) 2,768,750 25 November 2006 to 24 November 2015

12 $1.456 – 500,000 – – – 500,000 30 April 2008 to 29 April 2012

– 8,850,000 – – (100,000) 8,750,000 30 April 2008 to 29 April 2017 14,025,000 9,350,000 (9,334,600) (554,750) (357,400) 13,128,250

The weighted average share price at the date of exercise for options exercised during the financial year was $1.37 (2006: $1.22).

ESOS Exercise Options Options Options Grant price per outstanding Options Options cancelled/ outstanding Number share at 1.7.2005 granted Exercised lapsed at 30.6.2006 Exercise period 15 December 2001 to 14 December 2010 10 December 2003 to 9 December 2012 10 December 2004 to 9 December 2008

3,086,500 – (2,225,500) – 861,000 10 December 2004 to 9 December 2013

8,020,000 – (4,528,000) (68,000) 3,424,000 6 December 2005 to 6 December 2014 11 $1.238 – 780,000 – – 780,000 25 November 2006 to 24 November 2010

– 8,654,100 – (444,600) 8,209,500 25 November 2006 to 24 November 2015

12,038,000

9,434,100 (6,934,500)

(512,600)

14,025,000

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10 $1.02 600,000 – – – 600,000 6 December 2005 to 6 December 2009

a nn ua l re po r t 2 0 07

6 $0.151 1,500 – (1,000) – 500

8 $0.231 105,000 – (55,000) – 50,000

9 $0.769 225,000 – (125,000) – 100,000

61

notes to the financial statements for the financial year ended 30 June 2007

24. Share capital (cont’d)

The fair value of share options as at the date of grant, is determined using the binomial model, taking into account the terms and conditions upon which the options were granted. The inputs to the model for the financial years ended 30 June are shown below:

2007 2006

Grant 12 Grant 11 Expected dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Expected life of option (years) Exercise price ($) Share price at date of grant ($)

4.13 23.25 2.28 1.45 1.456 1.54

3.59 22.51- 25.35 2.68 1.50 - 1.60 1.238 1.23

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value.

25. Capital reserve

The capital reserve comprises the cumulative value of employee services received for the issue of share options. When the option is exercised, the amount from the capital reserve is transferred to share capital. When the share options expire, the amount from the capital reserve is transferred to revenue reserve.

Movement in capital reserve for the Group is disclosed in the Consolidated Statement of Changes in Equity. Movement in capital reserve for the Company is set out below:

Company

2007 2006

$’000 $’000

Balance at 1 July 1,321 873

Cost of share-based payment 702 1,195

Transfer of capital reserve to share capital (1,203) (747)

Balance at 30 June 820 1,321 26. Revenue reserve

Movement in revenue reserve for the Group is disclosed in the Consolidated Statement of Changes in Equity. Movement in revenue reserve for the Company is set out below:

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62

Balance at 1 July

Dividends on ordinary shares (Note 27)

Profit for the financial year

Balance at 30 June

Company 2007 2006 $’000 $’000 94,804 (72,684) 124,682 146,802

47,792 (51,380) 98,392 94,804

27. Dividends on ordinary shares

Dividends paid during the financial year:

Interim exempt (one-tier) dividend of 4 cents (2006: 3.5 cent less tax at 20%)

per ordinary share in respect of the financial year under review

Final exempt (one-tier) dividend of 5.5 cents (2006: 4.0 cents)

per ordinary share in respect of the previous financial year

Group and Company 2007 2006 $’000 $’000

30,714

21,195

41,970 72,684

30,185 51,380

notes to the financial statements for the financial year ended 30 June 2007

27. Dividends on ordinary shares (cont’d)

Dividends proposed but not recognised as a liability as at 30 June: Subject to shareholders’ approval at the AGM:

Group and Company 2007 2006 $’000 $’000

50,255

Final exempt (one-tier) dividend of 6.5 cents (2006: 5.5 cents) per ordinary share

42,074

28. Significant related party transactions

Related parties refer to the directors, key management personnel of the Group, minority shareholder of subsidiary companies, related companies and associated companies.

During the financial year, the Group entered into the following significant related party transactions and the effect of these transactions on the basis determined between the parties were reflected in the financial statements as follows: Group 2006 $’000

Associated companies:

Management fee income

Charter hire income

Shipmanagement fee income

Rental income

Interest income

Shipbuilding and shiprepair income

Subsidiary companies of the previously controlling shareholder:

Purchase of machinery and materials

Provision of offshore vessel chartering

107 9 36 8 354 29

45 – 36 8 947 15

505 144

19,764 588

2007 $’000

Directors’ and executives’ remuneration:

Directors’ fees

Directors’ remuneration

Employer’s contribution to defined contribution plans for directors

Directors’ share-based expenses

306 6,915 13 131

353 10,418 18 245

7,365

11,034

Executive officers’ remuneration Employer’s contribution to defined contribution plans for executive officers Executive officers’ share-based expenses

3,085 131 216

2,756 135 351

3,432

3,242

10,797

14,276

Total directors’ and executives’ remuneration

Group

1,300,000 and 3,235,000 (2006: 1,716,000 and 2,496,000) share options were granted to the directors and executive officers of the Group respectively during the financial year. The share options were granted on the same terms and conditions as those offered to other employees of the Group. There were 1,495,000 and 4,996,800 (2006: 3,416,000 and 1,080,000) share options granted to the directors and executive officers of the Group outstanding respectively at the end of the financial year.

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2006 $’000

>

2007 $’000

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63

notes to the financial statements for the financial year ended 30 June 2007

29. Operating lease commitments (a) Non-cancellable operating lease commitments in respect of premises – Group as a lessee

The Group leases premises under non-cancellable lease arrangements. Future minimum rentals under non-cancellable operating leases as at 30 June are as follows:

Future minimum lease payments

- within one year

- within two to five years

2007 $’000

Group

298 914 1,212

2006 $’000 298 1,285 1,583

Rental expenses were $294,000 and $370,000 for the financial years ended 30 June 2007 and 30 June 2006 respectively.

The above operating leases do not contain any escalation clauses and do not provide for contingent rents. Lease terms do not contain restrictions on the Group’s activities concerning dividends, additional debts or entering into other leasing agreements. The leases expire in the year 2011 and contain provisions for rental adjustments.

(b) Operating lease commitments in respect of shipchartering – Group as a lessor

The Group entered into charter hire contracts with third parties relating to the leasing of its fleet of vessels. Future minimum charter hire receivables under operating leases as at 30 June are as follows:

2007 $’000

Group

2006 $’000

Future minimum charter hire receivables

- within one year 51,613 44,738

- within two to five years 54,758 38,527

106,371 83,265

These leases have remaining lease terms of between 1 month to 4.3 years (2006: 1 month to 4.3 years). Certain leases contain renewable options at rental rates based on negotiations.

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64

Relating to the above, operating lease commitments that are cancellable upon exercise of purchase options by customers are as follows: Group

2007 $’000

Future minimum charter hire receivables

- within one year

- within two to five years

21,788 17,861

8,673 28,556

39,649

37,229

2006 $’000

30. capital commitments

Commitments in respect of contracts approved and placed for the purchase of:

(i) Vessels (ii) Materials and subcontracted labour for the construction of vessels

(iii) Land-use rights of 50 years

2007 $’000 181,916 576,971 – 758,887

Group

2006 $’000

19,908 261,949 1,446 283,303

notes to the financial statements for the financial year ended 30 June 2007

31. Contingent liabilities

Contingent liabilities not provided for in the financial statements:

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

(i) Corporate guarantees given to secure banking facilities

for an associated company 500 500 – –

(ii) Corporate guarantees given to secure banking facilities

for subsidiary companies – – 456,776 336,776

500

500

456,776

336,776

In 2003, a subsidiary of Jaya Holdings Limited (“JHL”) was awarded two 20-year contracts, each for the charter of a vessel to a Malaysian party FPSO Tech Sdn Bhd (“FPSO Tech”). As the vessels had to fly the Malaysian flag, a condition which could not be satisfied by the subsidiary, the subsidiary had sold the vessels to JHL’s then Malaysian associated company, Alam Maritim (M) Sdn Bhd (“Alam”) and also assigned the contracts to it. In August 2003, JHL issued two related corporate guarantees to FPSO Tech on Alam’s ability to perform the contracts over their duration.

When JHL disposed of its stake in Alam in March 2005, FPSO Tech did not agree to release JHL of its corporate guarantees. These guarantees are considered to be contingent liabilities in that if Alam should fail to perform their obligations under the charter contracts, JHL as a guarantor will have to provide substitute vessels to fulfill such obligations. However, as the charter contracts are profitable, JHL is not expected to incur any loss if it ever had to be called upon to perform them. Furthermore, JHL has obtained counter indemnities in the form of corporate guarantees by SAR Venture Sdn Bhd (“SAR”), the holding company of Alam, and personal guarantees of all the shareholders of SAR, indemnifying JHL against any liability whatsoever in respect of its corporate guarantees to FPSO Tech. In addition, Alam has provided JHL with a bank guarantee on a demand basis for the amount of US$116,000.

The Group’s operating businesses are organised and managed into 3 main operating divisions, namely the Offshore Shipping, Shipbuilding and Conventional Shipping Divisions. The Offshore Shipping Division is mainly engaged in the owning and chartering of offshore support vessels in serving the offshore oil and gas, marine construction, mining, harbour tug operations and other related industries. The Shipbuilding Division is mainly engaged in the building of vessels and vessel sale activities. The Conventional Shipping Division is mainly engaged in the owning and chartering of a product tanker.

Segment accounting policies are the same as the policies described in Note 2.27. Inter-segment sales and transfers are carried out on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those expenses, assets and liabilities that can be allocated on a reasonable basis.

Segment assets consist primarily of fixed assets, current assets and exclude club memberships. Segment liabilities comprise mainly operating liabilities and exclude taxation liabilities.

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Business segments

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32. Segment information

65

notes to the financial statements for the financial year ended 30 June 2007

32. Segment information (cont’d)

Business segments (cont’d)

Financial information about business segments is presented as follows:

C Offshore Shipping Conventional Shipping S Group 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Sales to external customers 69,410 59,018 1,365 1,442

Inter-segment sales 64 42 – –

Total revenue 69,474 59,060 1,365 1,442

Segment results 72,452 46,972 1,686 1,102

Finance costs (1,909) (3,259) – –

Share of profits of associated companies, net of tax 670 1,050 25 15

Profit before taxation

Taxation

Profit after taxation

Other business segment information:

Segment assets 315,451 286,314 4,735 6,117

Investment in associated companies 3,212 3,201 25,202 25,177

Unallocated assets

Total assets

Segment liabilities 52,675 77,304 696 1,972 Unallocated liabilities Total liabilities

Capital expenditure

Depreciation

Provision for impairment of investment in

an associated company

143,042 14,408

– 677

– 716

324

102

–

–

Geographical segments

The Group’s business segments operate globally in 5 main geographical regions. Segment revenue is based on the geographical location of the Group’s customers. Segment assets relating to the Group’s chartering business are based on the geographical location of the Group’s customers and other segment assets are based on the geographical location of the Group’s assets. Capital expenditure relating to vessels added to the Group’s chartering fleet is based on the geographical location of the Group’s customers and capital expenditure relating to vessels under construction is based on the geographical location of the construction. Other capital expenditure is based on the geographical location of the assets.

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North Asia* South Asia* Middle East* A

2007 2006 2007 2006 2007 2006

$’000 $’000 $’000 $’000 $’000 $’000

Sales to external customers – 16 41,718 89,808 20,282 37,847

Segment assets 119,639 55,606 310,803 267,194 13,142 31,952

Capital expenditure 65,991 64,476 84,149 62,884 – 2,900

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159,365 14,972

* These categories were classified as Asia in the prior financial year.

notes to the financial statements for the financial year ended 30 June 2007

Corporate & Shipbuilding Other Segment Elimination Consolidated 2007 2006 2007 2006 2007 2006 2007 2006 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

236,863 245,730 – – – – 307,638 306,190 103,474 96,262 – – (103,538) (96,304) – – 340,337 341,992 – – (103,538) (96,304) 307,638 306,190 69,450 83,742 (255) 941 (6,250) (2,185) 137,083 130,572 (744) (510) – – – – (2,653) (3,769) – – – – – – 695 1,065

135,125 127,868

(14,373) (20,500)

120,752 107,368

895 1,180

–

–

– –

– –

–

–

– (906)

168,479 26,545 195,024

– (682)

160,082 15,904

143,937 15,622

–

324

102

–

America Europe Others Elimination Consolidated 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

100,748

105,731 118,518

53,052

26,372

19,736

–

– 307,638 306,190

60,024

79,351

84,122

64,996

13,109

15,256

–

– 600,839 514,355

9,942

8,100

–

4,065

–

1,512

–

– 160,082 143,937

>

717 1,161

198,554 24,449 223,003

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120,378 63,585 24,849 25,700 (44) (82)

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256,446 193,166 5,358 6,540 (9,649) (6,956) 572,341 485,181 – – 3,866 4,626 (4,015) (4,274) 28,265 28,730

233 444

600,839 514,355

67

notes to the financial statements for the financial year ended 30 June 2007

33. Financial risk management objectives and policies

The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, credit risk and foreign currency risk. The policies for managing each of these risks are summarised below:

(a) Interest rate risk

The Group’s exposure to the risk of changes in interest rates arises mainly from the bank borrowings and cash deposits placed with financial institutions.

For interest income from cash deposits, the Group manages the interest rate risk by placing cash deposits with reputable financial institutions on varying maturities and interest rate terms.

For interest expenses on borrowings, the Group’s policy is to obtain the most favourable interest rates available after taking into account its foreign currency exposures.

Other information related to interest rate risk is disclosed in Notes 19 and 22.

(b) Liquidity risk

The Group’s financing activities are managed centrally by maintaining an adequate level of cash and cash equivalents to finance the Group’s operations. The Group ensures the availability of bank credit lines to address any short-term funding requirements.

The Group’s surplus funds are also managed centrally by placing them with reputable financial institutions on varying maturities.

(c) Credit risk

Credit risk arises mainly from the risk of counterparties defaulting on the terms of their agreements. The carrying amounts of cash and cash equivalents, trade debtors and other debtors represent the Group’s maximum exposure to credit risk in relation to financial assets. No other financial assets carry a significant exposure to credit risk.

The Group monitors the exposure to credit risk on an ongoing basis and credit evaluations are performed on customers requiring credit over a certain amount. The credit risk on balances of cash and cash equivalents is low as these balances are placed with reputable financial institutions.

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an nu a l re p o r t 20 0 7

(d) Foreign currency risk

68

The Group incurs foreign currency risk on sales, purchases and borrowings that are denominated in currencies other than Singapore Dollars. The currencies giving rise to this risk are primarily United States of America Dollars, Euros, Norwegian Kroner and Indonesian Rupiah.

The Group maintains foreign currency accounts with financial institutions in order to have a natural hedge where possible.

The Group also uses foreign exchange forward contracts to hedge its foreign currency risk. The Group generally enters into foreign exchange forward contracts with maturities of up to one year. Where necessary, the foreign exchange forward contracts are rolled over at maturity at market rates.

notes to the financial statements for the financial year ended 30 June 2007

34. Financial instruments (a) Credit risk

There are no significant concentrations of credit risk within the Group or the Company.

(b) Fair values

The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale. (i)

Financial instruments carried at fair value

The Group has carried all derivative financial instruments at their fair values. Fair value has been determined by reference to published prices at the balance sheet date without factoring in transaction costs.

(ii) Financial instruments whose carrying amounts approximate fair value

Management has determined that the carrying amounts of cash and short term deposits, short-term bank borrowings, trade and other debtors, amounts due from/(to) subsidiary companies and trade and other creditors, based on their notional amounts, reasonably approximate their fair values because these are mostly short term in nature or are re-priced frequently.

35. SUBSEQUENT EVENT

On 7 September 2007, the Group signed an Equity Interest Transfer Agreement with Nantong Hengsheng Shipyard Co. Limited and Mr Wong Kwok Keung, through its 100% owned subsidiary company, Jaya Offshore (H.K.) Limited, to acquire the entire issued share capital of Nantong Dongjiang Shipyard Company Limited (the “Acquisition”). The purchase consideration is RMB 36 million (approximately $7.3 million) in cash, which was arrived at on a “willing buyer, willing seller” basis. An advance payment of 20% will be made into an escrow account, to be released upon the successful completion of the equity transfer and the balance will be payable over various stages and milestones.

The Acquisition is financed through the Group’s internal resources and is not expected to have any material impact on the earnings per share and net tangible asset per share of the Group for the financial year ending 30 June 2008.

36. Authorisation of financial statements

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an nu a l re p o r t 20 0 7

The financial statements for the financial year ended 30 June 2007 were authorised for issue in accordance with a resolution of the Directors on 18 September 2007.

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69

shareholders’ information AS AT 14 SEPTEMBER 2007

Number of equity securities

:

769,851,185

Class of equity securities

:

Ordinary share

Voting rights

:

One vote per share

statistics OF SHAREHOLDINGS

No. of No. of Size of Shareholdings Shareholders % Shares

%

1 - 999 36 2.00 11,505 0.00 1,000 - 10,000 1,034 57.44 6,251,507 0.81 10,001 - 1,000,000 712 39.56 45,121,486 5.86 1,000,001 and above 18 1.00 718,466,687 93.33 Total

1,800

100.00

769,851,185

100.00

SUBSTANTIAL SHAREHOLDERS (As recorded in the Register of Substantial Shareholders)

Direct Deemed

Interest % Interest

Nautical Offshore Services – – 422,093,958 (1) Nautical Offshore Holdings – – 422,093,958 (2) Affinity Asia Pacific Fund II LP – – 422,093,958 (3) Cheyne Special Situation Fund LP 41,108,000 5.34 –

% 54.83 54.83 54.83 –

Notes: The deemed interest arises from the shares held in the name of its bank nominee, HSBC (Singapore) Nominees Pte Ltd.

(1)

Nautical Offshore Holdings (“NOH”), through its 100% shareholding in Nautical Offshore Services (“NOS”), is deemed to have an interest in the shares held by NOS.

(2)

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(3)

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Affinity Asia Pacific Fund II LP, through its 94.1% shareholding in NOH, which in turn has a 100% shareholding in NOS, is deemed to have an interest in the shares held by NOS.

shareholders’ information AS AT 14 SEPTEMBER 2007

TWENTY LARGEST SHAREHOLDERS

NO. NAME NO. OF SHARES

%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

HSBC (Singapore) Nominees Pte Ltd Citibank Nominees Singapore Pte Ltd DBS Nominees Pte Ltd

Raffles Nominees Pte Ltd Morgan Stanley Asia (Singapore) Securities Pte Ltd United Overseas Bank Nominees Pte Ltd Lai Chong Meng

Merrill Lynch (Singapore) Pte Ltd Oversea-Chinese Bank Nominees Pte Ltd Tan Rosalind

OCBC Nominees Singapore Private Limited Low Ai Lin Elaine

Eka Tjandranegara

Low Cheng Lum

DBSN Services Pte Ltd

Khong Lai Cheong

OCBC Securities Private Ltd DB Nominees (S) Pte Ltd Tan Ming Kirk Richard Liow Keng Teck

445,700,558 90,455,093 67,999,385 46,069,215 23,656,000 10,892,200 7,900,000 5,459,000 5,386,960 2,973,000 2,739,000 1,816,000 1,579,752 1,561,024 1,154,000 1,101,500 1,023,000 1,001,000 1,000,000 895,000

57.89 11.75 8.83 5.98 3.07 1.41 1.03 0.71 0.70 0.39 0.36 0.24 0.21 0.20 0.15 0.14 0.13 0.13 0.13 0.12

Total

720,361,687

93.57

PERCENTAGE OF SHAREHOLDing IN PUBLIC’S HANDS

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38.67% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the SGX-ST.

71

notice of annual general meeting

JAYA HOLDINGS LIMITED (Company Registration No.: 199002391E) (Incorporated in the Republic of Singapore) NOTICE IS HEREBY GIVEN that the Seventeenth Annual General Meeting of Jaya Holdings Limited (“the Company”) will be held at 13 Tuas Crescent, Singapore 638707 on Friday, 26 October 2007 at 11.00 a.m. for the following purposes:

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AS ORDINARY BUSINESS

72

1.

To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 30 June 2007 together with the Auditors’ Report thereon.

Resolution 1

2.

To declare a final dividend of Singapore cents 6.5 per share tax exempt one-tier for the year ended 30 June 2007 (2006: 5.5 cents per share tax exempt one-tier).

Resolution 2

3.

To re-elect the following Directors of the Company retiring pursuant to Articles 92 and 74 of the Articles of Association of the Company:

Mr Lim Jiew Keng

(Retiring under Article 92)

Resolution 3

Mr Tang Kok Yew (Retiring under Article 74)

Resolution 4

Mr Chan Fook Kong

(Retiring under Article 74)

Resolution 5

Mr Lai Tak Seng

(Retiring under Article 74)

Resolution 6

Mr Mok Weng Sun

(Retiring under Article 74)

Resolution 7

Mr Fung Hwee Ling

(Retiring under Article 74)

Resolution 8

Mr Goon Kok Loon

(Retiring under Article 74)

Resolution 9

Mr Lim Jiew Keng will, upon re-election as Director of the Company, remain as the Chairman of the Audit Committee and a member of the Nomination Committee, and will be considered independent.

Mr Tang Kok Yew will, upon re-election as Director of the Company, remain as the Chairman of the Board and a member of the Nomination Committee and will be considered non-independent.

Mr Chan Fook Kong will, upon re-election as Director of the Company, remain as the Executive Director and will be considered non-independent.

Mr Lai Tak Seng will, upon re-election as Director of the Company, remain as a member of the Audit and Remuneration Committees and will be considered non-independent.

Messrs Mok Weng Sun and Fung Hwee Ling will, upon re-election as Directors of the Company, be considered non-independent.

Mr Goon Kok Loon will, upon re-election as Director of the Company, remain as the Chairman of Remuneration Committee and will be considered independent.

4.

To approve the payment of Directors’ fees of $306,062.00 for the year ended 30 June 2007 (2006: $352,862.00).

Resolution 10

To re-appoint Messrs Ernst & Young as the Auditors of the Company and to authorise the Directors of the Company to fix their remuneration.

Resolution 11

5.

6.

To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

notice of annual general meeting

AS SPECIAL BUSINESS To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications: 7.

Authority to issue shares up to 50 per centum (50%) of the issued shares in the capital of the Company

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors of the Company be authorised and empowered to: (a) (i)

issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) options, warrants or debentures into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors of the Company while this Resolution was in force, provided that: (1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares and Instruments to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed twenty per centum (20%) of the issued shares in the capital of the Company (as calculated in accordance with sub-paragraph (2) below); (2) (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the purpose of determining the aggregate number of shares and Instruments that may be issued under sub-paragraph (1) above, the percentage of issued shares and Instruments shall be based on the number of issued shares in the capital of the Company at the time of the passing of this Resolution, after adjusting for: (a) new shares arising from the conversion or exercise of the Instruments or any convertible securities; (b) new shares arising from exercising share options or vesting of share awards outstanding and subsisting at the time of the passing of this Resolution; and

>

(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force (i) until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution, until the issuance of such shares in accordance with the terms of the Instruments.

Resolution 12 [See Explanatory Note (i)]

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(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the Company; and

a nn ua l re po r t 2 0 07

(c) any subsequent consolidation or subdivision of shares;

73

notice of annual general meeting

8.

Authority to issue shares under the Jaya Employees’ Share Option Scheme

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be authorised and empowered to offer and grant options under the Jaya Employees’ Share Option Scheme (“the Scheme”) and to issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of options granted by the Company under the Scheme, whether granted during the subsistence of this authority or otherwise, provided always that the aggregate number of additional ordinary shares to be issued pursuant to the Scheme shall not exceed ten per centum (10%) of the issued shares in the capital of the Company from time to time and that such authority shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.

[See Explanatory Note (ii)] Resolution 13

By Order of the Board

Yeo Poh Noi Caroline Secretary

9 October 2007

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Explanatory Notes:

74

(i)

The Ordinary Resolution 12 in item 7 above, if passed, will empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the issued shares in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to existing shareholders of the Company.

For determining the aggregate number of shares that may be issued, the percentage of issued shares in the capital of the Company will be calculated based on the issued shares in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of the Instruments or any convertible securities, the exercise of share options or the vesting of share awards outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent consolidation or subdivision of shares.

(ii) The Ordinary Resolution 13 in item 8 above, if passed, will empower the Directors of the Company, from the date of this Meeting until the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares in the Company pursuant to the exercise of options granted or to be granted under the Scheme up to a number not exceeding in total (for the entire duration of the Scheme) ten per centum (10%) of the issued shares in the capital of the Company from time to time.

Notes: 1.

A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2.

The instrument appointing a proxy must be deposited at the Registered Office of the Company at 13 Tuas Crescent, Singapore 638707 not less than forty-eight (48) hours before the time appointed for holding the Meeting.

Jaya Holdings Limited

IMPORTANT:

(Company Registration No. : 199002391E) (Incorporated in the Republic of Singapore)

1. For investors who have used their CPF monies to buy Jaya Holdings Ltd’s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

PROXY FORM

(Please see notes overleaf before completing this Form)

3. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified.

If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.

I/We, of being a member/members of Jaya Holdings Limited (the “Company”), hereby appoint: Name

NRIC/Passport No.

Proportion of Shareholdings

No. of Shares

%

Address

and/or (delete as appropriate) Name

NRIC/Passport No.

Proportion of Shareholdings No. of Shares

%

Address

or failing the person, or either or both of the persons, referred to above , the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held on 26 October 2007 at 11.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion.

The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [√] within the box provided.)

No.

Resolutions relating to:

For

1

Directors’ Report and Audited Accounts for the year ended 30 June 2007

2

Payment of proposed final dividend

3

Re-election of Mr Lim Jiew Keng as a Director

4

Re-election of Mr Tang Kok Yew as a Director

5

Re-election of Mr Chan Fook Kong as a Director

6

Re-election of Mr Lai Tak Seng as a Director

7

Re-election of Mr Mok Weng Sun as a Director

8

Re-election of Mr Fung Hwee Ling as a Director

9

Re-election of Mr Goon Kok Loon as a Director

10

Approval of Directors’ fees amounting to $306,062.00

11

Re-appointment of Messrs Ernst & Young as Auditors

12

Authority to issue new shares

13

Against

Authority to issue shares under the Jaya Employees’ Share Option Scheme

Dated this _____________________ day of ______________________ 2007 Total number of Shares in:

(a) CDP Register

(b) Register of Members

_______________________________________ Signature of Shareholder(s) or, Common Seal of Corporate Shareholder

No. of Shares

Notes: 1.

Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares.

If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2.

A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3.

Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/ her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4.

Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.

5.

The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 13 Tuas Crescent, Singapore 638707 not less than 48 hours before the time appointed for the Meeting.

6.

The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

7.

A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

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The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

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