final output

Inventory Management System
We have approximately 50,000 square feet of warehouse space, where our commonly used materials
such as uPVC pipes and fitting, copper pipes and fittings and electrical cables are kept. We have a
computerised inventory system that provides on-line information on our stock levels. This inventory
system allows us to schedule and plan for our stock requirements to ensure we have sufficient
material to complete a project and not cause a delay in the completion of our M&E services.
Stocktakes are conducted on an annual basis, both for us to monitor our stock levels and to check
against the quantity captured in our inventory system. We also perform weekly random checks on
selected items of inventory. To date, we have no material adjustments arising from discrepancies
between our physical stock and inventory system. As at 30 September 2000, we had approximately
$1.5 million of inventory at cost as shown at pages 43 and 106 of this Prospectus.
We intend to upgrade our inventory system by installing computer terminals and inventory software
that would allow us to update our inventory records and monitor movement of inventory on-line. We
plan to install additional storage shelves to optimise the utilisation of our warehouse space and
purchase new equipment to lift and move heavy items in our warehouse. The estimated cost of
upgrading our inventory system and purchases of equipment is estimated at $0.5 million as described
on page 26 of this Prospectus. We expect the new inventory system to be completed by December
2001.
Government Regulations
Labour Policies
The Singapore construction industry is dependent on foreign labour due to a small local construction
labour force. Any changes in the labour policies and laws on the employment of foreign labour would
therefore have an impact on our ability to employ such workers and may affect our labour costs.
The Ministry of Manpower regulates the employment of foreign workers in Singapore. Presently, the
Ministry of Manpower imposes a levy of $470 per month on every unskilled foreign worker and $30
per month on every skilled worker. The Ministry of Manpower also limits the number of foreign
workers that companies can employ by setting a ratio of foreign workers to local workers under a
company’s employment. The Ministry of Manpower sets the ratio at five foreign workers to one local
worker for all companies.
Any changes to the rates of foreign workers’ levies and the above ratio may affect our ability to
employ foreign workers. As a result, our work schedules, the number of projects secured by us and
our financial performance may be affected.
We currently have approximately 430 foreign workers which accounts for approximately 76.0% of
our workforce. In FY 2000, foreign workers’ levies totalled $1,100,000 and accounted for approximately
19% of our net profit before tax.
BCA Regulations
Certain aspects of our M&E work processes are subject to the provisions of the Building Control Act
(Cap 29) and the Building Control Regulations (Cap 29) (“BCA Regulations”). The BCA Regulations
require our work processes, our supervising staff and the materials utilised in our work process to
comply with standards imposed under the BCA Regulations and the Code of Practice (“Code”).
Any changes to the BCA Regulations and the Code may affect our work processes, which may
affect our costs and the time taken to complete the projects.
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