Annual Report For The Financial Year Ended 31 October 2002

CORPORATE GOVERNANCE STATEMENT

GN3.2 Chairman and Chief Executive Officer

The Company maintains the positions of Chairman and CEO separately, which ensures there is balance of power and authority at the top of the Company. These posts are held by Mr. Tan Chan Too and Mr. Wee Piew respectively.

The Chairman is responsible to :

• schedule meetings that enable the Board to perform its duties
• prepare the meeting agenda in consulation with the CEO
• coordinating the flow of information between management and the Board
• assist in ensuring comliance with the company's guidelines on corporate governance

GN4.5 Key Information regarding directors

GN8.3 Remuneration for Non-executive Directors

Remuneration for non-executive directors is determined by the executive directors, based on the effort, time spent and responsibilities of each non-executive director and also taking into account, market practice. The remuneration packages of non-executive directors will be subjected to shareholders' approval at the AGM.



GN11.4 Roles and Responsibilities of the Audit Committee

The Audit Committee recommends to the Board the appointment and re-appointment of auditors and their fees for shareholders' approval and review the scope and results of the audit, and its cost-effectiveness.

The non-audit fees paid to external auditors by the Group for the financial year amounted to S$14,600 (2001: S$6,000), being tax services rendered.


P15 Communication with Shareholders

The Company endeavours to maintain constant and effective communication with shareholders through :

• annual reports that are prepared and sent to all shareholders. The Board ensures that the annual report includes all relevant information about the Company and the Group, including the future developments and other disclosures required by the Singapore Companies Act and Singapore Statements of Accounting Standard;
• interim financial statements containing a summary of the financial information and affairs of the Company and the Group for that period;
• notices of and explanatory memoranda for AGMs and Extraordinary General Meetings;
• press and analyst briefings for the Company's and the Group's interim and annual results;
• press releases on major developments of the Company and the Group;
• disclosure to the SGX-ST;
• the Company's website at http://www.hgmetal.com ;and
• financial portal http://www.shareinvestor.com

Moreover, our shareholders are encouraged to attend the AGM to ensure a high level of accountability and to be up-dated of the Company's strategies and goals. The notice of the AGM is sent to our shareholders, together with explanatory notes, appendixes or a circular on items of special business, at least 14 days before the meeting.



Prospectus-type information relating to the background of key management staff as required by the amended Rule 1207(4)(c), which came into effect on 3 January 2003:

Ms Foong Lee Heng, Jasmine

Our Head of Finance is responsible for all financial and accounting matters of our Group. Prior to joining our Group in November 2000, Ms Foong Lee Heng, Jasmine was a senior accountant with IPC Corporation Ltd from August 1999 to November 2000. Between February 1998 and July 1999, she was the Senior Audit Officer with BDO International Singapore. Between January 1995 and January 1998, she was with BDO Binder, a professional accounting firm in Malaysia, where she last held the position of Audit Senior. Ms Foong Lee Heng, Jasmine is a member of the Association of Chartered Certified Accountants ("ACCA") and a non-practising member of the Institute of Certified Public Accountants of Singapore ("ICPAS").

Mr Tan Hock Lye

Our Head of Purchasing oversees the purchasing function of our Company. He is responsible for managing and overseeing the purchases from local suppliers and the overall inventory of our Group. Mr Tan Hock Lye, together with our Executive Chairman, Mr Tan Chan Too, is involved in the negotiations with our suppliers for all our steel product requirements. Mr Tan Hock Lye is also responsible for monitoring movements in the steel industry. Mr Tan Hock Lye joined our Group in 1988 as an executive reponsible for local sales and purchases.

Mr Tan Hock Seng

Our Company's Head of Sales oversees our Sales Department. He is responsible for managing existing relationships with our customers and is also responsible for developing new customer relationships. Mr Tan Hock Seng joined our Group in 1996 as an executive in our Sales Department and has also performed various duties in our Logistics and Warehousing Departments prior to heading our Sales Department.

Mr Goh Lai Poh, John

Our Sales Manager reports to our Head of Sales, Mr Tan Hock Seng, and is responsible for our sales to local customers and our export sales to Indonesia. Besides maintaining relationships with our existing customers, Mr Goh Lai Poh, John is also rsponsible for our Group's marketing activities to establish new customers in Singapore and Indonesia. Mr Goh Lai Poh, John joined our Group in 1988 as an executive in our Logistics and Warehousing Department.

Mr Kiat Yap Chuan

Our Group's Factory Manager is responsible for overseeing the production and manufacturing activities of our manufacturing unit and also managing the production workers. Mr Kiat Yap Chuan reports to our Executive Director, Mr Lee Leng Loke. Mr Kiat Yap Chuan has been with OMP since 1968 and has more than 30 years of experience in steel product manufacturing processes and the production of steel products.



Prospectus-type information relating to risk management policies and procedures as required by the amended Rule 1207(4)(c), which came into effect on 3 January 2003.

(i) Fluctuations in steel prices

As a manufacturer of steel products, steel is our main raw material. Similarly, as a steel stockist, we have to stock a wide range of steel products to cater to the needs of our customers. Steel and steel product purchases accounted for more than 90% of our overall cost of purchase in the last three financial years. Therefore, we are vulnerable to the movement in steel prices.

We have more than 30 years of experience in the business of steel. With our vast experience, we constantly monitor the movement of steel prices and adjust our buying and selling patterns accordingly.


(ii) Customers credit exposure

We have established a pool of more than 300 customers in South East including Malaysia, Indonesia and Thailand.

The payment terms for every customer is determined by a credit review committee consisting of our Directors, and Head of Finance. We monitor the aging of outstanding debts on monthly basis. If an amount owing from a customer is overdue beyond 180 days, we would stop further sales transaction until all overdue payment have been made. In addition, if a customer does not make any payment for more than 6 months, we would make specific provision for that debtor.


(iii) Fluctuation in the US dollar against Singapore dollar

Our purchase of steel products are principally denominated in US$ whilst our sales are predominantly denominated in S$ and US$. For FY2002, approximately 60.8% and 39.2% of our purchases were denominated in S$ and US$ respectively whilst 77.6% and 22.4% of our revenue are denominated in S$ and US$ respectively. As such, any appreciation of the US$ against S$ would increase our cost of purchase.

We constantly monitor our foreign exchange exposure and use hedging instruments to manage our foreign exchange risk on an ongoing basis.

Confirmation by the audit committee that it has undertaken a review of all non-audit services provided by the auditors and they would not, in the audit committee's opinion, affect the independence of the auditors. This confirmation is required by the amended Rule 1207(b), which came into effect on 3 January 2003.

The audit committee has undertaken a review of all non-audit services provided by the auditors and confirm that they would not, in the audit committee's opinion, affect the independence of the auditors.