Building Services Division

Our Building Services Division recorded external revenue of $24.9 million in FY2008, a decrease of 7.8% from $27.0 million in FY2007. This decrease is due to the delay in the delivery of some projects from FY2008 to FY2009. However, profit before interest and tax in FY2008 increased marginally as compared to FY2007.

During the year under review, we completed key projects which include the SPMS Laboratory Control project at Nanyang Technological University, the Crown Plaza Hotel in the Changi International Airport Terminal 3, and The Energy Building in Jakarta, Indonesia.

Key achievements included the installation of the most Open System Projects for the building industry in Singapore. We achieved a major award: the 2008 Frost & Sullivan South East Asia Technologies Award for Market Leadership in Singapore Building Automation Market in April 2008 which is testament to the professional quality and service of this Division. We continued to focus on the niche markets and grow the service business. An example of the niche market we targeted was the laboratory control business which has high entry barriers and good margins.

In Singapore, we won exciting new projects such as the Orchard Central Mall, 313@Somerset Retail Mall, Meritus Mandarin Upgrade, Scotts Square, Marina Bay Financial Centre Residential Phase II, OUB Centre Tower 2, One Shenton Residential, Overseas Union House and the Change Alley Aerial Plaza. The ability to secure these prestigious developments attests to the quality and recognition of our services.

We were awarded the Building Control Authority ("BCA") Zero Energy Building project, which is a flagship pilot project for the research of the Green Building by the BCA in order to cut down on carbon footprint. It implements the latest technologies to ensure that the building uses "No Energy" for its operations and functions. We continue to maintain our position as the BMS market leader in Singapore for the commercial sector and we will target more residential projects and a few ultra mega projects like the two integrated resorts.

Overseas operations are still in their infancy. Due to our track record, we have already secured projects in the UAE and Malaysia. These projects have potential for growth when the economy recovers.

For FY2009, we aim to further strengthen our position overseas by appointing distributors and striving to further penetrate the markets in USA, Saudi Arabia, Ukraine and Malaysia. We have already appointed distributors for our building and services equipment after having secured the UL Listing (UL916) for Energy Management by our Controllers and we are able to maintain our position as Special OEM Master Distributor Status by Echelon, USA. We will also step up our regional marketing efforts and identify new business opportunities to expand our business.

We continue to build up our product business by expanding our product offerings. We will develop products such as WIFI, wireless VAV and FCU Controllers. Of special mention is the completion of our fully programmable controller which is a requirement for four seasonal countries. We target to launch our products in regions with exhibitions and trade shows, magazines featuring intelligent products, while upgrading products to be comparable to international standards.

A key challenge in FY2009 is the possibility of delays in new order bookings, both in the commercial and residential sectors. Margins can be affected by uncertainties in sub-contractor costs. Any slowdown in the recovery from the present recession in Singapore and the world will have an impact on our project delivery and may affect our earnings beyond 2009.

For the long term, our growth strategy is to strengthen the branding of our developed products for use in projects, continue building our own identity, design and product ownership, and roll out product marketing through global channels. We will also step up efforts to penetrate the USA market.

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