Sunny Tew

OPERATIONS & FINANCIAL REVIEW (CONT’D)running at full capacity. Giventhe strong demand to our firstfacility, we have installed asecond sandblasting facilityand it has begun fulloperation. OrientalMetals has alsoreconfiguredits existing pipeproduction line tostart producing scaffoldingpipes and scaffolding metal decksto meet the demand in the buoyant constructionindustry.In addition, Galaxia has also started its business ofleasing of steel plates during the year. By this newoperation, we hope to provide value-added servicesof stainless steel products to our customers inconstruction and shipbuilding industries.To meet the demand for steel products and at thesame time take advantage of the rising steel prices,we have increased our inventory levels during theyear. As of 30 September 07, inventories stood atS$182.4 million, compared to S$101.6 million lastyear. Trade & other receivables also increased toS$98.5 million, compared to S$92.1 million last year,in line with higher revenue. Trade & other payablesincreased from S$43.4 million to S$75.3 million, asof 30 September 07.Property, plant and building has increased fromS$12.6 million as of 30 September 2006 to S$13.3million as of 30 September 2007, after the setting upof our second sandblasting facility.Our net gearing improved from 2.0 times in FY06 to1.1 times in FY07. Shareholders’ funds also doubledfrom S$58.0 million last year to S$115.8 million as of30 September 2007.As part of our efforts to reward our shareholders, wewill be recommending a final dividend of 1 cent perordinary share, a special dividend of 0.25 cent perordinary share and a 1-for-3 bonus share issue forthis year.10 HG METAL MANUFACTURING LTD LIMITED ANNUAL ANNUAL REPORT REPORT 2007 2007