AnnAik : ANNUAL REPORT YEAR 2022

PROVIDING ENERGY RESPONSIBLY

ADDING VALUE DILIGENTLY

Established since 1977 with

45 years solid track records

Manufacturing Operations are Certified and Awarded with

ISO 9001:2015

TUV, CRN and ClassNK

Build-Own-Transfer ("BOT")

Build-Own-Operate ("BOO")

Private-Public- Partnership ("PPP")

>5000	+	1	8
rural wastewater business	industrial wastewater treatment
systems sold		under PPP model	plants under BOT/BOO model

DISTRIBUTION

Warehouse holds over 10,000 products such as stainless steel pipes, flanges, buttwelded fittings, low/high pressure fittings, valves, stub ends, and flat products

Awarded: ISO 9001:2015 standards for quality management operation as stainless steel producer and stockist

Over 650 customers across the region

MANUFACTURING

Shinsei steel flanges.

Awarded ISO 9001:2015, TUV, CRN, and ClassNK certification and approved for international product standard compliance

Serve a wide base of customers

ENVIRONMENT AND ENGINEERING SERVICES

Construct and operate industrial wastewater treatment plants in the PRC

Consulting service in water resource management, including governmental and commercial operators in Singapore

Construct and supply rural wastewater treatment equipment in the PRC

This Annual Report has been prepared by the Company and its contents have been reviewed by the Company's sponsor, Hong Leong Finance Limited (the "Sponsor"). The Annual Report has not been examined or approved by the SGX-ST. The SGX-ST assumes no responsibility for the contents of this Annual Report including the correctness of any of the statements or opinions made or reports contained in this Annual Report.

The contact person for the Sponsor is Ms Vera Leong, Vice President, Hong Leong Finance Limited, at 16 Raffles Quay, #01-05 Hong Leong Building, Singapore 048581, telephone: [phone].

01 ANNAIK LIMITED

2022 Annual Report

Vision

To be a global leader in stainless steel piping products, known for our outstanding quality and unique upstream and downstream capabilities, from manufacturing to distribution to engineering construction and environmental business.

Contents

02 Chairman's Message

1. Board of Directors

1. Group Structure
2. Operations Review
3. Financial Highlights
   10 Sustainability Report

1. Corporate Governance Report
   51 Financial Statements
   132 Statistics of Shareholdings
   134 Statistics of Warrantholdings
   135 Notice of Annual General Meeting Proxy Form

ABOUT ANNAIK

Tracing its beginning to 1977, AnnAik Limited is today a manufacturer of forged steel flanges, and a distributor of over 10,000 stainless steel pipes, flanges, buttwelded fittings, low/high pressure fittings, valves, stub ends, and flat products. AnnAik also engages in providing environmental services in the PRC and Singapore to governmental and commercial operators.

AnnAik's manufacturing operations are certified and awarded with ISO 9001:2015, TUV, CRN and ClassNK certification and approved for international product standard compliance. The reliable quality of AnnAik's products under "SHINSEI" brand also make us greatly sought after by a wide base of customers from around the world.

Similarly, the distribution division serves over 650 customers globally. Awarded: ISO 9001:2015 standards for quality management operation as stainless steel producer and stockist, AnnAik also went on to achieve bizSAFE Level 3 accreditation in 2014.

In 2005, the Group diversified into environmental business by securing contracts to build wastewater treatment plants in the PRC. Today, the Group not only has eight wastewater treatment plants in the PRC under Build-Own-Transfer ("BOT") or Build-Own-Operate ("BOO") concept, we have also expanded our service offerings to include consulting services in water resource management to governmental and commercial operators in Singapore, as well as the construction and supply of rural wastewater treatment equipment and system in the PRC.

Notably, AnnAik's capabilities in both upstream and downstream activities have enabled us to enhance our efficiency and cost competitiveness in our business operations. Furthermore, the use of our products in diverse industries ranging from heavy-duty to light-duty industries such as marine engineering, shipbuilding and repair, oil and gas, petrochemical, semiconductor as well as the utilities sector has empowered the Group to build a sustainable business.

02

ANNAIK LIMITED

2022 Annual Report

CHAIRMAN'S MESSAGE

Dear Shareholders,

On behalf of the Board of Directors, I am pleased to share the results of AnnAik Limited and its subsidiaries ("AnnAik/the Group") for the financial year ended 31 December 2022 ("FY 2022"). I am glad that we have delivered another set of remarkable scorecards despite continued challenges from COVID-19 (Coronavirus Disease 2019) in FY 2022. I am thankful that with prudent, strong operational resilience and with an agile team in the Group, we navigated through another year to achieve continued business growth and profitability.

Singapore has slowly returned to normalcy as borders reopened and social distancing requirements having been lifted since April 2022. We have adopted a new operating approach and moved towards an endemic living environment with COVID-19. Sailing through the third year of COVID-19, AnnAik has grown even stronger in all business divisions through our strategy of "A Sustaining Steel Business and Growing Environmental Business". The hike in steel prices and strong demand for steel products since early 2021 fully flowed into FY 2022; which lead to higher turnover and results achieved in distribution of steel products business and manufacturing of steel flanges division. The stable environmental division with predictable cash inflows and profit continued to be the cornerstone for strengthening the Group's results.

As major economies have opened up for trade activities and connection to the World, Singapore's Gross Domestic Product ("GDP") grew by 3.6% in FY 2022. The Ministry of Trade and Industry ("MTI") is maintaining Singapore's GDP growth forecast at 0.5% to 2.5% for FY 2023 especially with the expectation of positive impacts from recent opening the PRC in January 2023. Barring any unforeseen circumstances, such as constraints caused by emergence of a new COVID-19 variant, persistent inflation with an abnormally high interest rate environment and geopolitical tensions from the Russian-Ukrainian conflict, we are cautiously optimistic of expecting a sustainable operating environment for our business in FY 2023.

Striking a Respectable Performance

Tapping on the hike of steel prices, strong demand of steel products since early 2021 and predictable contribution of the environmental division, our Group has achieved a remarkable profit attributable to owners of the Company of S$5.53 million for the financial ended 31 December 2022.

Distribution of steel products business and manufacturing of steel flanges division registered a higher turnover and profit contribution to the Group. Our distribution of steel business in Singapore will continue to position well so as to serve customers in regions with competitive pricing, quality products and value-added delivery services through our extensive stocks holding and ranges position in Singapore and Malaysia. Our manufacturing of steel flanges division will aggressively promote its SHINSEI brand for flanges and its newly added product; fittings through brand awareness and marketing activities in Malaysia.

As a result of low profit margin contributions from the trading of steel business in FY 2022, we have temporarily ceased this business since September 2022 after thorough internal review and to only focus on the trading of non-steel products following our diversification of trading business strategy. Our core distribution of steel products under the distribution division remains. We will continuously develop our non-steel trading business under the distribution division to complement our core distribution of steel products and manufacturing of steel flanges businesses.

Our environmental business is maintaining its healthy contribution of profit and cash flows to the Group in FY 2022. We are actively participating in some of the tenders in Singapore and the PRC in order to top up our order book of Engineering, Procurement and Construction ("EPC") projects. Recent completion of the upgrading of the wastewater treatment plant in Changxing LiJiaXiang New Era Wastewater Treatment Co., Ltd has enhanced our assets value and capability to meet stringent requirements set by the Ministry of Environment in PRC. It is heartening to note that the environmental division has consistently proven to be growing especially with the current strong support from government in green environment investment.

Realising Growth Opportunities

One wastewater treatment project in Shuanglin (Huzhou) Wastewater Treatment Co., Ltd is currently under construction and scheduled for completion in 3rd quarter of FY 2023. Again, our local team in PRC has demonstrated our ability in process design, adoption of treatment technology, management and investment capabilities for our environmental division. We will continue looking for similar opportunities in the PRC and the region for expansion.

A breakthrough of a new EPC project secured in the beginning of FY 2022 from a GLC-linked company has added our confidence, to undertake bigger and more complex projects in Singapore, by tapping on our extensive knowledge and expertise in the hazardous wastewater treatment business. We are currently participating in a few more tenders from GLC-linked companies with an aim to increase order book of our EPC business in hazardous wastewater treatment business.

03 ANNAIK LIMITED

2022 Annual Report

Looking Ahead for New Growth

The Group has also embarked on the trading of new materials at end of FY 2022. The successful deliveries of these new materials can further diversify our trading of non-steel business, coupled with a better profit margin contribution. From the recent experience garnered in this trading of new material, we are planning to set up a processing plant in Singapore and the region in the near future so can make this business our next growth engine of the Group.

We remain confident and trust that with our Group's collective resilience and perseverance and under the stewardship of the Board of Directors, backed by the collective efforts of the management team, we continue to have faith in our commitment to build a new long term sustainable business and enhance value for our shareholders and other stakeholders.

Understanding the Challenges Ahead

Looking ahead, the global business landscape continues to present business and operational challenges for the Group such as uncertainties with COVID-19 mutations, ongoing geopolitical tensions, significant inflationary pressures, rising interest rates and a potential recession in FY 2023. We shall continue to exercise strict financial prudence in cost and working capital management, focus on operational efficiency and mitigate business risks.

Dividend

We are very heartened by the unwavering support from our shareholders during the year. To show our appreciation, the Board of Directors is pleased to propose a first and final one-tiertax-exempt dividend of 0.4 Singapore cents per share for the year ended 31 December 2022. The dividend will be paid out to shareholders upon approval at the annual general meeting.

In Appreciation

On behalf of the Board of Directors, I would like to thank the team for their dedication and commitment throughout the year which has allowed the Group to thrive. Their efforts and contributions have been instrumental in the Group's growth journey. I would also like to express our appreciation to our customers, vendors and business partners for their unwavering faith and confidence in us. We are grateful to have you on our journey and we look forward to this continued support as we endeavour to achieve new milestones and greater times together.

We remain committed to realising our strategic objectives and achieving our profitability goals. Apart from keeping a strong focus on our existing businesses, we will also adapt our strategy in tandem with shifts in the economic landscape so as to stay competitive and ready to take advantage of new growth opportunities.

James Ow Chin Seng, PBM

Executive Chairman cum CEO