annual report 2013 · bsl corporate services pte ltd 220 orchard road #05-01 midpoint orchard...

Annual Report 2013

a new skyline of growth

01 Corporate Profile

24 Occupational Safety and Health

02 Our Breadth of Services

25 Corporate Highlights and Investor Relations

03 Corporate Information and Financial Calendar

26 Corporate Governance

04 Five-Year Financial Profile and Charts of the Group

37 Financial Statements

06 Letter to Shareholders

107 Statistics of Shareholdings

08 Board of Directors

108 Substantial Shareholders

10 Company Management

109 Notice of Annual General Meeting

12 Review of Operations 113 Proxy Form

Contents

01 UE E&C LTD. Annual Report 2013

An Integrated Building Solutions ProviderUE E&C Ltd. (“UEEC” or the “Company” and with its group of subsidiaries, the “Group”) is an established provider of integrated building solutions: mechanical and electrical (M&E) engineering, construction, property development and others.

Our principal M&E engineering and construction subsidiaries have been established for more than 30 years in Singapore and played a role in the building of many notable landmarks in Singapore and the region. To extend a more complete proposition to our customers, we also provide total power solutions, rental and supply of metal forms, as well as supply of flooring tiles and sanitary fittings. In addition, we engage in residential property development through joint ventures. Headquartered in Singapore, we have overseas operations in Brunei, Malaysia, Vietnam, China and the Philippines.

Corporate profile


our breadth of serviCes

Multi-Disciplinary

Building Services

• Property development• Total power solutions and

load testing• Rental and supply of metal forms

• Supply of flooring tiles and sanitary wares

• Rental and distribution of industrial equipment

• High and low-voltage electrical power distribution

• Air-conditioning and mechanical ventilation (“ACMV”) systems

• Fire protection, alarm and sanitary systems

• Design-and-build• Civil works

• General construction• Structural and wet-trade works

• Geo-technical foundation works

Building Materials and

Equipment

M&E Engineering

Construction


Corporate information

finanCial Calendar

Board of DirectorsDr Tan Eng Liang (Independent Chairman)Chua Hock Tong (Executive Director and CEO)Norman Ip Ka Cheung (Independent Director)Tan Soo Kiang (Independent Director)Jackson Chevalier Yap Kit Siong (Non-Executive Director)

Audit & Risk CommitteeNorman Ip Ka Cheung (Chairman)Dr Tan Eng Liang (Member)Tan Soo Kiang (Member)

Nominating CommitteeDr Tan Eng Liang (Chairman)Norman Ip Ka Cheung (Member)Tan Soo Kiang (Member)

Remuneration CommitteeTan Soo Kiang (Chairman)Dr Tan Eng Liang (Member)Jackson Chevalier Yap Kit Siong (Member)

Joint Company Secretaries Tan Ching Chek, LLB, ACISLo Swee Oi, ACISBSL Corporate Services Pte Ltd220 Orchard Road#05-01 Midpoint OrchardSingapore 238852 Tel: (65) 6235 3388Fax: (65) 6235 3178Website: www.bslcs.com.sg

Announcement of Q1 2013 Results 14 May 2013Announcement of Q2 2013 Results12 August 2013Announcement of Q3 2013 Results 8 November 2013Announcement of 2013 Full Year Results27 February 2014Notice of Fourth Annual General Meeting9 April 2014

Fourth Annual General Meeting24 April 2014Ex-dividend Date30 April 2014Last Date for Registration of Transfers5 May 2014Closure Date6 May 2014Dividend Payment Date12 May 2014

Registered Office and Principal Place of Business12 Ang Mo Kio Street 64#03-13 UE BizHub CENTRALSingapore 569088Tel: (65) 6818 8666Fax: (65) 6818 8682Website: www.ueec.sg

Share RegistrarBoardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623Tel: (65) 6536 5355Fax: (65) 6536 1360Website: www.boardroomlimited.com

AuditorErnst & Young LLPPublic Accountants and Chartered AccountantsOne Raffles QuayNorth Tower, Level 18Singapore 048583Partner-in-charge: Nelson Chen Wee Teck

(Appointed with effect from financial year ended 31 December 2013)

Principal BankersOversea-Chinese Banking Corporation LimitedBaiduri Bank BerhadDBS Bank LtdThe Hongkong and Shanghai Banking Corporation LimitedUnited Overseas Bank Limited


five-year finanCial profile of the group

2013 2012 2011(Restated)1

2010(Restated)1

2009(Restated)1

Consolidated income statement ($000)

Revenue 400,167 387,476 388,605 368,690 395,835

Profit before tax 72,621 59,041 75,368 38,925 29,544

Income tax expense (12,517) (9,914) (10,044) (8,683) (3,296)

Profit net of tax 60,104 49,127 65,324 30,242 26,248

Profit attributable to owners of the Company, net of tax 60,171 47,943 64,852 27,463 24,806

Statement of financial position ($000)

Property, plant and equipment 53,020 49,041 46,773 36,909 29,846

Investment properties 5,192 5,265 5,419 7,500 10,500

Non-current investments 11,565 15,321 16,916 716 811

Other non-current assets 105,272 108,468 65,206 52,831 65,345

Net current assets/(liabilities) 86,014 36,724 48,503 (6,527) (31,106)

261,063 214,819 182,817 91,429 75,396

Shareholders’ equity 244,158 197,508 168,527 71,129 12,476

Non-controlling interests 1,450 1,853 2,901 2,491 6,993

Long-term borrowings 2,058 2,127 - - 2,379

Other non-current liabilities 8,524 9,851 7,959 13,659 49,925

Deferred tax liabilities 4,873 3,480 3,430 4,150 3,623

261,063 214,819 182,817 91,429 75,396

Net debt ($000) 56,814 117,361 93,347 171,519 234,835

Net debt to equity (times) 0.23 0.59 0.55 2.41 18.82

Per ordinary share

Earnings per ordinary share (cents)2

- Profit attributable to ordinary shareholders 22.3 17.8 25.1 13.7 12.4

Ordinary dividends

- First and final (cents) 5.0 5.0 2.0 NA NA

- Special (cents) 2.0 - 4.0 NA NA

- Cover (times) 3.2 3.6 4.2 NA NA

Net tangible assets ($)2 0.90 0.73 0.62 0.36 0.06

NA: Not applicable

1 The comparative figures have been restated to take into account the retrospective adjustments arising from the acquisition of a subsidiary under common control 2 Calculated based on the pre-invitation share capital of 200,000,000 ordinary shares for financial years 2009 to 2010 for comparative purposes


five-year finanCial Charts of the group

Revenue by Business Segments ($000)Group Revenue ($000)

2013 2012

387,476 388,605368,690

395,835400,167

2011^ 2010^ 2009^

Group Profit Net of Tax ($000)

2013

49,127

60,104

22.3

65,324

30,24226,248

2012 2011^ 2010^ 2009^

Earnings Per Ordinary Share (cents)*

2013

17.8

25.1

13.7 12.4

2012 2011^ 2010^ 2009^

Revenue by Geographical Segments ($000)

Construction285,253 (71.3%)

Brunei89,555 (22.4%)

Engineering85,553 (21.4%)

Malaysia27,342 (6.8%)

Building Materialsand Equipment29,361 (7.3%)

Vietnam3,885 (1.0%)

Other Countries5,563 (1.4%)

Singapore270,377 (67.6%)

China3,445 (0.8%)

^ Restated values* Calculated based on the pre-invitation share capital of 200,000,000 ordinary shares for financial years 2009 to 2010 for comparative purposes

1 The comparative figures have been restated to take into account the retrospective adjustments arising from the acquisition of a subsidiary under common control 2 Calculated based on the pre-invitation share capital of 200,000,000 ordinary shares for financial years 2009 to 2010 for comparative purposes


letter to shareholders

Dear Shareholders,

The financial year ended 31 December 2013 (“FY 2013”) is the third year in operation for the Group since the Company’s listing on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”) in February 2011. Underpinned by sound management and the strong construction demand in Singapore and the region, the Group has been growing steadily in the last few years.

Steady growth momentum

In FY 2013, the Group’s revenue increased slightly to $400.2 million from $387.5 million in the previous year. This was mainly due to higher contributions from the M&E engineering segment, although they were offset by lower revenue from the construction segment. Gross profit increased to $94.3 million as compared with $81.9 million in the previous year due to the increased revenue and higher margin contribution from Austville Residences, as well as cost savings arising mainly from the write back of provisions upon the finalisation of accounts for completed projects. As a result, gross profit margin increased to 23.6% as compared with 21.1% in the previous year. The Group’s attributable profit increased by 25.5% to $60.2 million.

Reflective of the Company’s growth during the year, its share price rose 60% to close at $1.04 on 31 December. Based on the initial public offering price of $0.48, the Company’s share price had risen 97% since its listing in February 2011.

Strategic joint ventures and expansion of core services

The Group continues to participate in joint property development on the condition that it also undertakes the role of main contractor for such development projects. This is a business development strategy as well as a form of risk diversification for the Group. In January, the Group formed a joint venture company with Sing Holdings Limited to complete the acquisition of a land parcel at Punggol Field Walk/Punggol East for the development of a 373-unit executive condominium (EC) named Waterwoods. One of the Group’s principal construction subsidiaries, Greatearth Corporation Pte Ltd (“Greatearth Corporation”), was appointed as the main contractor for Waterwoods.

The Group also incorporated a 95%-owned subsidiary, PT. UE Prima Nusantara, in September to expand its power solutions business in Indonesia through the provision of engineering, trading and rental services in power-related equipment.

Strong order books

In FY 2013, the Group won contracts on several fronts to sustain the growth momentum. In February, the Group’s principal M&E engineering subsidiary, United Engineers (Singapore) Private Limited (“UES”), secured a contract for electrical installation works to the proposed residential/commercial development for Waterway Point and Watertown at Punggol Central/Punggol Walk. The $35.2 million project is expected to be completed in two phases by July 2015 and July 2016 respectively. In April, UES was also awarded a $20.7 million contract for the supply and installation of ACMV, building management, fire protection, electrical and engineering smoke control services in The Seletar Mall at Sengkang West Avenue/Fernvale Road which is expected to be completed by November 2014. In June, UES won the tender for the installation of electrical, extra-low voltage, sanitary, plumbing and gas services in Eight Riversuites at Whampoa East for $21.0 million which is expected to be completed by September 2015.

In February 2014, another of the Group’s principal construction subsidiary, Greatearth Construction Pte Ltd (“Greatearth Construction”) was appointed as the main contractor for the proposed erection of one block of 19-storey educational institution with one basement for the Lee Kong Chian School of Medicine, Nanyang Technological University (NTU) at Mandalay Road (Novena Campus) and one block of 7-storey School of Medicine at Nanyang Drive (NTU’s Yunnan Garden Campus) for approximately $243.5 million. This is one of the largest contracts that the Group has won in recent times.

The Group’s construction subsidiary in Brunei, United Engineers (B) Sdn Bhd (“UEB”), won a tender for the proposed renovation of the Arts and Crafts Centre at Jalan Residency for a contract sum of BND23.2 million. It is expected to complete in the middle of 2014.

Underpinned by sound management and the strong construction demand in Singapore and the region, the Group has been growing

steadily in the last few years.


Chua Hock TongChief Executive Officer (CEO)

Dr Tan Eng LiangChairman

Dividends

Based on the financial performance for the year, the Company’s Directors are pleased to propose a first and final dividend of 5 cents per ordinary share and a special dividend of 2 cents per ordinary share, amounting to $18.9 million. The proposed dividends, if approved by members at the forthcoming Annual General Meeting (AGM), will be paid on 12 May 2014.

Improved economic outlook

The global economic environment is showing signs of strengthening and the Group believes that this improved outlook bodes well for all businesses. In particular, the Group remains optimistic about its engineering and construction businesses as the construction demand in Singapore for 2014 is projected to be between $31 billion and $38 billion based on forecast by the Building and Construction Authority of Singapore (“BCA”). This high demand is likely to be driven by public housing, institutional developments and major infrastructure projects.

However, with this high level of construction activities, we expect continued pressures from rising labour costs due to the current tight labour market. For this, the Group will continue to strive for productivity enhancement and strategic labour deployment.

The demand for private residential properties and ECs will continue to be affected by the Total Debt Servicing Ratio framework for property loans implemented by the Monetary Authority of Singapore in June. As such, the Group will continue to take a cautious approach in property development.

Acknowledgements

On behalf of the Board of Directors and management, we would like to express our gratitude to Independent Director Mr Kwan Chiew Choi, who resigned in February 2014, for his dedication and contributions to the Group since the Company’s listing in February 2011. Mr Kwan had served in all the Board committees. We wish him the best in all his future endeavours.

We would also like to thank all our shareholders, customers, business associates, sub-contractors, suppliers and bankers for their continued support of the Group. Last but not least, we extend our appreciation to the Board of Directors, management and staff for their efforts and dedication throughout the year.


board of direCtors

1. Dr Tan Eng Liang Independent Chairman

2. Chua Hock Tong Executive Director and CEO

3. Norman Ip Ka Cheung Independent Director

4. Tan Soo Kiang Independent Director

5. Jackson Chevalier Yap Kit Siong Non-Executive Director

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3

5

2

4


Dr Tan Eng LiangIndependent Chairman

Dr Tan Eng Liang was appointed to our Board of Directors on 26 April 2012. Dr Tan serves as the Chairman of the Nominating Committee and a member of the Audit & Risk and Remuneration Committees.

Currently, Dr Tan sits on the board of several listed companies such as Tung Lok Restaurants (2000) Ltd, Progen Holdings Ltd, Sunmoon Food Company Limited and HG Metal Manufacturing Limited. In addition, he also sits on several public service committees including the Singapore National Olympic Council.

Dr Tan graduated with a Bachelor of Science (Honours) degree from the University of Malaya, Singapore (now known as the National University of Singapore). He also holds a doctorate of philosophy from Oxford University, England. He was awarded the Public Service Star (BBM), Public Service Star (BAR) and Meritorious Service Medal by the Singapore Government as recognition for his services to the country. In 1995, the IOC Olympic Movement Unity Trophy was presented to him for his invaluable services to Olympism. In 2010, he was awarded the IOC Order - Silver for successful organisation of the Youth Olympic Games in Singapore.

Chua Hock TongExecutive Director and CEO

Mr Chua Hock Tong was appointed to our Board of Directors on 22 December 2010.

Mr Chua is the founder of Greatearth Construction and has over 30 years of experience in the construction industry. He held various senior positions in the UEL Group’s construction division and last served as a Divisional Managing Director before he became the CEO of UEEC. He started out his career as a quantity surveyor and had worked in several construction firms prior to setting up Greatearth Construction.

Mr Chua graduated with a Diploma in Quantity Surveying from the Royal Melbourne Institute of Technology. He is a member of the Singapore Institute of Management, the Singapore Institute of Surveyors and Valuers and was an associate of the Australian Institute of Quantity Surveyors.

Norman Ip Ka CheungIndependent Director

Mr Norman Ip Ka Cheung was appointed to our Board of Directors on 22 December 2010. Mr Ip serves as the Chairman of the Audit & Risk Committee and a member of the Nominating Committee.

Mr Ip is the Chairman of the board of Malaysia Smelting Corporation Berhad. He is also a director of United Engineers Limited (UEL), Great Eastern

Holdings Limited, AIMS AMP Capital Industrial REIT Management Limited and a member of the BCA Board. He retired in October 2009 as the President & Group CEO and Executive Director of The Straits Trading Company Limited, which main activities are in real estate, mining and hospitality.

Mr Ip graduated with a Bachelor of Science (Economics) degree from the London School of Economics and Political Science. He is a Fellow of both the Institute of Chartered Accountants in England and Wales and the Institute of Singapore Chartered Accountants.

Tan Soo KiangIndependent Director

Mr Tan Soo Kiang was appointed to our Board of Directors on 22 December 2010. Mr Tan serves as the Chairman of the Remuneration Committee and a member of the Audit & Risk and Nominating Committees.

Mr Tan is currently an independent director of Pertama Holdings Limited and director of Singapore Pools (Private) Limited. Mr Tan is also a consultant of Wee Swee Teow & Company, a firm of advocates and solicitors, with more than 30 years of experience in legal practice. His main practice areas encompass general commercial and criminal litigation. He has been with Wee Swee Teow & Company since 1992. Prior to that, he was with the Singapore Legal Service.

Mr Tan graduated with a Bachelor of Law (Honours) degree from the University of Singapore (now known as the National University of Singapore) and was admitted to the Singapore Bar in 1977. He was awarded the Public Service Medal (PBM) in 2007 and the Public Service Star Award (BBM) in 2013.

Jackson Chevalier Yap Kit SiongNon-Executive Director

Mr Jackson Chevalier Yap Kit Siong was appointed to our Board of Directors on 22 December 2010. Mr Yap serves as a member of the Remuneration Committee.

Mr Yap joined UEL in 1997 as its Chief Operating Officer and was appointed as Group Managing Director and CEO in 2001. In January 2014, he retired from his position as Group Managing Director and CEO. Prior to joining UEL, he was with Exxon Chemical Singapore as Planning Manager. He also spent seven years with Shell Eastern Petroleum undertaking a variety of jobs in process engineering, energy conservation and quality control. He also sits on the board of Apex Healthcare Berhad.

Mr Yap graduated with a Bachelor of Engineering (Chemical and Materials) (Honours) degree from the University of Auckland. He was awarded the Public Service Medal (PBM) in 2013.


Company management

1. Chan Tuck Lee Executive Vice President

2. Tai Chee Yick Acting Executive Vice President

3. Poon Wai Gah Financial Controller

4. Tan Kay Yan General Manager, Strategy and

Corporate Planning

5. Lee Seng Poh Executive Director, Construction

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3

5

2

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Mr Chua Hock Tong is the CEO of UEEC and is assisted by five key executives. Their work experience and qualifications are set out below:

Chan Tuck LeeExecutive Vice President

Mr Chan Tuck Lee was appointed as Executive Vice President on 1 January 2014. Mr Chan joined the UEL Group in 1991 as a project manager and had since held various senior positions in the engineering department before his last position as divisional managing director. He had also worked in several property development, contracting and consultancy firms in Malaysia, Indonesia and Singapore prior to joining the UEL Group. He is currently a council member of the Singapore Electrical Contractors and Licensed Electrical Workers Association. He holds a Bachelor of Science (Honours) degree in Electronic and Electrical Engineering from the Loughborough University of Technology, England. He is also a registered Professional Engineer in Singapore and Malaysia since 1995 and 1984 respectively, and is a licensed electrical worker (Engineer Grade) registered with the Energy Market Authority of Singapore.

Tai Chee YickActing Executive Vice President

Mr Tai Chee Yick was appointed as Acting Executive Vice President on 1 January 2014 and prior to that, Mr Tai was Executive Director, M&E Engineering since January 2012. He joined the UEL Group in 1990 as a project manager and had since held various positions before his last position as general manager of UES Holdings Pte Ltd. He has design experience in consultancy services involving projects in countries including Australia, China and Indonesia before joining the UEL Group. He graduated from the National University of Singapore with a Bachelor of Engineering (Mechanical) degree. He is also a registered Professional Engineer in Singapore since 1986.

Poon Wai GahFinancial Controller

Ms Poon Wai Gah was appointed as the Group’s Financial Controller on 23 December 2010. Ms Poon has more than 26 years of experience in the area of finance and accounting. She joined the UEL Group in 1989 as a finance manager and had since held various positions in the finance department before her last position as vice president of finance group accounting. She had also worked in an international audit firm and a bank in its accounts department prior to joining the UEL Group. She holds a Bachelor of Accountancy degree from the National University of Singapore and is a member of the Institute of Singapore Chartered Accountants.

Tan Kay YanGeneral Manager, Strategy and Corporate Planning

Mr Tan Kay Yan was appointed as the Group’s General Manager, Strategy and Risk on 23 December 2010 and subsequently redesignated as General Manager, Strategy and Corporate Planning. Mr Tan joined the UEL Group in 2004 as a strategy deployment manager and had since held various positions before his last position as general manager of the corporate planning department of the UEL Group. Prior to joining the UEL Group, he had been working in companies in the telecommunication and property sectors. He graduated from the National University of Singapore with a Bachelor of Engineering (Electrical) (Honours) degree and holds an Executive Master of Business Administration from the Helsinki School of Economics.

Lee Seng PohExecutive Director, Construction

Mr Lee Seng Poh was appointed as the Group’s Divisional General Manager, Construction, Equipment and Materials on 23 December 2010 and subsequently to Executive Director, Construction on 1 January 2012. Mr Lee joined the UEL Group in 1989 as a project manager and had since held various positions before his last position as general manager of UEB. Prior to joining the UEL Group, he had been working in various construction companies. He graduated from the Royal Melbourne Institute of Technology with a Bachelor of Civil Engineering degree.


m&e engineeringReview of Operations


1


review of operationsM&E Engineering

UES was awarded a number of projects during the year including a contract for electrical installation works to the proposed residential/commercial development for Waterway Point and Watertown at Punggol Central/Punggol Walk; supply and installation of ACMV, building management, fire protection, electrical and engineering smoke control services in The Seletar Mall at Sengkang West Avenue/Fernvale Road; and installation of electrical, extra-low voltage, sanitary, plumbing and gas services in Eight Riversuites.

During the year, UES continued works in orchardgateway, towers A and B in Fusionopolis, plots A and B in Singapore University of Technology and Design, and MD1 building in National University of Singapore.

The Group’s M&E engineering subsidiary in Vietnam, United Engineers (Vietnam) Limited, secured a contract to provide electrical and extra-low voltage services for the retail mall (Vivo City) of Saigon South Commercial Complex, a mixed-use development comprising serviced apartments, retail shops and offices.

1) UES continued installation of M&E engineering services in orchardgateway during the year2) UES secured a contract for the installation of electrical, extra-low voltage, sanitary, plumbing and gas services in Eight Riversuites3) UES was awarded a contract for the supply and installation of ACMV, building management, fire protection, electrical and engineering

smoke control services in The Seletar Mall4) United Engineers (Vietnam) Limited secured a contract for electrical and extra-low voltage services for the retail mall (Vivo City) of

Saigon South Commercial Complex during the year

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ConstruCtionReview of Operations


1


review of operationsConstruction

During the year, Greatearth Construction completed the National Continuing Education and Training campus and Ascentia Sky, continued works in Watercolours as well as commenced construction for The Crest, a condominium at Prince Charles Crescent. Greatearth Corporation continued works in Austville Residences.

For new projects, Greatearth Corporation was appointed as the main contractor and began construction for Waterwoods, an EC at Punggol Field Walk/Punggol East. Greatearth Construction was appointed as the main contractor for the proposed erection of one block of 19-storey educational institution with one basement for the Lee Kong Chian School of Medicine, NTU at Mandalay Road (Novena Campus) and one block of 7-storey School of Medicine at Nanyang Drive (NTU’s Yunnan Garden Campus) for a total contract sum of approximately $243.5 million in February 2014.

UEB completed the Prime Minister’s Office Building Complex, a hangar for Shell Aviation, and 334 house units and related infrastructure at Lorong Tengah Seria, Kuala Belait. UEB also continued works for the construction of 232 house units and related infrastructure for the National Housing Scheme at Kg Rataie, Temburong, as well as secured a new project for the renovation of the Arts and Crafts Centre at Jalan Residency.

1) Greatearth Corporation continued construction of Austville Residences during the year2) Greatearth Construction commenced construction for The Crest, a condominium at Prince Charles Crescent3) Construction for the National Continuing Education and Training campus was completed during the year4) UEB completed the construction of the Prime Minister’s Office Building Complex in Brunei during the year

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4


building materials and equipmentReview of Operations


1


review of operationsBuilding Materials and Equipment

On the property development front, the Group formed a joint venture company with Sing Holdings to complete the acquisition of an EC land parcel at Punggol Field Walk/Punggol East. Named Waterwoods, the EC was launched in October and had sold about 35% of its total of 373 units as at 31 December. As at the same date, Watercolours had sold 100% of its total of 416 units.

The Group’s total power solutions subsidiary, UE Power & Resources Pte Ltd (“UE Power & Resources”), completed its project in Calapan Island, the Philippines involving the supply of power to supplement the local power requirements. UE Power & Resources also delivered a fleet of generators in Batam, Indonesia for a turbine project as well as continued to supply power to Banda Aceh, Indonesia. In addition, UE Power & Resources established a subsidiary in Indonesia to provide engineering, trading and rental services in power-related equipment.

For the Group’s business in supplying flooring tiles and sanitary fittings, UE-IBP Building Materials Pte Ltd (“UE-IBP”) completed projects at the National Continuing Education and Training campus as well as residential developments such as The Woods, Lian Villas and Illiv. UE-IBP also continued works at Austville Residences, Watercolours, Luxus Hill Phase 5 and Shaw Centre. New contracts secured comprise the Singapore University of Technology and Design, Fusionopolis Phases 2A, 2B, 2C and 5, BCA Academy, Capitol, Sky Habitat, Waterwoods, Marina Square extension and Springside.

1) The Group formed a joint venture company with Sing Holdings to complete the acquisition of an EC land parcel on which Waterwoods is developed

2) Watercolours has sold 100% of its total of 416 units as at 31 December 20133) UE Power & Resources delivered a fleet of generators in Batam, Indonesia for a turbine project during the year4) UE-IBP secured a project to supply flooring tiles for the Singapore University of Technology and Design

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oCCupational safety and health

The Group emphasises on workplace safety and health (WSH) as well as maximising productivity by reducing downtimes.

In 2013, the Group’s Accident Frequency Rate (number of workplace accidents reported per 1,000,000 man-hours worked) was reduced to 0.46 as compared with 0.64 in 2012, and Accident Severity Rate (number of man-days lost due to workplace accidents per 1,000,000 man-hours worked) is 5.50.

In view of its good WSH performance and management systems in subsidiaries, projects and worksites, the Group won several safety accolades and awards. UEEC, UE Power & Resources and UES each won a WSH Performance (Silver) Award at the WSH Awards 2013 organised by the WSH Council. UEEC was also conferred the bizSAFE Partner Award for its efforts in

providing business advantages to motivate its small and medium enterprises business partners to join the bizSAFE programme and improve WSH performance. In addition, Greatearth Construction and Greatearth Corporation won a total of four Silver Awards for its Austville Residences, National Continuing Education and Training campus, UE BizHub EAST and Ascentia Sky projects from the United Kingdom-based Royal Society for the Prevention of Accidents.

Greatearth Construction also won several awards from the BCA such as the BCA Green and Gracious Builder Excellent Award and BCA Construction Excellence Award. In the BCA-certified CONQUAS system, a national quality yardstick for the Singapore construction industry, UE BizHub EAST and Ascentia Sky scored 95.2 and 93.5 out of 100 respectively.

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2 3

1) Award winners of WSH Awards 2013 from the Group and United Engineers Limited2) The Group organised activities for staff under its UE Annual Workplace Safety & Health Campaign3) Greatearth Construction and Greatearth Corporation won a total of four Silver Awards for projects from the United Kingdom-based

Royal Society for the Prevention of Accidents.


Corporate highlights

investor relationsThe Group is committed to deliver timely, transparent and consistent disclosures to its shareholders, the investment community and public. The Group’s investor relations function is headed by CEO Mr Chua, who is assisted by Executive Vice President Mr Chan Tuck Lee, General Manager, Strategy and Corporate Planning Mr Tan Kay Yan and Quotemarks Communications Pte Ltd (“Quotemarks Communications”).

The Group’s disclosures are available on SGXNET and uploaded onto its corporate website (www.ueec.sg) as well. The website is also regularly updated on corporate matters such as financial results and changes to the Board of Directors. These ensure that the Group’s website is the go-to, one-stop information source on all investor relations matters.

The Group engages with analysts and fund managers on a regular basis where management will give presentations on the Group’s updates, performance, strategies and other insights. The Group also addresses queries from the media and shareholders, if any, through Quotemarks Communications.

The Group held its third AGM on 25 April and its Board of Directors, management and Company Secretary were present to give an update of the Group’s performance in 2012, answer questions and gather feedback from

the shareholders. All the resolutions of the AGM were passed and the results were posted on SGXNET and the corporate website after that.

The Group’s share price performed well during the year, recording a general upward trend and increased 60% from a closing price of $0.65 on 2 January to a closing price of $1.04 on 31 December, as seen in Figure 1 above.

Figure1: UEEC’s share price chart for 2013

Jan 2013

Closing share price on 2 January$0.65

Closing share price on 31 December$1.04

Apr 2013

Jul 2013

Oct 2013

Jan 2014

1.2

1.0

0.8

0.6

0.4

January

May

February

June

March

August

April

November

• Formed a joint venture with Sing Holdings Limited to complete the acquisition of an EC land parcel at Punggol Field Walk/Punggol East for the development of Waterwoods

• Announced Q1 2013 financial statement

• Awarded tender for electrical installation works to the proposed residential/commercial development for Waterway Point and Watertown at Punggol Central/Punggol Walk

• Announced FY 2012 financial statement

• Awarded contract for installation of electrical, extra-low voltage, sanitary, plumbing and gas services in Eight Riversuites

• Awarded tender for proposed renovation of the Arts and Crafts Centre at Jalan Residency, Brunei


• Appointed as main contractor for Waterwoods

• Awarded contract for the supply and installation of ACMV, building management, fire protection, electrical and engineering smoke control services in The Seletar Mall at Sengkang West Avenue/Fernvale Road

• Mr Pok Soy Yoong retired from his position as Independent Director

• 3rd AGM


corporate governance


The Company is committed to a high standard of corporate governance to ensure effective self-regulation practices are in place to enhance corporate performance and accountability.

This report outlines the Company’s main corporate governance practices with reference to the principles of the Code of Corporate Governance 2012 (“the Code”). The Code forms part of the Continuing Listing Obligations of the Singapore Exchange Securities Trading Limited’s (“SGX-ST”) Listing Manual.

THE BOARD’S CONDUCT OF AFFAIRS

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this objective and the Management remains accountable to the Board.

The Board has five members comprising one Executive Director, one Non-Executive Director and three Non-Executive and Independent Directors. The Board comprises the following members:

Name of Directors Position in Board Appointment

Dr Tan Eng Liang Chairman Independent ChairmanChua Hock Tong Member Executive Director and Chief Executive OfficerNorman Ip Ka Cheung Member Independent Director Tan Soo Kiang Member Independent DirectorJackson Chevalier Yap Kit Siong Member Non-Executive Director

The Company’s Articles of Association permit Directors to attend meetings through the use of audio-visual communication equipment.

In between Board meetings, important matters concerning the Company are also put to the Board for its decision by way of circulating resolutions in writing for the Directors’ approval together with supporting memoranda to enable the Directors to make informed decisions.

The attendance of Directors at Board and Board Committees’ meetings in FY2013 are set out below:

TYPE OF MEETINGS

BOARD OF DIRECTORS

AUDIT & RISK COMMITTEE (“ARC”)

REMUNERATION COMMITTEE (“RC”)

NOMINATING COMMITTEE (“NC”)

Held Attended Held Attended Held Attended Held Attended

Dr Tan Eng Liang @ 5 5 4 4 3 3* 1 1*

Chua Hock Tong 5 5 4 4* 3 3* 1 1*

Norman Ip Ka Cheung # 5 5 4 3 (1*) 3 1(2*) 1 1

Kwan Chiew Choi + 5 5 4 4 3 2 (1*) 1 1

Tan Soo Kiang ß 5 5 4 4 3 3 1 1*

Jackson Chevalier Yap Kit Siong 5 5 4 3* 3 3 1 -

Pok Soy Yoong ^ 5 1 4 1 3 1* 1 1

@ Dr Tan was appointed as a member and Chairman of the Nominating Committee on 25 April 2013 and 10 February 2014 respectively. Dr Tan was also appointed as a member of the Remuneration Committee on 10 February 2014.

# Mr Norman Ip was appointed as a member and Chairman of the Audit & Risk Committee on 25 April 2013. He stepped down as a member of the Remuneration Committee on 25 April 2013.

+ Mr Kwan was appointed as a member of the Remuneration Committee on 25 April 2013. He stepped down as the Chairman of the Nominating Committee and a member of the Audit & Risk and Remuneration Committees upon his resignation on 10 February 2014.

ß Mr Tan was appointed as a member of the Nominating Committee on 10 February 2014.^ Mr Pok retired from the Board on 25 April 2013.* Attendance by invitation.



The profile of each Director and other relevant information as at the date of this report are set out on pages 8 to 9 of the Annual Report.

The Board oversees the business affairs of the Group, sets strategic directions, approves budgets and is responsible for the Group’s overall entrepreneurial leadership, performance objectives and long-term success. In addition to its statutory duties, the Board’s principal functions are:

(i) supervising the overall management of the business and affairs of the Group and approving the Group’s corporate and strategic policies and direction;

(ii) formulating and approving financial objectives of the Group and monitoring its performance such as reviewing and approving of results announcements and approving of annual financial statements;

(iii) overseeing the processes for evaluating the adequacy of internal controls and risk management including the review and approval of interested person transactions;

(iv) assuming responsibility for corporate governance and compliance with the Companies Act, Cap. 50, and the rules and regulations of the relevant regulatory bodies;

(v) evaluating performance of Management; (vi) ensuring the necessary financial and human capital resources are available for the Group to meet its objectives; and (vii) reviewing major acquisitions and divestments.

Matters that are specifically reserved for the approval of the Board include, among others, any material acquisitions and disposals of assets, corporate or financial restructuring, proposing of dividends, annual budgets, significant legal and financial issues, announceable matters, interested person transactions, appointment and resignation of directors and key management staff and other matters as may be considered by the Board from time to time.

The Board has adopted a set of internal guidelines on the matters requiring Board approval. Certain functions have also been delegated to various Board Committees, namely, the ARC, the RC and the NC.

Changes to regulations and accounting standards are monitored closely by Management. To keep pace with new laws, regulations, changing commercial risks and financial reporting standards, Directors are briefed either during Board meetings or at specially- convened sessions conducted by professionals. Directors are also encouraged to attend, at the Group’s expense, relevant and useful seminars for their continuing education and skills improvement courses that are conducted by external organisations. The Company Secretary will bring to directors’ attention, information on seminars that may be of relevance or use to them. The Group conducts a comprehensive orientation program for newly appointed Directors to familiarise themselves with its business activities, strategic directions, policies and corporate governance practices.

In order to ensure that the Board is able to fulfill its responsibilities, prior to the Board meetings, Management provides the members of the Board with management accounts, as well as relevant background information and documents relating to items of business to be discussed at a Board meeting before the scheduled meeting.

The Directors are also regularly briefed on the business activities of the Group.

The Board has separate and independent access to the Company Secretaries at all times and one of the Company Secretaries attends Board and Board Committees’ meetings and is responsible for ensuring that Board procedures are followed. The Board also has access to independent professional advice, where necessary, at the Company’s expense.

BOARD COMPOSITION AND GUIDANCE

Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management and 10% shareholders. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

The Board comprises five members of whom one is Executive Director, one is Non-Executive Director and three are Non-Executive and Independent Directors. Independent Directors comprise more than one third of the Board members.

There is strong and independent element on the Board. The Board is able to exercise objective judgment independently from Management and no individual or small group of individuals dominate the decisions of the Board.

The NC is of the view that the current size of the Board is appropriate taking into account the nature and scope of the Group’s operations, the core competency and a broad range of industry knowledge and the business experience of the Directors to govern and contribute to the effectiveness and success of the Group. The NC reviews the size of the Board from time to time.

The Board has no dissenting view on the Chairman and Chief Executive Officer’s letter to shareholders for FY2013.



CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company’s business. No one individual should represent a considerable concentration of power.

The Company’s Chairman and Chief Executive Officer (“CEO”) are not related to each other. There is a clear division of the responsibilities and accountability between the Chairman and the CEO so as to ensure an appropriate balance and segregation of power and authority is in place.

The duties of the Chairman of the Board include:

(i) leading the Board to ensure its effectiveness on all aspects of its role and setting its agenda;(ii) ensuring that the Directors receive accurate, timely and clear information;(iii) ensuring effective communication with shareholders;(iv) encouraging constructive relations among Board members and their interaction with Management by, among other things,

steering effective, productive and comprehensive discussion amongst the Board members and the senior executives on strategy, business and other key issues pertinent to the business and operations of the Group;

(v) facilitating the effective contribution of Non-Executive director; and(vi) promoting high standards of corporate governance.

The CEO is Mr Chua Hock Tong, the most senior executive in the Company who bears executive responsibility for the management of the Company and the Group. He is also responsible for the running of the Group’s business and has the full executive responsibilities over the business directions and operational decisions of the Group.

BOARD MEMBERSHIP AND BOARD PERFORMANCE

Principle 4: There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.

Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board.

The NC comprises the following Directors:

Dr Tan Eng Liang - Chairman (appointed as a member and Chairman on 25 April 2013 and 10 February 2014 respectively)Norman Ip Ka Cheung - MemberTan Soo Kiang - Member Kwan Chiew Choi - Member

All members of this Committee are Non-Executive and Independent Directors.

The NC’s written key terms of reference describe its responsibilities, and these include:

(i) reviewing and assessing candidates for directorships (including executive directorships) before nominating such candidates for the approval of our Board of Directors;

(ii) reviewing and recommending to our Board of Directors the re-election and re-appointment of any Directors under the retirement provisions in accordance with our Articles of Association at each annual general meeting and under S153(6) of the Companies Act, Cap. 50;

(iii) reviewing the composition of our Board of Directors annually to ensure that our Board of Directors has an appropriate balance of Independent Directors and ensuring an appropriate balance of expertise, skills, attributes and abilities among our Directors;

(iv) reviewing and determining annually if a Director is independent, in accordance with the Code and any other salient factors; and

(v) where a Director has multiple board representations, deciding whether the Director is able to and has been adequately carrying out his duties as Director.

The Directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years. Pursuant to Article 91 of the Company’s Articles of Association, one third of the Board of Directors are to retire from office by rotation and be subject to re-election at the Annual General Meeting (“AGM”) of the Company. In addition, Article 97 of the Company’s Articles of Association, requires a newly appointed director to submit himself for retirement and re-election at the AGM immediately following his appointment. Thereafter, he is subject to retirement by rotation once every three years.

The Board, through the delegation of its authority to the NC has made its best efforts to ensure each Director possesses the experience, knowledge and skills critical to the Group’s business. This is necessary to enable the Board to make sound and well-considered decisions. The NC, in considering the nominating of any director for re-election or re-appointment, will evaluate the performance of the Director involved.

(appointed on 10 February 2014)(resigned on 10 February 2014)



For the forthcoming AGM, Mr Norman Ip Ka Cheung and Mr Tan Soo Kiang will retire pursuant to Article 91 of the Company’s Articles of Association. Dr Tan Eng Liang will retire pursuant to Section 153(6) of the Companies Act, Cap. 50.

The NC has recommended the Directors for the re-election and re-appointment at the forthcoming AGM. The Board has accepted the recommendations of the NC.

The dates of initial appointment and last re-appointment/re-election of each Director are set out below:

Name of Directors AppointmentDate of Initial Appointment

Date of Last Re-appointment/

Re-electionDr Tan Eng Liang Independent Chairman 26 April 2012 25 April 2013

Chua Hock Tong Executive Director and Chief Executive Officer 22 December 2010 26 April 2012

Norman Ip Ka Cheung Independent Director 22 December 2010 26 April 2012Tan Soo Kiang Independent Director 22 December 2010 28 April 2011Jackson Chevalier Yap Kit Siong Non-Executive Director 22 December 2010 25 April 2013

The NC has established a formal appraisal process to assess the performance and effectiveness of the Board as a whole annually. It focuses on a set of performance criteria which includes the evaluation of the size and composition of the Board, the Board’s access to information and Board accountability. The findings of such evaluations were analysed and discussed with a view to identifying areas for improvement and implementing certain recommendations to further enhance the effectiveness of the Board.

The NC is of the view that whilst it is important for Directors to devote sufficient time and attention to the affairs of the Group, the issue relating to multiple board representations should be left to the judgment and discretion of each Director.

The NC believes that contributions from each Director can be reflected in other ways other than the reporting of attendances of each Director at Board and Board Committees’ meetings as well as the frequency of such meetings. A director would have been appointed on the strength of his experience and his potential to contribute to the proper guidance of the Group and its business. To focus on a director’s attendance at formal meetings alone may lead to a narrow view of a director’s contribution. It may also not do justice to his contributions, which can be in many forms, including Management’s access to him for guidance or exchange of views outside the formal environment of the Board.

The NC is of the opinion that the Directors, who have been classified as independent under the Board Composition section, are indeed independent and the current size of the Board is adequate for the purposes of the Group.

The search and nomination process for new directors, if any, will be through search companies, contacts and recommendations that go through the normal selection process, to cast its net as wide as possible for the right candidates.

New directors are appointed after the NC has reviewed and nominated them for appointment. Such new directors submit themselves for re-election or re-appointment at the next AGM of the Company.

ACCESS TO INFORMATION

Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

All Directors receive a set of Board papers that include explanatory information relating to matters to be brought before the Board, copies of disclosure notes and internal group financial statements prior to Board and Board Committees’ meetings. This is generally sent to them at least three working days in advance. This is to allow sufficient time for the Board members to obtain further explanations, where necessary, to be properly briefed and adequately prepare for the Board and Board Committees’ meetings.

In addition, Directors receive the management accounts of the Company and have unrestricted access to the records and information of the Company. The Non-Executive and Independent Directors have access to senior executives in the Company and other employees to seek additional information if required. To facilitate such access, the contact particulars of the senior executives and Company Secretaries of the Company have been provided to the Directors. The Directors whether collectively or individually may, at the Company’s expense, seek and obtain independent professional advice when necessary to discharge their duties effectively.

The Company Secretaries have the responsibility to ensure that Board procedures are followed and that all applicable rules and regulations are complied with. One or both of the Company Secretaries are in attendance at meetings of the Board and Board Committees. The appointment and removal of the Company Secretary should be a matter for the Board as a whole.



PROCEDURES FOR DEVELOPING REMUNERATION POLICIES, LEVEL AND MIX OF REMUNERATION AND DISCLOSURE OF REMUNERATION

Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Principle 8: The level of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.

Principle 9: Each company should provide clear disclosure of its remuneration policies, level and mix of remuneration, and the procedure for setting remuneration in the company’s Annual Report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.

The RC comprises the following Directors:

Tan Soo Kiang - ChairmanDr Tan Eng Liang - Member (appointed on 10 February 2014)Jackson Chevalier Yap Kit Siong - Member Kwan Chiew Choi - Member (resigned on 10 February 2014)

Mr Tan Soo Kiang and Dr Tan Eng Liang are Non-Executive and Independent Directors. Mr Jackson Chevalier Yap Kit Siong is a Non-Executive Director.

The RC’s written key terms of reference describe its responsibilities, and these include:

(i) recommending to the Board of Directors, in consultation with the Chairman of the Board of Directors, for endorsement, a comprehensive remuneration policy framework and guidelines for remuneration of the Directors and key executives;

(ii) recommending specific remuneration packages for each of the Directors and the CEO;(iii) in the case of service agreements, considering what compensation commitments the Directors’ or key executives’ contracts of

service, if any, would entail in the event of early termination with a view to be fair and avoid rewarding poor performance and to recognise the duty to mitigate loss;

(iv) approving performance targets for assessing the performance of each of the key managerial personnel and recommending such targets as well as employee specific remuneration packages for each of such key managerial personnel, for endorsement by the Board of Directors; and

(v) administering the share incentive plans of the Company, if any.

Although the recommendations are made in consultation with Management, the remuneration packages are ultimately approved by the Board. No Director is involved in deciding his own remuneration.

The Company adopts a remuneration policy for employees comprising a fixed component and a variable component. The fixed component is in the form of a base salary. The variable component is in the form of a variable bonus that is linked to the performance of the Company and the individual.

Directors’ fees are set in accordance with the remuneration framework comprising basic fees, committee fees and attendance fees. These are subject to the approval of the shareholders at the forthcoming AGM.



The remuneration of directors and key executives is set out below:

Directors’ Remuneration

RemunerationDirectors’

Fees S$

SalaryS$

Bonus S$

Other Benefits

S$Total

S$Non-Executive DirectorsDr Tan Eng Liang 93,110 - - - 93,110Norman Ip Ka Cheung 69,383 - - - 69,383Tan Soo Kiang 68,000 - - - 68,000Jackson Chevalier Yap Kit Siong (Note) 49,000 - - - 49,000Kwan Chiew Choi 72,110 - - - 72,110Pok Soy Yoong 23,479 - - - 23,479

Executive DirectorChua Hock Tong - 410,000 750,000 22,177 1,182,177

Note: Mr Jackson Chevalier Yap Kit Siong is the representative of UEL and his fees will be paid to UEL upon approval at the AGM.

Key Executives Remuneration

Given the highly competitive industry conditions and in the interest of maintaining good morale and a strong spirit of teamwork within the Group, the disclosure relating to the remuneration of the top 5 key executives (who are not Directors) of the Group in bands of S$250,000 is set out below. Their profiles are found on pages 10 to 11.

Remuneration Bands No. of Executives

S$250,000 to below S$500,000 4Below S$250,000 1

There are no employees of the Group who are immediate family members of a director or a substantial shareholder.

The Company does not have a share option scheme.

ACCOUNTABILITY

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

The Board, through its announcements of the Group financial results to shareholders, aims to present a balanced and understandable assessment of the Group’s position and prospects.

In preparing the financial statements, the Directors have:

(i) selected suitable accounting policies and applied them consistently;(ii) made judgments and estimates that are reasonable and prudent;(iii) ensured that all applicable accounting standards have been followed; and(iv) prepared financial statements on the basis that the Directors have reasonable expectations, having made enquiries, that the

Group and Company have adequate resources to continue operations for the foreseeable future.

RISK MANAGEMENT AND INTERNAL CONTROLS AND AUDIT COMMITTEE

Principle 11: The Board is responsible for governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

Principle 12: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.



The Board, assisted by the ARC, has oversight of the risk management system in the Group. The practice of risk management is undertaken by the CEO and senior executives under the purview of the ARC and the Board. Management regularly reviews the Group’s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks within the Group’s policies and strategy. Management reviews all significant control policies and procedures and highlights all significant matters to the Board and the ARC.

The Group established an Enterprise Risk Management Policy and Framework (ERM Policy and Framework) in FY2012 with the help of the external consultant, PricewaterhouseCoopers LLP, to monitor, manage and build awareness within the Group of the various risks to which the Group is exposed.

Under the ERM Policy and Framework, which is developed with reference to the ISO 31000:2009 Risk Management - Principles and Guidelines and the Committee of Sponsoring Organisations of the Treadway Commission (COSO) Model and Risk Governance Guidance for Listed Boards 2012, management of all levels are expected to constantly review the business operations and the environment that we operate in to identify risk areas and ensure mitigating measures are promptly developed to address these risks. The ERM Policy and Framework outlines the Group’s approach to managing enterprise-wide risks and sets out a systematic process for identifying, evaluating, managing and monitoring risks faced by the Group.

The financial risk management objectives and policies of the Group are set out in Note 31 to the financial statements.

The Group has also established an Enterprise Risk Management Committee (“ERMC”) to assist the ARC and the Board in the discharge of its duties to maintain an effective control environment that reflects both the established risk appetite and the business objectives.

The ERMC (comprising the CEO and senior executives of the Company) reports to the ARC and Board quarterly on the nature and extent of the functions performed by it and shall make recommendations to the ARC and Board on any matters within its scope of duties as it may think fit. The ERMC’s other duties include:

(i) approving and overseeing the risk management framework;(ii) reviewing and endorsing the risk appetite (i.e. risk parameters) established by the Management team;(iii) ensuring the adequacy and appropriateness of the risk assessment and management processes;(iv) reviewing key strategic risks and gaps identified by the Management team;(v) ensuring that all risks and gaps identified have been adequately covered/mitigated by Management; (vi) providing guidance for alignment of risk management initiatives and embedding of risk management into existing management

processes (e.g. strategy planning, budgeting, investments); and(vii) providing Enterprise Risk Management awareness training to all staff.

The ERMC is entitled to the full co-operation and from time to time the assistance of Management and may require the provision of such information, and access to such personnel, as it deems necessary, and to seek external professional advice on such matters within its scope of duties as may be appropriate. The ERMC may also invite any other Director, other senior executives and/or external professional advisers to attend its meetings.

In FY2013, the Company implemented the Influenza Pandemic Policy & Framework as part of its business continuity plan to deal with pandemic situation so as to mitigate the negative impact on the Group’s operations. The plan, which addresses measures to reduce the spread of a pandemic outbreak, was endorsed by the ARC.

The Board with the assistance of the ARC, has undertaken an annual assessment on the adequacy and effectiveness of the Group’s risk management and internal control systems over financial, operational, compliance and information technology risks. The assessment considered issues dealt with in reports reviewed by the Board during the year together with any additional information necessary to ensure that the Board has taken into account all significant aspects of risks and internal controls for the Group for FY2013.

The Board’s annual assessment in particular considered:

(i) the changes since the last annual assessment in the nature and extent of significant risks, and the Company’s ability to respond to changes in its business and the external environment;

(ii) the scope and quality of management’s ongoing monitoring of risks and of the system of internal controls and the work of its internal audit function and other providers of assurance;

(iii) the extent and frequency of the communication of the results of the monitoring to the ARC; and (iv) the incidence of significant internal controls weaknesses that were identified during the financial year.

In order to obtain assurance that the Group’s risks are managed adequately and effectively, the Board had reviewed an overview of the risks which the Group is exposed to, as well as an understanding of what countermeasures and internal controls are in place to manage them.



The Board has obtained a written confirmation from the CEO and Financial Controller:

(i) that the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations and finances; and

(ii) regarding the effectiveness of the Group’s risk management systems and internal control systems.

The system of internal controls and risk management established by the Company provides reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that can be reasonably foreseen as it strives to achieve its business objectives. However, the Board also notes that no system of internal controls and risk management can provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities.

Based on the aforesaid and the statutory audit conducted by the external auditor, the Board, with the concurrence of the ARC, is satisfied that the system of internal controls, including financial, operational, compliance and information technology controls and risk management, are adequate to meet the needs of the Group’s existing business objectives, having addressed the critical risks area. While acknowledging their responsibility for the system of internal controls, the Directors are aware that such a system is designed to manage, rather than eliminate risks, and therefore cannot provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors or mis-statements, poor judgment in decision-making, human error, losses, fraud or other irregularities.

The ARC comprises the following Directors:

Norman Ip Ka Cheung - ChairmanDr Tan Eng Liang - MemberTan Soo Kiang - Member Kwan Chiew Choi - Member (resigned on 10 February 2014)

All members of this Committee are Non-Executive and Independent Directors.

The role of the ARC is to assist the Board of Directors in overseeing the adequacy of the overall internal control functions, the internal audit functions within the Group, the relationship of those functions to external audit, the scope of audit by the external auditor and their independence as well as corporate and financial risk management. The ARC’s written key terms of reference describe its responsibilities, and these include:

(i) assisting our Board of Directors in discharging its statutory responsibilities on financing and accounting matters;(ii) reviewing significant financial reporting issues and judgments to ensure the integrity of the financial statements and any

formal announcements relating to financial performance;(iii) reviewing the scope and results of the audit and its cost effectiveness, and the independence and objectivity of the external

auditor;(iv) reviewing and evaluating with internal auditors, the adequacy and effectiveness of the system of internal controls, including

financial, operational and compliance controls, and risk management policies and framework;(v) reviewing any interested person transactions as defined in the Listing Manual;(vi) appraising and reporting to the Board of Directors on the audits undertaken by the external auditor and internal auditors,

the adequacy of disclosure of information, and the appropriateness and quality of the system of management and internal controls;

(vii) making recommendations to the Board of Directors on the appointment, re-appointment and removal of the external auditor and internal auditors, and approving the remuneration and terms of engagement of the external auditor and internal auditors;

(viii) reviewing any actual or potential conflicts of interest that may involve our Directors as disclosed by them to our Board and exercising directors’ fiduciary duties in this respect;

(ix) reviewing on a periodic basis the framework and processes established for the implementation of the terms of the Non-Competition Deed with United Engineers Limited group of companies (“UE Group”) in order to ensure that such framework and processes remain appropriate; and

(x) reviewing whistle-blowing investigations within the Group and ensuring appropriate follow-up action, if required. The ARC has been given full access and obtained the co-operation of Management of the Company. The ARC has the explicit authority to investigate any matter within its terms of reference. It also has full access to and co-operation by Management and full discretion to invite any Director or executive officer to attend its meetings, and reasonable resources to enable it to discharge its functions properly.

The ARC has met with the external and internal auditors without the presence of Management. The ARC also met with the external auditor to discuss the results of their examinations and matters relating to internal financial controls which came to their attention during the course of their statutory audit and related recommendations for improvements. In addition, updates on changes in accounting standards and treatment are prepared by the external auditor and circulated to members of the ARC periodically for information.



The ARC has reviewed the nature and extent of non-audit services provided by Ernst & Young LLP (“EY”) and the fees paid for its audit services, non-audit services and the aggregate amount of fees paid in respect of the year ended 31 December 2013. The ARC has reviewed the nature and amount of non-audit fees paid to the external auditor and is of the view that the independence of the external auditor has not been compromised. The ARC has also reviewed and confirmed that EY is a suitable audit firm to meet the Company’s audit obligations, having regards to the adequacy of resources and experience of the firm and the assigned audit engagement partner, EY’s other audit engagements, size and complexity of the UE E&C Group, number and experience of supervisory and professional staff assigned to the audit. Accordingly, the ARC recommended to the Board the re-appointment of EY as External Auditor of the Group for the year ending 31 December 2014.

The Group has complied with Rule 715 of the Listing Manual in relation to its auditing firms. EY has been engaged to audit the accounts of the Company and its Singapore-incorporated subsidiaries and significant associated companies except for Wingcrown Investment Pte Ltd, a 20% associated company of the Group whose accounts are audited by PricewaterhouseCoopers LLP. The ARC and the Board are satisfied that such appointment would not compromise the standard and effectiveness of the audit of the Group. The significant foreign-incorporated subsidiaries and significant associated companies are audited by EY member firms in the respective countries.

The ARC has also put in place a Whistle-Blowing policy which provides well-defined and accessible channels in the Group through which employees and third parties may raise concerns in the event that they encounter any improper conduct within the Group.

INTERNAL AUDIT

Principle 13: The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

The Board is cognizant of its responsibility for maintaining a sound system of internal controls to safeguard the investment of its shareholders and the assets and business of the Group. The Group has outsourced the internal audit function of the Group to PricewaterhouseCoopers LLP. They conduct regular internal audit reviews of the Group’s companies based on the internal audit plan approved by the ARC, recommend necessary improvements and enhancements, and report to the ARC.

The Group promotes the standardisation of policies, processes and control procedures throughout its operations. This is achieved in part through the Group Operating Manual (GOM) which provides a framework for quality management systems and assurance processes.

The ARC examines the effectiveness of the Group’s internal control systems. The many assurance mechanisms operating are supplemented by the Company’s internal auditors’ reviews of the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls. Any material non-compliance or failures in internal controls and recommendations for improvements are reported to the ARC. The ARC reviews the effectiveness of the actions taken by Management on the recommendations made by the internal auditors in this respect.

During the year, the ARC reviewed the effectiveness of the Company’s internal control procedures.

Based on the internal controls established and maintained by the Group, work performed by the internal auditors, statutory audit conducted by the external auditor, and reviews performed by Management, various Board Committees and the Board, the Board with the concurrence of the ARC, is of the opinion that the Group’s internal controls are adequate and meet the needs of the Group as at 31 December 2013. However, the Board also notes that no system of internal controls can provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities.

COMMUNICATION WITH SHAREHOLDERS AND CONDUCT OF SHAREHOLDERS’ MEETINGS

Principle 14: Companies should treat shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders’ rights and continually review and update such governance arrangements.

Principle 15: Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders.

Principle 16: Companies should encourage greater shareholder participation at general meetings of shareholders and allow shareholders the opportunity to communicate their views on various matters affecting the company.

The Company does not practise selective disclosure. Price sensitive information is always released on SGXNET after trading hours. Results and annual reports are announced or issued within the mandatory periods.



The Board believes that general meetings serve as an opportune forum for shareholders to meet the Board and senior executives, therefore shareholders are encouraged to attend the AGM to ensure a greater level of shareholder participation and for them to be kept up to date as to the strategies and goals of the Group. All shareholders of the Company receive a copy of the Annual Report, the Notice of AGM and circulars and notices pertaining to any Extraordinary General Meetings of the Company. To facilitate participation by the shareholders, the Articles of the Company allow the shareholders to attend and vote at general meetings of the Company by proxies. A shareholder may appoint up to two proxies to attend and vote on his behalf at the general meeting through proxy form deposited 48 hours before the meeting Notices of general meetings are also advertised in newspapers and available on the SGX-ST’s website.

Every matter requiring shareholders’ approval is proposed as a separate resolution. Each item of special business included in the notice of meeting is accompanied, where appropriate, by an explanation for the proposed resolution. As authentication of shareholder identity information and other related security issues still remain a concern, the Company has decided, for the time being, not to implement voting in absentia by mail, facsimile or email. Participation of shareholders is encouraged at the AGM through the open question and answer session with the Directors and the external auditor in attendance. The Directors and Management are available to address any queries or concerns on matters relating to the Group and its operations.

While acknowledging that voting by poll is integral in the enhancement of corporate governance and lead to greater transparency of the level of support for each resolution, the Company is concerned over the cost effectiveness and efficiency of the polling procedures which may be logistically and administratively burdensome. Electronic polling may be efficient in terms of speed but may not be cost effective. The Board would adhere to the requirements of the Listing Manual where all resolutions are to be voted by poll at general meetings held on or after 1 August 2015.

DIVIDEND POLICY

While the Company has not formally instituted a dividend policy, it has a good track record of paying annual dividends to shareholders since FY2012. In proposing any dividend payout and/or determining the form, frequency and/or the amount of such dividend payout, the Board will take into account, inter alia, the Group’s financial position, retained earnings, results of operation and cash flow, the Group’s expected working capital requirements, the Group’s expected capital expenditure and future expansion and investment plans and other funding requirements, general economic conditions and other internal or external factors that may have an impact on the business or financial performance and position of the Group.

The Board endeavours to maintain a balance between meeting shareholders’ expectations and prudent capital management with a sustainable dividend payout.

DEALINGS IN SECURITIES

In compliance with Rule 1207(19) of the SGX-ST Listing Manual and the Group’s Internal Code of Best Practices for Dealings in Securities, the “Window Period” for dealing in the Group’s securities is posted on the intranet at the beginning of the year and is accessible to all Directors and employees of the Group.

The Company, Directors and employees of the Group are prohibited from dealing in the listed securities of the Group one month before the release of any financial results of the Group or if they are in possession of unpublished price-sensitive information. In addition, Directors and employees are expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period.

Directors and employees are also discouraged from dealing in the listed securities of the Group on short-term consideration.

DISCLOSURE OF MATERIAL CONTRACTS

There was no material contract entered into by the Company or any of its subsidiaries involving the interests of any Directors.

INTERESTED PERSON TRANSACTIONS

The Company has set out procedures governing all interested person transactions to ensure that they are carried out on an arm’s length basis, on normal commercial terms and will not be prejudicial to the interests of the Company and its shareholders.



Disclosure according to Rule 907 of the SGX-ST Listing Manual in respect of interested person transactions for FY2013 is stated in the following table:

Name of Interested Person

Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920 of the SGX-ST Listing Manual)

Aggregate value of all interested person transactions conducted under the shareholders’ mandate pursuant to Rule 920 of the SGX-ST Listing Manual (excluding transactions less than S$100,000)

Group 31/12/2013

S$’000

Group 31/12/2013

S$’000United Engineers Limited Group (A) Contract Value1 - 128,391(B) Revenue1 - 71,906

1 Revenue forms part of the Contract Value

USE OF PROCEEDS

As at the date of this report, the Company has utilised a total of S$18.2 million of the initial public offering (“IPO”) proceeds.

The use of proceeds raised from the IPO was in accordance with the intended use as stated in the Company’s Prospectus dated 15 February 2011. The Company will provide periodic updates on the use of the IPO proceeds through SGXNET.

Financial statements

38

41

42

43

44

Directors’ report

Statement by directors

Independent auditor’s report

Consolidated income statement

Consolidated statement of comprehensive income

45

46

50

52

Statements of financial position

Statements of changes in equity

Consolidated statement of cash flows

Notes to the financial statements


Directors’ report

DIRECTORS’ REPORT

The directors are pleased to present their report to the members together with the audited consolidated financial statements of UE E&C Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”) and the statement of financial position and statement of changes in equity of the Company for the financial year ended 31 December 2013.

DIRECTORS

The directors of the Company in office at the date of this report are as follows:

Dr Tan Eng Liang (Chairman) Chua Hock Tong (Executive Director and Chief Executive Officer)Norman Ip Ka Cheung Tan Soo Kiang Jackson Chevalier Yap Kit Siong

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The following directors, who held office at the end of the financial year, had, according to the register of directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Chapter 50, an interest in the shares, share options and convertible bonds of the Company and related companies (other than wholly-owned subsidiaries) as follows:

Direct interest Deemed interest1 January

201331 December

20131 January

201331 December

2013

Interest in the Company:

Ordinary SharesDr Tan Eng Liang 100,000 100,000 – –Chua Hock Tong 15,860,874 15,860,874 – –Norman Ip Ka Cheung 50,000 50,000 – –Jackson Chevalier Yap Kit Siong 100,000 100,000 – –

Interest in Ultimate Holding Company:

United Engineers Limited

Ordinary Stock UnitsChua Hock Tong 173,333 296,666 – –Jackson Chevalier Yap Kit Siong 668,000 1,536,000 – –

Unissued Ordinary Shares under OptionJackson Chevalier Yap Kit Siong 552,000 503,407 – –

Convertible BondsChua Hock Tong 1,340 1,340 – –

Unissued Ordinary Shares underlying the Convertible BondsChua Hock Tong 1,000 1,313 – –

Interest in Related Corporation:

MFS Technology Ltd

Ordinary SharesJackson Chevalier Yap Kit Siong 75,000 75,000 – –


Directors’ report

DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES (continued)

There was no change in any of the above-mentioned interests between the end of the financial year and 21 January 2014.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options and convertible bonds of the Company or of its related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year.

DIRECTORS’ CONTRACTUAL BENEFITS

Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except that certain directors have employment relationships with related corporations of the holding company and received remuneration in those capacity and those disclosed in the notes to the financial statements.

SHARE OPTIONS

During the financial year, there were:

(i) no options granted by the Company to any person to take up unissued shares in the Company; and(ii) no shares issued by virtue of any exercise of options to take up unissued shares of the Company.

As at the end of the financial year, there were no unissued shares of the Company under option.

AUDIT & RISK COMMITTEE

The Audit & Risk Committee comprises the following Directors:

Norman Ip Ka Cheung - Chairman Dr Tan Eng Liang - MemberTan Soo Kiang - Member

The Audit & Risk Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Chapter 50. The Audit & Risk Committee reviewed the Company’s accounting policies and internal controls on behalf of the Board of Directors and performed the functions specified in the Singapore Companies Act, Chapter 50 and Singapore Exchange Listing Manual. In performing its functions, the Committee reviewed the overall scope of both internal and external audits. It met with the Company’s internal auditors and external auditor to discuss the results of their examinations and their evaluation of the Company’s system of internal accounting controls.

The Audit & Risk Committee also reviewed the financial statements of the Company and the consolidated financial statements of the Group as well as the independent auditor’s report thereon.

The Audit & Risk Committee recommended to the Board of Directors that Ernst & Young LLP be nominated for re-appointment as the external auditor of the Company for the financial year ending 31 December 2014 at the forthcoming Annual General Meeting of the Company.

Further details regarding the Audit & Risk Committee are disclosed in the Report on Corporate Governance of the Company’s Annual Report for the financial year ended 31 December 2013.


Directors’ report

AUDITOR

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditor.

On behalf of the board of directors,

DR TAN ENG LIANG CHUA HOCK TONGDirector Director

18 March 2014Singapore


statement by Directors

We, DR TAN ENG LIANG and CHUA HOCK TONG, being two of the directors of UE E&C LTD., do hereby state that, in the opinion of the directors,

(i) the accompanying statements of financial position, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity and consolidated statement of cash flows together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2013 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date, and

(ii) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the board of directors,

DR TAN ENG LIANG CHUA HOCK TONG Director Director

18 March 2014Singapore


inDepenDent auDitor’s reportFor the financial year ended 31 December 2013

To the members of UE E&C Ltd.

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of UE E&C LTD. (the “Company”) and its subsidiaries (collectively, the “Group”) which comprise the statements of financial position of the Group and the Company as at 31 December 2013, the statements of changes in equity of the Group and Company and the consolidated income statement, consolidated statement of comprehensive income, and consolidated statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITy FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. AUDITOR’S RESPONSIBILITy

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, the consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2013 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORy REQUIREMENTS

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Ernst & young LLPPublic Accountants and Chartered AccountantsSingapore

18 March 2014


consoliDateD income statementFor the financial year ended 31 December 2013

(In Singapore Dollars)

GROUPNote 31/12/2013 31/12/2012

$000 $000

Revenue 4 400,167 387,476Cost of sales (305,819) (305,538)

Gross profit 94,348 81,938

Other items of incomeInterest income 5 4,681 3,313Other income 6 4,780 1,425

Other items of expenseDistribution expenses (8,468) (7,728)Administrative expenses (15,285) (14,382)Finance costs 7 (826) (1,100)Other expenses (7,555) (7,509)Share of results of associates and joint ventures 946 3,084

Profit before tax 8 72,621 59,041Income tax expense 9 (12,517) (9,914)

Profit net of tax 60,104 49,127

Profit attributable to:Owners of the Company 60,171 47,943Non-controlling interests (67) 1,184

60,104 49,127

Earnings per ordinary share attributable to owners of the Company (cents per share)

Basic and diluted 10 22.3 17.8

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


consoliDateD statement oF compreHensiVe incomeFor the financial year ended 31 December 2013


GROUP31/12/2013 31/12/2012

$000 $000

Profit net of tax 60,104 49,127

Other comprehensive income:

Items that may be reclassified subsequently to profit or loss

Net effect of exchange differences arising from translation of financial statements of foreign operations (37) (205)

Other comprehensive income for the year, net of tax (37) (205)

Total comprehensive income for the year 60,067 48,922

Total comprehensive income attributable to:Owners of the Company 60,150 47,719Non-controlling interests (83) 1,203

Total comprehensive income for the year 60,067 48,922



statements oF Financial positionAs at 31 December 2013


GROUP COMPANyNote 31/12/2013 31/12/2012 31/12/2013 31/12/2012

$000 $000 $000 $000AssetsNon-current assetsProperty, plant and equipment 11 53,020 49,041 16 29Investment properties 12 5,192 5,265 – –Goodwill 13 229 229 – –Investments in subsidiaries 13 – – 130,203 130,203Investments in associates 14 11,270 15,013 – –Investments in joint ventures 15 295 308 – –Deferred tax assets 16 29 – – –Trade and other receivables 19 105,014 108,239 1,823 13,823Total non-current assets 175,049 178,095 132,042 144,055

Current assetsInventories 18 1,936 2,006 – –Income tax receivable 310 329 – –Trade and other receivables 19 144,601 150,115 2,488 1,226Other investments 17 305 7,427 – –Gross amount due from customers for contract

work-in-progress 20 15,344 18,739 – –Prepayments 501 367 36 26Property held for sale 21 200 204 – –Cash and bank balances 22 164,615 105,708 37,739 18,380Total current assets 327,812 284,895 40,263 19,632Total assets 502,861 462,990 172,305 163,687

Equity and liabilitiesEquityShare capital 23 138,774 138,774 138,774 138,774Retained earnings 165,842 119,171 30,961 22,240Other reserves 24 (60,458) (60,437) – –Equity, attributable to owners of the

Company 244,158 197,508 169,735 161,014Non-controlling interests 1,450 1,853 – –Total equity 245,608 199,361 169,735 161,014

Non-current liabilitiesDeferred tax liabilities 16 4,873 3,480 – –Trade and other payables 26 5,984 9,555 – –Borrowings 25 2,058 2,127 – –Finance leases 27 2,540 296 – –Total non-current liabilities 15,455 15,458 – –

Current liabilitiesIncome tax payable 10,893 10,549 – –Trade and other payables 26 188,199 198,029 2,570 2,673Borrowings 25 21,110 12,330 – –Finance leases 27 1,538 732 – –Gross amount due to customers for contract

work-in-progress 20 20,058 26,531 – –Total current liabilities 241,798 248,171 2,570 2,673Total liabilities 257,253 263,629 2,570 2,673Total equity and liabilities 502,861 462,990 172,305 163,687



statements oF cHanges in equityFor the financial year ended 31 December 2013


Attributable to owners of the Company

Sharecapital

Retainedearnings

Other reserves

Totalreserves

Equity attributable

to owners of the

Company

Non-controlling

interestsTotal

equity(Note 23) (Note 24)

GROUP $000 $000 $000 $000 $000 $000 $000

At 1 January 2013 138,774 119,171 (60,437) 58,734 197,508 1,853 199,361

Profit net of tax – 60,171 – 60,171 60,171 (67) 60,104

Other comprehensive income

Net effect of exchange differences arising from translation of financial statements of foreign operations – – (21) (21) (21) (16) (37)

Other comprehensive income for the year, net of tax – – (21) (21) (21) (16) (37)

Total comprehensive income for the year – 60,171 (21) 60,150 60,150 (83) 60,067

Distributions to owners

Dividends on ordinary shares(Note 29) – (13,500) – (13,500) (13,500) – (13,500)

Total distributions to owners – (13,500) – (13,500) (13,500) – (13,500)

Changes in ownership interests in subsidiary that do not result in a loss of control

Incorporation of subsidiary company – – – – – 30 30

Acquisition of non-controlling interests without a change in control – – – – – (350) (350)

Changes in ownership interests in subsidiary that do not result in a loss of control – – – – – (320) (320)

Total transactions with owners in their capacity as owners – (13,500) – (13,500) (13,500) (320) (13,820)

At 31 December 2013 138,774 165,842 (60,458) 105,384 244,158 1,450 245,608





Sharecapital

Retainedearnings

Other reserves

Totalreserves

Equity attributable

to owners of the

Company

Non-controlling

interestsTotal


GROUP $000 $000 $000 $000 $000 $000 $000

At 1 January 2012, as previously reported 138,774 87,248 (61,339) 25,909 164,683 492 165,175

Effect of acquisition of a subsidiary under common control – 180 3,664 3,844 3,844 2,409 6,253

At 1 January 2012, restated 138,774 87,428 (57,675) 29,753 168,527 2,901 171,428

Profit net of tax – 47,943 – 47,943 47,943 1,184 49,127

Other comprehensive income

Net effect of exchange differences arising from translation of financialstatements of foreign operations – – (224) (224) (224) 19 (205)

Other comprehensive income for the year, net of tax – – (224) (224) (224) 19 (205)

Total comprehensive income for the year – 47,943 (224) 47,719 47,719 1,203 48,922


Dividends on ordinary shares (Note 29) – (16,200) – (16,200) (16,200) – (16,200)

Total distributions to owners – (16,200) – (16,200) (16,200) – (16,200)

Changes in ownership interests in subsidiary that do not result in a loss of control

Incorporation of subsidiary company – – – – – 150 150

Acquisition of subsidiary under common control – – (3,373) (3,373) (3,373) – (3,373)

Acquisition of non-controlling interests without a change in control – – 835 835 835 (2,401) (1,566)

Changes in ownership interests in subsidiary that do not result in a loss of control – – (2,538) (2,538) (2,538) (2,251) (4,789)





Sharecapital

Retainedearnings

Other reserves

Totalreserves

Equity attributable

to owners of the

Company

Non-controlling

interestsTotal


GROUP $000 $000 $000 $000 $000 $000 $000

Total transactions with owners in their capacity as owners – (16,200) (2,538) (18,738) (18,738) (2,251) (20,989)

At 31 December 2012 138,774 119,171 (60,437) 58,734 197,508 1,853 199,361





Sharecapital

Retainedearnings

Totalreserves

Equity attributable

to ownersof the

CompanyTotal

equity(Note 23)

COMPANy $000 $000 $000 $000 $000

At 1 January 2013 138,774 22,240 22,240 161,014 161,014

Profit net of tax, representing total comprehensive income for the year – 22,221 22,221 22,221 22,221


Dividends on ordinary shares (Note 29) – (13,500) (13,500) (13,500) (13,500)

Total transactions with owners in their capacity as owners – (13,500) (13,500) (13,500) (13,500)

At 31 December 2013 138,774 30,961 30,961 169,735 169,735

At 1 January 2012 138,774 18,232 18,232 157,006 157,006

Profit net of tax, representing total comprehensive income for the year – 20,208 20,208 20,208 20,208


Dividends on ordinary shares (Note 29) – (16,200) (16,200) (16,200) (16,200)

Total transactions with owners in their capacity as owners – (16,200) (16,200) (16,200) (16,200)

At 31 December 2012 138,774 22,240 22,240 161,014 161,014



consoliDateD statement oF casH FloWsFor the financial year ended 31 December 2013

(In Singapore Dollars)GROUP

31/12/2013 31/12/2012$000 $000

Cash flows from operating activitiesProfit before tax 72,621 59,041

Adjustments:Allowance for doubtful trade receivables 1,054 628Write back of allowance for doubtful trade receivables (475) (134)Allowance for doubtful other receivables 1,019 178Write back of allowance for doubtful other receivables (294) (75)Allowance for inventory obsolescence 150 250Write back of allowance for inventory obsolescence (186) (343)Amortisation of receivables and payables (122) 65Depreciation of property, plant and equipment (Note 11) 10,515 8,898Dividend income from investment securities (6) (302)Gain on disposal of property, plant and equipment (894) (124)(Gain)/Loss on disposal of held-for-trading investments (507) 12Gain on fair value adjustment on held-for-trading investments (1,560) (195)Impairment loss on property, plant and equipment (Note 11) – 215Finance costs 826 1,100Interest income (4,681) (3,313)Share of results of associates and joint ventures (946) (3,084)

Operating cash flows before changes in working capital 76,514 62,817

Proceeds from disposal of property held for sale – 283Decrease in inventories 114 2,471Decrease/(Increase) in gross amount due from customers for contract

work-in-progress 1,794 (4,244)(Decrease)/Increase in gross amount due to customers for contract

work-in-progress (6,460) 11,717Decrease/(Increase) in trade and other receivables and prepayments 15,524 (9,379)(Decrease)/Increase in trade and other payables and provisions (12,224) 2,906

Cash flows from operations 75,262 66,571

Interest received 266 336Interest paid (883) (1,130)Income tax paid (10,712) (8,353)

Net cash flows from operating activities 63,933 57,424


consoliDateD statement oF casH FloWsFor the financial year ended 31 December 2013

(In Singapore Dollars)GROUP

31/12/2013$000

31/12/2012 $000

Cash flows from investing activitiesAcquisition of a subsidiary under common control – (3,373)Acquisition of non-controlling interests (350) (1,566)Contribution from non-controlling interests 30 150Purchase of property, plant and equipment (Note 11) (11,993) (10,998)Proceeds from disposal of property, plant and equipment 3,008 202Proceeds from disposal of held-for-trading investments 9,189 4Dividends received from associates 5,000 5,000Dividends received from investment securities 6 302Investments in associates (300) (322)Loans to associates (29,496) (58,348)Loan to a joint venture – (4,125)Repayment of loans from associates 14,536 10,684Repayment of loan from a joint venture 12,000 –

Net cash flows from/(used in) investing activities 1,630 (62,390)

Cash flows from financing activitiesDividends paid on ordinary shares (13,500) (16,200)Proceeds from/(Repayment of) trust receipts and bills payable 386 (1,862)Repayment of obligations under finance leases (1,382) (601)Proceeds from bank loans 105 2,455Repayment of bank loans (327) (100)Decrease in revolving bank loans – (2,820)

Net cash flows used in financing activities (14,718) (19,128)

Net increase/(decrease) in cash and cash equivalents 50,845 (24,094)Cash and cash equivalents at the beginning of year 103,918 128,111Effect of exchange rate changes on cash and cash equivalents (492) (99)

Cash and cash equivalents at the end of year (Note 22) 154,271 103,918


notes to tHe Financial statements 31 December 2013


1 CORPORATE INFORMATION

UE E&C Ltd. is a limited liability company incorporated and domiciled in Singapore and is listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”).

The registered office and the principal place of business of the Company are located at 12 Ang Mo Kio Street 64 #03-13 UE BizHub CENTRAL, Singapore 569088.

The principal activity of the Company is that of investment holding company.

The principal activities of the subsidiary companies are disclosed in Note 13 to the financial statements.

The ultimate holding company of the Company is United Engineers Limited (“UEL”) which is incorporated in Singapore.

Related companies consist of companies within the UEL group of companies, excluding entities within the Group.

2 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on the historical cost basis except for investment properties and held-for-trading investments that have been measured at their fair values.

The financial statements are presented in Singapore Dollars (“SGD” or “$”) and all values in the tables are rounded to the nearest thousand ($000) except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised Singapore Financial Reporting Standards (“FRSs”) and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after 1 January 2013.

The adoption of these standards and interpretations did not result in any substantial change to the Group’s accounting policies or any significant impact on financial statements of the Group and the Company.

According to the transition provisions of FRS 113 Fair Value Measurement, FRS 113 has been applied prospectively by the Group on 1 January 2013.

2.3 Standards issued but not yet effective

The Group has not adopted the following standards that have been issued but not yet effective:

Description

Effective for annual periods beginning

on or after

Revised FRS 27 Separate Financial Statements 1 January 2014Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2014FRS 110 Consolidated Financial Statements 1 January 2014FRS 111 Joint Arrangements 1 January 2014FRS 112 Disclosure of Interests in Other Entities 1 January 2014Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2014

Except for FRS 110, Revised FRS 27, FRS 111, Revised FRS 28 and FRS 112, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of FRS 110, Revised FRS 27, FRS 111, Revised FRS 28, and FRS 112 are described below.



2 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.3 Standards issued but not yet effective (continued)

FRS 110 Consolidated Financial Statements and Revised FRS 27 Separate Financial Statements FRS 110 Consolidated Financial Statements and Revised FRS 27 Separate Financial Statements are effective for financial

periods beginning on or after 1 January 2014. FRS 110 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 110 will require management to exercise significant judgment to determine which entities are controlled, and therefore are required to be consolidated by the Group, compared with the requirements that were in FRS 27. Therefore, FRS 110 may change which entities are consolidated within a group. The Revised FRS 27 was amended to address accounting for subsidiaries, jointly controlled entities and associates in separate financial statements. The Group does not expect adoption of these standards to have material impact to the financial statements.

FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures FRS 111 Joint Arrangements and Revised FRS 28 Investments in Associates and Joint Ventures are effective for financial

periods beginning on or after 1 January 2014.

FRS 111 classifies joint arrangements either as joint operations or joint ventures. Joint operation is a joint arrangement whereby the parties that have rights to the assets and obligations for the liabilities whereas joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

FRS 111 requires the determination of joint arrangement’s classification to be based on the parties’ rights and obligations under the arrangement, with the existence of a separate legal vehicle no longer being the key factor. FRS 111 disallows proportionate consolidation and requires joint ventures to be accounted for using the equity method. The revised FRS 28 was amended to describe the application of equity method to investments in joint ventures in addition to associates.

The Group currently accounts for its investment in joint ventures and associates using the equity method. Upon adoption of FRS 111, the Group does not expect any impact on the financial position of the Group.

FRS 112 Disclosure of Interests in Other EntitiesFRS 112 Disclosure of Interests in Other Entities is effective for financial periods beginning on or after 1 January 2014.

FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. As this is a disclosure standard, it will have no impact to the financial position and financial performance of the Group when implemented in 2014.

2.4 Basis of consolidation and business combinations

(A) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group

transactions and dividends are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and

continue to be consolidated until the date that such control ceases.

Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.




2.4 Basis of consolidation and business combinations (continued)

(A) Basis of consolidation (continued)

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

- derecognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost;

- derecognises the carrying amount of any non-controlling interest;- derecognises the cumulative translation differences recorded in equity;- recognises the fair value of the consideration received;- recognises the fair value of any investment retained;- recognises any surplus or deficit in profit or loss;- reclassifies the Group’s share of components previously recognised in other comprehensive income to profit

or loss or retained earnings, as appropriate.

(B) Business combinations

Business combinations (other than combinations involving entities or businesses under common control which are accounted for by applying the pooling of interests method) are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity.

In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation, is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Other components of non-controlling interests are measured at their acquisition date fair value, unless another measurement basis is required by another FRS.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.12. In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date.

(C) Business combinations involving entities under common control

Business combinations involving entities under common control are accounted for by applying the pooling of interests method which involves the following:

- the assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company;

- no adjustments are made to reflect the fair values on the date of combination, or recognise any new assets or liabilities;

- no additional goodwill is recognised as a result of the combination;- any differences between the consideration paid/transferred and the equity “acquired” is reflected within the

equity as merger reserve;- the statement of comprehensive income reflects the results of the combining entities for the full year,

irrespective of when the combination took place;- comparatives are restated to reflect the combination as if it had occurred from the beginning of the earliest

period presented in the financial statements or from the date the entities had come under common control, if later.




2.5 Transactions with non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statements of financial position, separately from equity attributable to owners of the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any differences between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received are recognised directly in equity and attributed to owners of the Company.

2.6 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, excluding discounts, rebates, and sales taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The following specific recognition criteria must also be met before revenue is recognised:

Sale of goods

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

Rental income

Rental income arising on investment properties are accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

Revenue from rental of machinery, equipment and metal products are recognised on a straight-line basis over the lease term as they become receivable according to the provision of the lease agreement.

Construction contract revenue

Revenue from construction contracts is recognised on the percentage of completion method. Further details can be found in Note 2.18.

Rendering of services

Revenue from services rendered is recognised upon services performed.

Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

Interest income

Interest income is recognised using the effective interest method.

Sale of completed development property held for sale

A completed development property held for sale is regarded as sold when the significant risks and returns have been transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are recognised only when all the significant conditions are satisfied.




2.6 Revenue recognition (continued)

Sale of property under construction

Where a property is under construction and agreement has been reached to sell such property when construction is complete, the Directors consider when the contract comprises:

• Acontracttoconstructaproperty;or

• Acontractforthesaleofcompletedproperty

(a) Where a contract is judged to be for the construction of a property, revenue is recognised using the percentage of completion method as construction progresses.

(b) Where the contract is judged to be for the sale of a completed property, revenue is recognised when the significant risks and rewards of ownership of the real estate have been transferred to the buyer (i.e. revenue is recognised using the completed contract method).

(i) If, however, the legal terms of the contract are such that the construction represents the continuous transfer of work-in-progress to the purchaser, the percentage of completion method of revenue recognition is applied and revenue is recognised as work progresses.

(ii) In Singapore context, INT FRS 115 includes an accompanying note on application of INT FRS 115 which requires the percentage of completion method of revenue recognition to be applied to sale of private residential properties in Singapore prior to completion of the properties that are regulated under the Singapore Housing Developers (Control and Licensing) Act (Chapter 130) and uses the standard form of sale and purchase agreements (SPAs) prescribed in the Housing Developers Rules. The accompanying note to INT FRS 115 does not address the accounting treatment for other SPAs, including SPAs with a Deferred Payment Scheme feature in Singapore.

In the above situations (i) and (ii), the percentage of work completed is measured based on the costs incurred up until the end of the reporting periods as a proportion of total costs expected to be incurred.

2.7 Employee benefits

Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. As required by law, the Group’s companies in Singapore make contributions to the Central Provident Fund (CPF) scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they are accrued to the employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period.

2.8 Foreign currencies

The financial statements are presented in SGD, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

(a) Transactions and balances

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured.




2.8 Foreign currencies (continued)

(a) Transactions and balances (continued)

Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in the income statement except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income as foreign currency translation in the statement of financial position. The foreign currency translation reserve is reclassified from equity to income statement of the Group on disposal of the foreign operation.

(b) Consolidated financial statements

For consolidation purposes, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

2.9 Income taxes

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the Group operates and generates taxable income.

Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in where applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in atransaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• Inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterestsin joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.




2.9 Income taxes (continued)

Deferred tax (continued)

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

• Wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofan asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• Inrespectofdeductibletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterestsin joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of each reporting period.

Deferred tax relating to items recognised outside income statement is recognised outside income statement. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Goods and services taxation/sales tax

Revenues, expenses and assets are recognised net of the amount of goods and services taxation/sales tax except:

• Wherethegoodsandservicestaxation/salestaxincurredonapurchaseofassetsorservicesisnotrecoverablefrom the taxation authority, in which case the goods and services taxation/sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• Receivablesandpayablesthatarestatedwiththeamountofgoodsandservicestaxation/salestaxincluded.

The net amount of goods and services taxation/sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.




2.10 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note 2.25. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Leasehold land and buildings - over the terms of lease ranging from 8 to 20 yearsMetal forms - 1 to 2.5 yearsLight plant and machinery - 2 to 10 yearsHeavy plant and machinery - 11 to 15 yearsMotor vehicles and other assets - 1 to 5 years

Light and heavy plant and machinery are disclosed as “plant and machinery” in Note 11. Light plant and machinery consists of machinery used for power solutions business such as generators, transformers and loadbanks as well as machinery used for building construction such as tower cranes. Heavy plant and machinery consists mainly of geo-technical equipment such as crawler cranes, excavators and hydraulic drilling rigs.

Assets under construction included in capital work-in-progress are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at the end of each reporting period, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the year the asset is derecognised.

2.11 Investment properties

Investment properties comprise completed properties and properties under construction or re-development held on a long-term basis for their investment potential and income.

Investment properties are initially measured at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met.

Subsequent to initial recognition, investment properties are measured at fair value. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. For a transfer from owner-occupied property to investment property, the property is accounted for in accordance with the accounting policy for property, plant and equipment set out in Note 2.10 up to the date of change in use.




2.12 Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group’s cash-generating units (“CGUs”) that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

The CGUs to which goodwill have been allocated is tested for impairment annually and whenever there is an indication that the CGU may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. Where the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised in profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a CGU and part of the operation within that CGU is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the CGU retained.

Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.8.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2005 are deemed

to be assets and liabilities of the Company and are recorded in SGD at the rates prevailing at the date of acquisition.

2.13 Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or CGU fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset or CGU is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculation which are prepared separately for each of the Group’s CGU to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.




2.14 Subsidiaries, associates and joint ventures

Subsidiary

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

Associate

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associates is carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates.

Goodwill relating to associates is included in the carrying amount of the investment and is neither amortised nor tested individually for impairment.

Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is included as income in the determination of the Group’s share of results of the associate in the period in which the investment is acquired.

The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised in other comprehensive income by the associates, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associates.

The Group’s share of the profit or loss of its associates is the profit attributable to equity holders of the associate and, therefore is the profit or loss after tax and non-controlling interests in the subsidiaries of associates.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss on the Group’s investment in its associates. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the aggregate of the retained investment and proceeds from disposal is recognised in profit or loss.




2.14 Subsidiaries, associates and joint ventures (continued)

Joint venture

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, where the strategic, financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control. The Group’s investments in joint ventures are accounted for using the equity method. Under the equity method, the investment in joint venture is carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the joint venture. The Group’s share of the profit or loss of the joint venture is recognised in the consolidated income statement. Where there has been a change recognised directly in the equity of the joint venture, the Group recognises its share of such changes.

After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the joint ventures. The Group determines at the end of each reporting period whether there is any objective evidence that the investment in the joint venture is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognises the amount in the profit or loss.

In the Group’s consolidated financial statements, the Group’s share of results and reserves of joint ventures acquired or disposed of are included in the consolidated financial statements from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint venture.

The financial statements of the joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The profit or loss reflects the share of the results of operations of the joint ventures. Where there has been a change recognised in other comprehensive income by the joint ventures, the Group recognises its share of such changes in other comprehensive income. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint ventures.

When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture.

Upon loss of joint control, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the former joint venture upon loss of joint control and the aggregate of the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

In the Company’s separate financial statements, investments in subsidiaries, associates and joint ventures are accounted for at cost less impairment losses. Loans and amounts due from or to subsidiaries, associates and joint ventures are classified and accounted for as loans and receivables under FRS 39. The accounting policy for this category of financial asset is stated in Note 2.16.

2.15 Inventories

Inventories are stated at the lower of cost and net realisable value. The costs of all inventories are determined on a weighted average basis.

Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.




2.16 Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in the profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.

Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Derecognition

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchase or sale of a financial asset

All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

2.17 Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. If any such indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.




2.17 Impairment of financial assets (continued)

Financial assets carried at amortised cost (continued)

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in profit or loss.

When the asset becomes uncollectible, the carrying amount of impaired financial asset is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

Financial assets carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

2.18 Construction contracts

The Group principally operates fixed price contracts.

Contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the end of the reporting period (the percentage of completion method), when the outcome of a construction contract can be estimated reliably.

The outcome of a construction contract can be estimated reliably when: (i) total contract revenue can be measured reliably; (ii) it is probable that the economic benefits associated with the contract will flow to the entity; (iii) the costs to complete the contract and the stage of completion can be measured reliably; and (iv) the contract costs attributable to the contract can be clearly identified and measured reliably so that actual contract costs incurred can be compared with prior estimates.

When the outcome of a construction contract cannot be estimated reliably (principally during early stages of a contract), contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred.

An expected loss on the construction contract is recognised as an expense immediately when it is probable that total contract costs will exceed total contract revenue.

In applying the percentage of completion method, revenue recognised corresponds to the total contract revenue (as defined below) multiplied by the actual completion rate based on the surveys of work performed.

Contract revenue – Contract revenue corresponds to the initial amount of revenue agreed in the contract and any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue; and they can be reliably measured.

Contract costs – Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity in general and can be allocated to the contract.




2.18 Construction contracts (continued)

Revenue from cost plus contracts is recognised by reference to the recoverable costs incurred plus a percentage of the contract fee earned during the year. Percentage of the contract fee earned is measured by the proportion that the costs incurred to date bear to the estimated total costs of the contract. Only costs that reflect services performed are included in the estimated total costs of the contract. Where the contract outcome cannot be measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

2.19 Properties held for sale

Development properties held for sale

Development properties for which revenue is recognised using the percentage of completion method is stated at cost plus estimated profits to-date less progress billings. Progress claims from purchasers of residential units for sale are shown as a deduction from the cost of the development properties held for sale.

Development properties for which revenue is recognised using the completed contract method is stated at cost. Progress claims from purchasers of residential units for sale are included in “trade and other payables” as “progress billings received in advance”.

Allowance for foreseeable losses is made when it is anticipated that the net realisable value has fallen below cost. Costs includes cost of land and construction, related overhead expenditure and financing charges incurred up to the completion of construction.

Financing charges incurred to finance the development of such properties are capitalised during the period that is required to complete and prepare each property for its sale. Net realisable value represents the estimated selling price

less costs to be incurred in selling the property.

Construction of a property is considered completed upon the issue of Temporary Occupation Permit (“TOP”). When completed, development properties held for sale are transferred to completed properties held for sale.

Profit on development properties held for sale using the percentage of completion method is recognised on partly completed projects which have been sold and is based on the accounting policy in Note 2.6. The expected profit is assessed having regard to the sales procured less attributable total costs including the cost of land, construction and interest and after making due allowance for known potential costs over-runs and allowance for contingencies. Progress claims from purchasers of residential units for sale are shown as a deduction from the cost of the development properties held for sale.

Progress billings not yet paid by customers are included in trade and other receivables.

Completed properties held for sale

Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction, related overhead expenditure, and financing charges and other net costs incurred during the period of development. The costs are assigned by using specific identification. Net realisable value represents the estimated selling price less costs to be incurred in selling the property.

Allowance for impairment is made when it is anticipated that the net realisable value has fallen below cost.

Revenue from completed properties held for sale is recognised upon execution of Sale and Purchase Agreements and issue of Notice of Vacant Possession.

2.20 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.




2.21 Borrowings

Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the end of the reporting period.

Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in income statement over the period of the borrowings using the effective interest method.

2.22 Financial liabilities

Initial recognition and measurement

Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs.

Subsequent measurement

The measurement of other financial liabilities is as follows:

Other financial liabilities

After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.23 Provisions

General

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Warranty provisions

Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.




2.24 Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104.

As lessee

Finance leases which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.6. Contingent rents are recognised as revenue in the period in which they are earned.

2.25 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

2.26 Contingencies

A contingent liability is:

(a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

(b) a present obligation that arises from past events but is not recognised because:

(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) the amount of the obligation cannot be measured with sufficient reliability.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the statement of financial position of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined.




2.27 Government grants

Government grants are recognised when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Where the grant relates to an asset, the fair value is recognised as deferred capital grant on the balance sheet and is amortised to profit or loss over the expected useful life of the relevant asset by equal annual instalments.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income are deducted in reporting the related expenses.

2.28 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 34, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.29 Related parties

A related party is defined as follows:

(a) A person or a close member of that person’s family is related to the Group and Company if that person:

(i) has control or joint control over the Company;

(ii) has significant influence over the Company; or

(iii) is a member of the key management personnel of the Group or Company or of a parent of the Company.

(b) An entity is related to the Group and the Company if any of the following conditions applies:

(i) the entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);

(ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member);

(iii) both entities are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

2.30 Share capital and share issuance expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.



3 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future periods.

3.1 Judgments made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognised in the consolidated financial statements:

Assessment of operating lease commitments – as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the contracts as operating leases.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

The Group based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Useful lives of plant and machinery

The cost of plant and machinery is depreciated on a straight-line basis over the useful lives estimated to be within 2 to 15 years. The carrying amount of the plant and machinery as at 31 December 2013 was $36,440,000 (2012: $36,662,000). Changes in the expected level of usage could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

Based on management’s estimates, a 5% difference in the expected useful lives of these assets would result in less than 1% (2012: 1%) variance in the Group’s profit before tax for the financial year.

Construction contracts

The Group recognises contract revenue by reference to the stage of completion of the contract activity at the end of each reporting period, when the outcome of a construction contract can be estimated reliably. The stage of completion is measured by reference to professional surveys of work performed.

Significant assumptions are required in determining the stage of completion, the extent of the contract costs incurred, the estimated total contract revenue and contract costs and liquidated damage claims, as well as the recoverability of the contract costs incurred. Total contract revenue also includes an estimation of the recoverable variation works that are recoverable from the customers. In making the estimation, the Group evaluates by relying on past experience and knowledge of the project engineers and/or the work of specialists.

The carrying amounts of assets and liabilities arising from construction contracts at the end of each reporting period are disclosed in Note 20 to the financial statements.

If the estimated total contract cost had been 5% higher/lower than management’s estimate, the Group’s profit before tax would have been lower/higher by $38,350,000 (2012: $27,952,000).



3 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (continued)

3.2 Key sources of estimation uncertainty (continued)

Impairment of loans and receivables

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on

historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables with impairment indicators at the end of the reporting period is disclosed in Note 19 to the financial statements. If the present value of estimated future cash flows of receivables that are past due but not impaired and those that are impaired, varies by 5% from management’s estimates, the Group’s allowance for impairment will increase by $1,897,000 (2012: $1,794,000).

Assessment of allowance for inventories

The estimate is based on the current market conditions and the historical experience of selling products of a similar nature. It could change as a result of competitors’ actions. The Group reassesses the estimates at the end of each reporting period. The carrying amount of the Group’s inventories as at 31 December 2013 is $1,936,000 (2012: $2,006,000).

Revaluation of investment properties

The Group’s investment properties, with a carrying amount of $5,192,000 as at 31 December 2013 (2012: $5,265,000) are stated at their estimated fair values which are determined annually by independent professional valuers. These estimated fair values may differ from the prices at which the Group’s investment properties could be sold at a particular time, since actual selling prices are negotiated between willing buyers and sellers. Also, certain estimates require an assessment of uncontrollable factors, such as overall market conditions. As a result, actual results of operations and realisation of these investment properties could differ from the estimates set forth in these financial statements.

The carrying amount and key assumptions used to determine the fair value of the investment properties are further explained in Note 32. If the market capitalisation rates used in the valuation had been 1% higher than management’s estimate, the carrying amount of the investment properties would have been approximately $895,000 (2012: $913,000) lower.

Income tax

The Group has exposure to income taxes in a few jurisdictions. Significant judgment is involved in determining the Group-wide provision for income taxes. Tax is computed in accordance with taxation rules in each jurisdiction. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s income tax payable, income tax receivable, deferred tax liabilities and deferred tax assets as at 31 December 2013 was $10,893,000 (2012: $10,549,000), $310,000 (2012: $329,000), $4,873,000 (2012: $3,480,000) and $29,000 (2012: Nil) respectively.



4 REVENUE

GROUP31/12/2013 31/12/2012

$000 $000

Revenue from construction and engineering contracts 369,127 354,898Rental of equipment and other service income 27,119 23,205Rental income from investment properties (Note 12) 206 192Sale of goods 3,715 9,181

400,167 387,476

5 INTEREST INCOME

GROUP31/12/2013 31/12/2012

$000 $000

Interest income from loans and receivables 4,681 3,313

6 OTHER INCOMEGROUP

31/12/2013 31/12/2012$000 $000

Accounting and administrative fees received from a joint venture (Note 30) 84 56Administrative fee income 190 –Compensation for loss of metal forms 535 244Dividend income from investment securities 6 302Gain on disposal of property, plant and equipment 894 124Gain on disposal of held-for-trading investments 507 –Gain on fair value adjustment on held-for-trading investments 1,560 195Gain on disposal of scrap 168 111Rental income from premises 368 329Other sundry income 468 64

4,780 1,425

Other sundry income comprised mainly income from claims and grants received from government.

7 FINANCE COSTS

GROUP31/12/2013 31/12/2012

$000 $000

Interest expense on:– Bank loans and bank overdrafts 732 1,046– Finance leases 94 54

826 1,100



8 PROFIT BEFORE TAX

Profit before tax is stated after (charging)/crediting: GROUP

31/12/2013 31/12/2012$000 $000

Audit fees paid/payable to: – Auditors of the Company (188) (218)– Other auditors (70) (67)

Non-audit fees paid/payable to: – Auditors of the Company (53) (537)– Other auditors (263) (278)

(574) (1,100)

Allowance for doubtful receivables (Note 19):– Trade receivables (1,054) (628)– Other receivables (1,019) (178) Write back of allowance for doubtful receivables (Note 19):– Trade receivables 475 134– Other receivables 294 75Bad debts written off (168) –Allowance for inventory obsolescence (Note 18) (150) (250)Write back of allowance for inventory obsolescence (Note 18) 186 343Amortisation of receivables and payables 122 (65)Depreciation of property, plant and equipment (Note 11) (9,671) (7,750)Direct operating expenses arising from investment properties (Note 12) (48) (57)Foreign exchange gain/(loss), net 309 (655)Impairment loss on property, plant and equipment (Note 11) – (215)Inventories recognised as an expense in cost of sales (Note 18) (4,456) (7,282)Legal fees (66) (98)Loss on disposal of held-for-trading investments – (12)Management fees and consultancy services (640) (763)Operating lease expense (Note 28) (1,491) (1,698)Staff costs (including directors’ remuneration)– Salaries, wages, bonuses and other costs (38,304) (31,231)– Central Provident Fund and other defined contribution plans (2,743) (2,289)



9 INCOME TAX EXPENSE

Major components of income tax expenseThe major components of income tax expense for the years ended 31 December 2013 and 2012 are:

GROUP31/12/2013 31/12/2012

$000 $000

Consolidated income statement:Current taxation:– Current year 12,514 10,611– Over provision in respect of prior years (1,010) (385)

11,504 10,226

Deferred taxation (Note 16):– Origination and reversal of temporary differences 1,414 361– Over provision in respect of prior years (44) (158)– Utilisation of tax losses under group relief (357) (515)

1,013 (312)

Income tax expense recognised in the income statement 12,517 9,914

Relationship between tax expense and accounting profit The reconciliation of the tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for

the years ended 31 December 2013 and 2012 are as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Profit before tax 72,621 59,041

Tax at Singapore statutory tax rate of 17% 12,346 10,037Adjustments for tax effect of:

Expenses not deductible for tax purposes 1,963 1,895Income not subject to taxation (573) (193)Singapore statutory income exemption (104) (195)Impact of different tax rates applicable to profits in the countries where

the Group operates 920 505Deferred tax assets not recognised 511 35Utilisation of previously unrecognised deferred tax assets (621) (486)Utilisation of tax losses under group relief (357) (515)Tax benefit from Productivity and Innovation Credit (306) (224)Over provision in respect of prior years (1,054) (543)Share of results of associates and joint ventures (161) (524)Others (47) 122

Income tax expense recognised in the income statement 12,517 9,914

The Productivity and Innovation Credit (“PIC”) was introduced in the Singapore Budget 2010. PIC has been enhanced in Budget 2011 and Budget 2012 to provide tax benefits for investments by businesses in a broad range of activities along the innovation value chain. The tax benefits under PIC will be effective from Years of Assessment (“YA”) 2011 to YA 2015. During the financial year ended 31 December 2013, the Group qualifies for the tax benefits as prescribed in the PIC scheme allowing a claim amounting to $306,000 (2012: $224,000).



10 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net profit attributable to owners of the Company by the weighted average number of ordinary shares of 270,000,000 (2012: 270,000,000) outstanding during the financial year.

Diluted earnings per share is calculated by dividing net profit attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the potential dilutive ordinary shares into ordinary shares. There were no potential dilutive ordinary shares existing during the financial year.

The following tables reflect the profit and share data used in the computation of basic and diluted earnings per share for the years ended 31 December 2013 and 2012:

GROUP31/12/2013 31/12/2012

Net profit for the year attributable to owners of the Company used in computation of basic and diluted earnings per share ($000) 60,171 47,943

No. of shares No. of sharesWeighted average number of ordinary shares for computation of basic

and diluted earnings per share (000) 270,000 270,000



11 PROPERTy, PLANT AND EQUIPMENT

Leaseholdland and

buildings

Capital work-in-progress Metal forms

Plant and machinery

Motorvehicles and other assets Total

GROUP $000 $000 $000 $000 $000 $000

CostAt 1 January 2012, restated 11,016 – 3,805 76,693 5,497 97,011Additions – 3,461 1,753 5,618 1,156 11,988Disposals – – – (240) (525) (765)Reclassification/adjustments (161) (3,261) 86 3,261 (57) (132)Exchange differences – (1) – (881) (61) (943)

At 31 December 2012 and 1 January 2013 10,855 199 5,644 84,451 6,010 107,159

Additions – 7,714 1,358 6,622 788 16,482Disposals – – (339) (4,155) (402) (4,896)Reclassification – (2,509) – 2,509 – –Exchange differences – – – 261 (40) 221

At 31 December 2013 10,855 5,404 6,663 89,688 6,356 118,966

Accumulated depreciationand impairment loss

At 1 January 2012, restated 1,096 – 3,659 41,525 3,958 50,238Charge for the year 934 – 440 6,756 768 8,898Disposals – – – (224) (463) (687)Impairment loss – – – 215 – 215Exchange differences – – – (483) (63) (546)

At 31 December 2012 and 1 January 2013 2,030 – 4,099 47,789 4,200 58,118

Charge for the year 938 – 1,264 7,547 766 10,515Disposals – – (339) (2,195) (248) (2,782)Exchange differences – – – 107 (12) 95

At 31 December 2013 2,968 – 5,024 53,248 4,706 65,946

Net carrying amountAt 31 December 2012 8,825 199 1,545 36,662 1,810 49,041

At 31 December 2013 7,887 5,404 1,639 36,440 1,650 53,020

Assets held under finance leases During the financial year, the Group acquired plant and machinery with an aggregate cost of $4,489,000 (2012: $990,000) by

means of finance leases. The cash outflow on acquisition of property, plant and equipment amounted to $11,993,000 (2012: $10,998,000).

The carrying amount of plant and machinery held under finance leases as at 31 December 2013 was $6,962,000 (2012: $1,363,000).

Leased assets are pledged as security for the related finance lease liabilities.



11 PROPERTy, PLANT AND EQUIPMENT (continued)

Depreciation charge

GROUP31/12/2013 31/12/2012

$000 $000

The depreciation charge for the financial year in the income statement is as follows:

Depreciation for the financial year 10,515 8,898Current financial year’s depreciation charged to construction projects (844) (1,148)

Charged to the income statement (Note 8) 9,671 7,750

Impairment of assets In 2012, a subsidiary of the Group within the construction division carried out a review of the recoverable amount of its plant

and machinery. An impairment loss of $215,000, representing the write-down of these machinery to the recoverable amount was recognised in “other expenses“ line item (Note 8) of the profit or loss for the financial year ended 31 December 2012.

Motor vehicles

and other assetsCOMPANy $000

CostAt 1 January 2012 32Additions 15

At 31 December 2012 and 1 January 2013 47Additions –

At 31 December 2013 47

Accumulated depreciationAt 1 January 2012 7Charge for the year 11

At 31 December 2012 and 1 January 2013 18Charge for the year 13


Net carrying amountAt 31 December 2012 29




12 INVESTMENT PROPERTIES

GROUP31/12/2013 31/12/2012

$000 $000

Statement of financial position:At 1 January 5,265 5,419Exchange differences (73) (154)

At 31 December 5,192 5,265

Consolidated income statement:Rental income from investment properties (Note 4):– Minimum lease payments 206 192

Direct operating expenses (including repairs and maintenance) (Note 8) arising from:– Rental generating properties (48) (57)

The investment properties held by the Group as at 31 December are as follows:

Description and location Existing use Tenure Unexpired lease term31/12/2013 31/12/2012

Shop lots at Lots G-052 to G-086, Megalong Commercial Complex, 89500 Penampang, Sabah, Malaysia

Retail shops 99 years leasehold from 01/01/2006

91 years 92 years

Shop lots at Lots G-123 to G-128, Megalong Commercial Complex, 89500 Penampang, Sabah, Malaysia

Retail shops 99 years leasehold from 01/01/1991

76 years 77 years

Rental proceeds in respect of investment properties have been assigned to secure term loan facility of a subsidiary (Note 25).

Valuation of investment properties Investment properties are stated at their fair values as at the end of the financial year based on valuations performed as at 31

December 2013 and 31 December 2012.

The valuation was performed by Henry Butcher Malaysia (Sabah) Sdn Bhd, an independent valuer with a recognised and relevant professional qualification and with recent experience in the location and category of the properties being valued. Details of valuation techniques and inputs used are disclosed in Note 32.



13 INVESTMENTS IN SUBSIDIARIES

COMPANy31/12/2013

$00031/12/2012

$000

Unquoted equity shares at cost 130,203 130,203

The subsidiaries as at 31 December are as follows:

Name of companyPrincipal activities(Place of business)1

Percentage of equity heldby the Group

31/12/2013 31/12/2012% %

Incorporated in Singapore2

Greatearth Construction Pte Ltd Building contractors 100 100

Greatearth Corporation Pte Ltd Building contractors 100 100

Greatearth Holding Pte Ltd Investment holding 100* 100*

Quality Engineering Pte Ltd General building contractors and provision of security services

70 70

Maxdin Pte Ltd Property investment and provision of project management services

100 100

UE-IBP Building Materials Pte Ltd Bulk supply of building materials 100 70

UE Power & Resources Pte Ltd Rental and supply of machinery, equipment and metal products

100* 100*

United Engineers (Singapore) Private Limited

Mechanical and electrical engineering 100* 100*

United Air Pte Ltd Air-conditioning supply 100 100



13 INVESTMENTS IN SUBSIDIARIES (continued)



31/12/2013 31/12/2012% %

Incorporated in Malaysia3

APG Geo-Systems Sdn Bhd

APG Systems (E.M.) Sdn Bhd

GE Construction Sdn Bhd

Quality Edition Sdn Bhd

Incorporated in Brunei3

Specialists geo-technical foundation engineering(Malaysia)

Specialists construction, sub-contractor for other geo-technical works(Malaysia)

Building contractors and property developer (Malaysia)

Property investment (Malaysia)

90

90

100

100

90

90

100

100

United Engineers (B) Sdn Bhd Civil, electrical, mechanical engineers and contractors (Brunei)

90* 90*

Incorporated in The People’s Republic of China3

Anhui Anxin Energy Co., Ltd. Leasing of generator sets (The People’s Republic of China)

100 100

Incorporated in Vietnam3

United Engineers (Vietnam)Limited

Engineering and construction (Vietnam)

100* 100*



13 INVESTMENTS IN SUBSIDIARIES (continued)



31/12/2013 31/12/2012% %

Incorporated in Indonesia4

PT. UE Power Engineering Services Trading, service of equipment and engineering consultancy services(Indonesia)

100 100

PT. UE Prima Nusantara Engineering, trading and rental services of power related equipment(Indonesia)

95 –

1 Place of business in Singapore unless otherwise stated.2 Audited by Ernst & Young LLP, Singapore.3 Audited by member firms of Ernst & Young Global in the respective countries.4 Not statutorily required to be audited in its country of incorporation.* Direct subsidiaries of UE E&C Ltd.

Goodwill on acquisition of APG Geo-Systems Sdn Bhd and its subsidiary company (“APG”) On 14 November 2012, the Group acquired 60% equity stake in APG from UEL, its ultimate holding company. The acquisition is

accounted for by applying the pooling of interests method of accounting. Under the pooling of interests method of accounting, the assets and liabilities of APG including the goodwill recognised upon the acquisition by UEL, are consolidated in the Group based on the carrying amounts reported in the consolidated financial statements of UEL. Goodwill of $229,000 at the end of each reporting period relates to the remaining goodwill recognised by UEL on its acquisition of APG.

Acquisition of non-controlling interests On 15 November 2013, the Group’s subsidiary company, Greatearth Construction Pte Ltd (“GEC”), acquired an additional 30%

equity interest in UE-IBP Building Materials Pte Ltd (“UE-IBP”) from its non-controlling interests for a cash consideration of $350,000 equal to the value of the net assets attributable to the additional interest acquired. As a result of this acquisition, UE-IBP became a wholly-owned subsidiary.

14 INVESTMENTS IN ASSOCIATES

GROUP31/12/2013 31/12/2012

$000 $000

Unquoted equity shares at cost 1,422 1,122Share of post acquisition reserves 9,851 13,891Exchange differences (3) –

11,270 15,013



14 INVESTMENTS IN ASSOCIATES (continued)

The associates as at 31 December are as follows:


Percentageof equity held

31/12/2013%

31/12/2012%

Held through subsidiaries

Incorporated in Singapore

Coral Edge Development Pte Ltd2 Property development and investment 30 –

Greatearth Developments Pte Ltd2 Real estate development and investment holding

50 50

MaxLee Development Pte Ltd2 Property development and investment 30 30

Wingcrown Investment Pte Ltd3

Incorporated in Malaysia

UE E&C Sanjia (M) Sdn Bhd4

Property development and investment

Property development and construction and/or project management(Malaysia)

20

30

20

30

1 Place of business in Singapore unless otherwise stated. 2 Audited by Ernst & Young LLP, Singapore.3 Audited by PricewaterhouseCoopers LLP, Singapore.4 Audited by member firm of Ernst & Young Global.

The summarised financial information of the associates, not adjusted for the proportion of ownership interest held by the Group, is as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Assets and liabilities:

Current assets 592,779 234,222Non-current assets 625,969 578,197

Total assets 1,218,748 812,419

Current liabilities 348,756 24,977Non-current liabilities 844,436 756,572

Total liabilities 1,193,192 781,549

Results:Revenue – 366

Profit for the year 916 6,199



15 INVESTMENTS IN JOINT VENTURES

GROUP31/12/2013 31/12/2012

$000 $000

Unquoted equity shares at cost 300 300Share of post acquisition reserves (5) 8

295 308

The joint venture as at 31 December is as follows:


Percentageof equity held

31/12/2013%

31/12/2012%

Held through a subsidiary

Incorporated in Singapore

HUGE Development Pte Ltd2 Real estate developers 30 30

1 Place of business in Singapore unless otherwise stated. 2 Audited by Ernst & Young LLP, Singapore.

The aggregate amounts of each of current assets, current liabilities, non-current liabilities, income and expenses related to the Group’s interests in the joint venture are as follows:

GROUP

31/12/2013 31/12/2012$000 $000

Assets and liabilities:

Current assets 72,904 43,181

Total assets 72,904 43,181

Current liabilities 48,527 383Non-current liabilities 24,082 42,490

Total liabilities 72,609 42,873

Income and expenses:Income 24 43

Expenses 38 29



16 DEFERRED TAX

The analysis of deferred income tax is as follows:

GROUPStatement of financial

positionConsolidated income

statement31/12/2013 31/12/2012 31/12/2013 31/12/2012

$000 $000 $000 $000Deferred tax assets:Provisions 249 225 (28) (50)Differences in depreciation for tax purposes 385 – (393) –Other items 30 34 4 555

Gross deferred tax assets 664 259

Deferred tax liabilities:Unremitted offshore income 221 65 156 (34)Differences in depreciation for tax purposes 4,984 3,369 1,633 (221)Fair value adjustment on investment

properties 303 303 – (49)Utilisation of tax losses under group

relief – – (357) (515)Other items – 2 (2) 2

Gross deferred tax liabilities 5,508 3,739

Net deferred tax liabilities (4,844) (3,480)

Deferred income tax expense/(credit) (Note 9) 1,013 (312)

Presented after appropriate offsetting as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Deferred tax assets 29 –Deferred tax liabilities (4,873) (3,480)

Net deferred tax liabilities (4,844) (3,480)

Unrecognised tax losses and capital allowances The Group has unabsorbed tax losses of approximately $7,378,000 (2012: $5,700,000) and unutilised capital allowances of

approximately $2,626,000 (2012: $8,744,000) for the financial year ended 31 December 2013 that are available for offset against future assessable income of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to agreement with the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate.

Unrecognised temporary differences relating to investments in subsidiaries At the end of the reporting period, no deferred tax liability (2012: Nil) has been recognised for taxes that would be payable on

the undistributed earnings of the Group’s overseas subsidiaries as the Group has determined that undistributed earnings of its subsidiaries will not be distributed in the foreseeable future; and such temporary differences for which no deferred tax liability has been recognised aggregate to $3,476,000 (2012: $3,244,000). The deferred tax liability is estimated to be $854,000 (2012: $625,000).

Tax consequences of proposed dividends There are no income tax consequences (2012: Nil) attached to the dividends to the shareholders proposed by the Company but

not recognised as a liability in the financial statements (Note 29).



17 OTHER INVESTMENTS

GROUP 31/12/2013 31/12/2012

$000 $000

Current:Held-for-trading investments

Quoted equity shares 305 7,427

18 INVENTORIES

GROUP31/12/2013 31/12/2012

$000 $000

Statement of financial position:Inventories, at lower of cost and net realisable valueTrading inventories 1,936 2,006

Inventories are stated after deducting allowance of 190 291

Consolidated income statement:Inventories recognised as an expense in cost of sales 4,456 7,282

Inclusive of the following charge/(credit) (Note 8):– Allowance for inventory obsolescence 150 250– Write back of allowance for inventory obsolescence (186) (343)

The write back of allowance for inventory obsolescence was made when the related inventories were sold.



19 TRADE AND OTHER RECEIVABLES

GROUP COMPANy31/12/2013 31/12/2012 31/12/2013 31/12/2012

$000 $000 $000 $000

Non-current:Loans receivable from subsidiaries – – 1,823 13,823 Loans receivable from associates 88,697 71,164 – –Loan receivable from a joint venture 3,098 14,493 – –Retention sums 13,219 22,582 – –

105,014 108,239 1,823 13,823

Current:Trade receivables 62,900 79,711 – –Amounts due from subsidiaries – – 2,405 1,180 Amounts due from related companies 829 3,663 – –Amounts due from associates 9,354 – – –Amounts due from a joint venture 9,146 995 – –Retention sums 43,488 42,751 – –Allowance for doubtful trade receivables (1,230) (701) – –

124,487 126,419 2,405 1,180 Other receivables:

Claims/expenses recoverable 6,072 5,685 72 44Deposits 2,107 2,085 – –Project advance 69 763 – –Loans receivable from associates 14,339 17,047 – –Sundry and other receivables 3,256 3,120 11 2Allowance for doubtful other receivables (5,729) (5,004) – –

20,114 23,696 83 46

144,601 150,115 2,488 1,226

Trade and other receivables (current and non-current) 249,615 258,354 4,311 15,049

Add:Cash and bank balances (Note 22) 164,615 105,708 37,739 18,380

Total loans and receivables 414,230 364,062 42,050 33,429

Trade receivables Trade receivables are non-interest bearing and are generally on 30 days’ terms. They are recognised at their original invoice

amounts which represent their fair values on initial recognition.

Retention sumsRetention sums relate to monies retained for construction contracts in progress.

Loans receivable from subsidiaries Included in loans receivable from subsidiaries is interest bearing, unsecured loan of $1,200,000 (2012: $13,200,000) which

bears interest at 6.50% (2012: 6.50%) per annum. The other loan is unsecured and non-interest bearing. These loans are to be settled in cash and are not expected to be repayable within the next 12 months.



19 TRADE AND OTHER RECEIVABLES (continued)

Loans receivable from associates Included in loans receivable from associates are interest bearing, unsecured loans of $85,233,000 (2012: $88,211,000) which

bear interest ranging from 5.00% to 6.50% (2012: 5.00% to 6.50%) per annum. The other loan of $17,803,000 (2012: Nil) is unsecured and non-interest bearing. These loans are to be settled in cash and are not expected to be repayable within the next 12 months, except for loan receivable of $14,339,000 (2012: $17,047,000) which is to be repayable within the next 12 months.

Loan receivable from a joint venture Loan receivable from a joint venture is interest bearing, unsecured loan which bears interest at 6.50% (2012: 6.50%) per

annum. The loan is to be settled in cash and is not expected to be repayable within the next 12 months.

Amounts due from subsidiaries, related companies, associates and a joint venture Amounts due from subsidiaries, related companies, associates and a joint venture are unsecured, trade in nature, non-interest

bearing, repayable upon demand and are to be settled in cash.

The Group’s trade receivables denominated in foreign currencies as at 31 December 2013 are as follows:

• $2,231,000(2012:$5,092,000)denominatedinUnitedStatesDollars,• $772,000(2012:$643,000)denominatedinIndonesianRupiahand• Nil(2012:$17,000)denominatedinVietnameseDong.

Receivables that are past due but not impaired The Group has trade and other receivables amounting to $30,168,000 (2012: $28,238,000) that are past due at the end of the

reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Trade and other receivables past due but not impaired:Less than 30 days 3,476 8,74130 to 60 days 2,467 1,36061 to 90 days 1,708 70491 to 120 days 439 3,339More than 120 days 22,078 14,094

30,168 28,238

Receivables that are impaired The Group’s trade and other receivables that are impaired at the end of the reporting period and the movement of the allowance

accounts used to record the impairment are as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Trade and other receivables – nominal amounts 7,770 7,642Less: Allowance for doubtful receivables (6,959) (5,705)

811 1,937



19 TRADE AND OTHER RECEIVABLES (continued)

Receivables that are impaired (continued)

Movements in allowance accounts:

GROUPTrade receivables Other receivables

31/12/2013 31/12/2012 31/12/2013 31/12/2012$000 $000 $000 $000

At 1 January (701) (291) (5,004) (5,355)Charge for the year (Note 8) (1,054) (628) (1,019) (178)Written off 51 77 – 454Written back (Note 8) 475 134 294 75Exchange differences (1) 7 – –

At 31 December (1,230) (701) (5,729) (5,004)

Trade and other receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

20 GROSS AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORK-IN-PROGRESS

GROUP31/12/2013 31/12/2012

$000 $000

Aggregate amount of costs incurred and recognised profits (less recognised losses) to-date 839,547 578,573

Less: Progress billings and advances (844,261) (586,365)

(4,714) (7,792)

Presented as:Gross amount due from customers for contract work-in-progress 15,344 18,739Gross amount due to customers for contract work-in-progress (20,058) (26,531)

(4,714) (7,792)

Advances received included in gross amount due to customers for contract work – 1,940

Retention sums on construction contract included in trade receivables 43,809 37,707



21 PROPERTy HELD FOR SALE

GROUP31/12/2013 31/12/2012

$000 $000

As at 1 January 204 –Exchange differences (4) –Additions – 204

As at 31 December 200 204

In 2012, the Group received one residential property unit from its customer as a settlement of the outstanding trade receivable. This property was accounted for in the financial statements of the Group as property held for sale as the Group intends to dispose this property.

22 CASH AND CASH EQUIVALENTS

GROUP COMPANy31/12/2013 31/12/2012 31/12/2013 31/12/2012

$000 $000 $000 $000

Cash and bank balances:Cash and bank balances 44,469 54,488 2,519 3,160Fixed deposits 120,146 51,220 35,220 15,220

164,615 105,708 37,739 18,380

Bank balances and deposits earn effective interest at floating rates based on daily bank deposit rate. Short-term fixed deposits are made for varying periods of between one day and three months depending on the cash requirements of the Group, and earn effective interest at rates ranging from 0.06% to 1.90% (2012: 0.01% to 1.90%) per annum.

For the purpose of consolidated statement of cash flows, cash and cash equivalents comprise the following at the end of the reporting period:

GROUP31/12/2013 31/12/2012

$000 $000

Cash and bank balances 164,615 105,708Bank overdrafts (Note 25) (10,344) (1,790)

Cash and cash equivalents 154,271 103,918

The Group’s bank balances and deposits denominated in foreign currencies as at 31 December 2013 are as follows:

• $6,643,000(2012:$6,344,000)denominatedinUnitedStatesDollarsand• $49,000(2012:$93,000)denominatedinVietnameseDong.

23 SHARE CAPITAL

GROUP AND COMPANy31/12/2013 31/12/2012

No. of shares

000 $000

No. of shares

000 $000

Issued and fully paid ordinary shares

At 1 January and 31 December 270,000 138,774 270,000 138,774

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction. The ordinary shares have no par value.



24 OTHER RESERVES

GROUP31/12/2013 31/12/2012

$000 $000

Foreign currency translation reserve (355) (334)Share of hedging reserve of associates 61 61Merger deficit (60,999) (60,999)Discount received on acquisition of non-controlling interests 835 835

(60,458) (60,437)

(a) Foreign currency translation reserve

Foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

GROUP31/12/2013 31/12/2012

$000 $000

At 1 January (334) (110)Net effect of exchange differences arising from translation of

financial statements of foreign operation (21) (224)

At 31 December (355) (334)

(b) Share of hedging reserve of associates

GROUP31/12/2013 31/12/2012

$000 $000

At 1 January and 31 December 61 61

(c) Merger deficit

Merger deficit represents the difference between the value of shares issued by the Company as consideration and the value of shares acquired in respect of the acquisition of subsidiaries and business accounted for under the pooling of interests method arising from the restructuring exercise carried out in 2010 and acquisition of subsidiary under common control in 2012.

GROUP

31/12/2013 31/12/2012$000 $000

At 1 January (60,999) (57,626)Effect of acquisition of subsidiary under common control – (3,373)

At 31 December (60,999) (60,999)

(d) Discount received on acquisition of non-controlling interests

Discount received on acquisition of non-controlling interests represents the difference between the consideration paid to non-controlling interests and the value of net assets acquired.



25 BORROWINGS

GROUP31/12/2013 31/12/2012

$000 $000

Current:Bank overdrafts (Note 22): – Secured – 27– Unsecured 10,344 1,763Trust receipts and bills payable:– Secured 809 686– Unsecured 3,151 2,868Bank loans:– Secured 71 67– Unsecured 6,735 6,919

21,110 12,330Non-current:Bank loans:– Secured 2,058 2,127

Total borrowings 23,168 14,457

Bank overdrafts Bank overdrafts are repayable upon demand and bear effective interest rates ranging from 5.50% to 5.88% (2012: 5.50% to

8.60%) per annum.

Bank overdrafts of $27,000 for financial year ended 31 December 2012 were secured by a fixed and floating charge over all assets of a subsidiary.

Trust receipts and bills payable Trust receipts and bills payable are unsecured, bear effective interest rates ranging from 1.56% to 3.43% (2012: 1.41% to

5.88%) per annum and have an average maturity period of 3 to 6 months.

Trust receipts and bills payable of $809,000 (2012: $686,000) for the financial year ended 31 December 2013 are secured by a fixed and floating charge over all assets of a subsidiary.

Bank loans

Current bank loans bear interest at floating interest rates ranging from 2.64% to 7.60% (2012: 2.61% to 8.30%) per annum, repayable upon demand and to be settled in cash.

Non-current bank loan of $2,058,000 (2012: $2,127,000) bears floating interest at 4.75% (2012: 4.75%) per annum. This loan is fully repayable by 2032.

The term loan facility of a subsidiary is secured by a first party registered charge as well as assignment of rental proceeds in respect of investment properties.

The Group’s borrowings denominated in foreign currencies as at 31 December 2013 is as follows:

• $1,146,000(2012:$1,138,000)denominatedinUnitedStatesDollars.



26 TRADE AND OTHER PAyABLES

GROUP COMPANy31/12/2013 31/12/2012 31/12/2013 31/12/2012

$000 $000 $000 $000

Non-current:Retention sums 5,853 9,473 – –Other payables 131 82 – –

5,984 9,555 – –

Current:Trade payables 22,944 23,189 29 59Retention sums 16,188 8,576 – –

39,132 31,765 29 59Other payables:

Accrued staff costs 10,338 8,542 1,851 1,744Accrued job costs 128,032 145,230 – –Advance from customers 2,290 3,302 – –Other accruals 3,505 3,207 556 713Amounts due to related companies 2,115 3,029 112 145Amounts due to associates – 51 – –Provisions 430 1,036 – –Other payables 2,357 1,867 22 12

149,067 166,264 2,541 2,614

188,199 198,029 2,570 2,673

Trade and other payables (current and non-current) 194,183 207,584 2,570 2,673

Add:Borrowings (Note 25) 23,168 14,457 – –Finance leases (Note 27) 4,078 1,028 – –

Less:Other payables (non-current) 131 82 – –Advance from customers 2,290 3,302 –Provisions 430 1,036 – –

Total financial liabilities carried at amortised cost 218,578 218,649 2,570 2,673

–



26 TRADE AND OTHER PAyABLES (continued)

Retention sums Retention sums payable to sub-contractors relate to amounts withheld (up to 5% of the contract sum) under contractual terms

from amounts payable to the sub-contractors as the construction work progresses. The monies are generally released to the sub-contractors upon the certification of completion of work and/or finalisation of contract accounts, which is typically 12 to 18 months after physical completion of the project. Non-current retention sums relate to amounts that are not payable within the next 12 months.

Non-current other payables Non-current other payables relate to government grants received for the acquisition of machinery for improvement of

construction activities on site. There are no unfulfilled conditions or contingencies attached to these grants.

Trade and other payables Trade payables are non-interest bearing and are normally settled on 30 to 60 days terms. Other payables are non-interest

bearing and have an average term of 6 months.

Amounts due to related companies and associates Amounts due to related companies and associates are unsecured, non-trade in nature, non-interest bearing, repayable upon

demand, and are to be settled in cash.

The Group’s trade payables denominated in foreign currencies as at 31 December 2013 are as follows:

• $801,000(2012:$28,000)denominatedinUnitedStatesDollarsand• Nil(2012:$23,000)denominatedinVietnameseDong.

27 FINANCE LEASES

The Group has finance leases for certain items of plant and machinery. The leases have no renewal option or escalation clauses included in the contracts. There are no restrictions placed upon the Group by entering into these leases.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

GROUP31/12/2013 31/12/2012

$000 $000Minimum

leasepayments

Present value of

payments

Minimumlease

payments

Present value of

payments

Not later than one year 1,722 1,538 768 732Later than one year but not later than five years 2,797 2,540 303 296

Total minimum lease payments 4,519 4,078 1,071 1,028Less: Amounts representing finance charges (441) – (43) –

Present value of minimum lease payments 4,078 4,078 1,028 1,028

Finance leases as at 31 December 2012 and 2013 mature between 2015 and 2018. The average discount rate per annum implicit in the leases for 2013 are 1.45% to 3.57% (2012: 2.84% to 3.25%).



28 COMMITMENTS

(a) Capital commitments

Capital expenditure contracted for as at the end of the reporting period but not recognised in the financial statements are as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Capital commitments in respect of property, plant and equipment 949 –

(b) Operating lease commitments – as lessee

The Group has entered into commercial property leases on its office premises and certain office equipment. The leases expire at various dates until 2016 and contain provisions for rental adjustments. Some of the leases have no renewal options or contingent rent provision include in the lease agreements but two of the leases will be renewed for a further term of 1 year upon expiry. There are no restrictions placed upon the lessee by entering into these leases. Operating lease payments recognised in profit or loss amounted to $1,491,000 (2012: $1,698,000). The Group is restricted from subleasing leased equipment to third parties.

Future minimum rental payable under non-cancellable operating leases at the end of the reporting period are as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Not later than one year 1,643 1,758Later than one year but not later than five years 2,282 1,472

3,925 3,230

(c) Operating lease commitments – as lessor

The Group has entered into commercial properties leases on its warehouse and investment properties. All leases include a clause to enable revision of the rental charge on an annual basis based on prevailing market condition. These non-cancellable leases have remaining lease terms of 1 to 11 years.

Future minimum rental receivable under non-cancellable operating leases at the end of the reporting period are as follows:

GROUP31/12/2013 31/12/2012

$000 $000

Not later than one year 598 590Later than one year but not later than five years 916 1,255After five years 1,532 1,793

3,046 3,638



29 DIVIDENDS PAID

The following dividends were paid:

GROUP AND COMPANy31/12/2013 31/12/2012

$000 $000

Declared and paid during the year:

Dividends on ordinary shares:– First and Final tax exempt (one-tier) dividend of 5 cents (2012: 2 cents)

per ordinary share– Special tax exempt (one-tier) dividend of Nil (2012: 4 cents) per ordinary share

13,500–

5,40010,800

Proposed but not recognised as a liability as at 31 December:

Dividends on ordinary shares, subject to shareholders’ approval at the AGM:– First and Final tax exempt (one-tier) dividend of 5 cents (2012: 5 cents)

per ordinary share 13,500 13,500– Special tax exempt (one-tier) dividend of 2 cents (2012: Nil) per ordinary share 5,400 –

30 SIGNIFICANT RELATED PARTy TRANSACTIONS

In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the years ended 31 December 2013 and 2012.

(a) Sale and purchase of goods and services

GROUP31/12/2013 31/12/2012

$000 $000

Revenue from construction and engineering contracts:– Related companies 2,694 14,544– Associates 66,154 21,909– A joint venture 29,811 7,500

Project management fees from an associate 1,473 614

Accounting and administrative fees received from a joint venture (Note 6) 84 56

Interest income: – Associates 4,012 2,368– A joint venture 423 620



30 SIGNIFICANT RELATED PARTy TRANSACTIONS (continued)

(a) Sale and purchase of goods and services (continued)

GROUP31/12/2013 31/12/2012

$000 $000

Management fees and consultancy services expenses from a related company (640) (763)

Rental expenses:– Ultimate holding company (722) (698)– A related company (17) –

Other purchases:– Ultimate holding company (7) (14)– Related companies (356) (484)

Please refer to Note 19 and Note 26 for information on amount due from/to subsidiaries, associates and a joint venture.

(b) Compensation of key management executives

GROUP31/12/2013 31/12/2012

$000 $000

Short-term employee benefits 2,585 2,818Central Provident Fund 58 51

Total compensation paid to key management executives 2,643 2,869

Comprise amounts paid to:– Director of the Company 1,182 1,382– Other key management executives 1,461 1,487

2,643 2,869 The remuneration of key management personnel is determined by the Directors having regards to the performance of

individuals and market trends.

Directors’ fees amount to $375,082 (2012: $351,596).

31 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise bank loans and overdrafts, cash and bank balances. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.

The Group is exposed to financial risks arising from its operations and the use of financial instruments. The main risks arising from the Group’s financial instruments are credit risk, market price risk, foreign currency risk, interest rate risk and liquidity risk.

The following sections provide details regarding the Group’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risks.



31 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. Credit risk arising from the inability of a customer to meet the terms of the Group’s financial instrument contracts is generally limited to the amounts. The Group’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities and cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

It is the Group’s policy to sell to a diverse group of customers who have been assessed for their credit worthiness to reduce credit risk. The Group has set up formal Business Unit Credit Committees for some of the subsidiaries to oversee the management of the Group’s debts.

Excessive risk concentration Concentration arise when a number of counterparties are engaged in similar business activities, or activities in the same

geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry.

In order to avoid excessive concentrations of risk, the Group’s policies and procedures include specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of credit risks are controlled and managed accordingly.

Exposure to credit risk

At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of trade and other receivables and cash and bank balances recognised in the statements of financial position. No other financial assets carry a significant exposure to credit risk.

Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade and other

receivables on an on-going basis. The credit risk concentration profile of the Group’s trade and other receivables at the date of the statements of financial position is as follows:

GROUP31/12/2013 31/12/2012

$000% oftotal $000

% oftotal

By countrySingapore 192,406 77 196,033 76Brunei 43,437 17 49,857 19Malaysia 11,406 5 10,615 4China 1,785 1 1,706 1Vietnam 266 – 134 –Indonesia 315 – 9 –

249,615 100 258,354 100

By industry sectorsConstruction 223,424 90 228,234 88Engineering 15,280 6 17,872 7Building materials and equipment 10,877 4 12,248 5Corporate services and others 34 – – –

249,615 100 258,354 100

At the end of the reporting period, approximately:

- 65% (2012: 51%) of the Group’s trade receivables and retention sums were due from 3 major customers comprising a property developer and a main contractor, both are located in Singapore and the Government of Brunei.

- 50% (2012: 42%) of the Group’s trade and other receivables were due from related parties while all of the Company’s receivables were balances with related parties.




Credit risk (continued)

Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with

the Group. Cash and bank balances and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impairedInformation regarding financial assets that are either past due or impaired is disclosed in Note 19 (trade and other receivables).

Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity instruments. These instruments are quoted on the SGX-ST in Singapore and are classified as held-for-trading financial assets.

It is not the Group’s policy to actively trade in quoted equity instruments. The Group’s holdings of the quoted equity instrument that are classified as held-for-trading investments (Note 17) arose from the settlement of trade debts from its customer by way of shares issued.

Sensitivity analysis for equity price risk At 31 December 2013, if the quoted equity instruments listed on the SGX-ST had been 5%, higher/lower with all other variables

held constant, the Group’s profit net of tax would have been $13,000 (2012: $308,000) higher/lower, arising as a result of higher/lower fair value gains on held-for-trading instruments in equity instruments respectively.

Foreign currency risk

The Group has exposure to foreign exchange risk as a result of transactions denominated in a currency other than the respective functional currencies of Group entities, arising from normal trading activities. Approximately 3% (2012: 9%) of the Group’s sales is denominated in currencies other than the respective functional currencies of Group entities.

The Group has foreign currencies exposure mainly in United States Dollars (“USD”), Vietnamese Dong (“VND”) and Indonesian Rupiah (“IDR”) in its cash and bank balances, trade receivables, trade payables, trust receipts and bills payable.

It is in the Group’s policy to hedge these risks through foreign currency forward contracts, to protect against volatility associated with foreign currency purchases of materials and other assets and liabilities created in the normal course of business. The Group does not use foreign currency forward contracts for trading purposes. As at 31 December 2013, the Group did not enter into foreign currency forward contracts as the exposure of the foreign currency risk is inconsequential.

In addition to transactional exposure, the Group is also exposed to currency translation risk arising from its net investments in foreign operations. The Group’s net investments in foreign subsidiaries are not hedged as currency positions are considered to be long-term in nature.




Foreign currency risk (continued)

Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the USD,

VND and IDR exchange rates against SGD for the year ended 31 December 2013, with all other variables held constant.

GROUPProfit/(loss) net of tax

31/12/2013$000

31/12/2012$000

USD/SGD - strengthened 5% (2012: 5%) 346 514 - weakened 5% (2012: 5%) (346) (514)

VND/SGD - strengthened 5% (2012: 5%) 2 4 - weakened 5% (2012: 5%) (2) (4)

IDR/SGD - strengthened 5% (2012: 5%) 39 32 - weakened 5% (2012: 5%) (39) (32)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk relate primarily to its bank borrowings. All of the Group’s borrowings at floating rate are contractually re-priced at intervals of less than 6 months from the end of the reporting period. The Group does not hedge this risk; however to manage this, the Group enters into short-term bank loans for working capital purposes which allow the interest rate to be re-priced at intervals of not more than 6 months.

The Group’s policy is to manage interest costs using combination of fixed and floating rate debts taking into consideration the funding requirements of the Group.

Sensitivity analysis for interest rate risk At 31 December 2013, if SGD interest rates had been 75 (2012: 75) basis points lower/higher with all other variables held

constant, the Group’s profit net of tax would have been $54,000 (2012: $50,000) higher/lower, arising mainly as a result of lower/higher interest expense on loans and borrowings respectively.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s liquidity risk management policy is to monitor its net operating cash flows and maintain an adequate level of committed banking facilities through regular review of its working capital requirements. For the year ended 31 December 2013, approximately 91% (2012: 85%) of the Group’s borrowings (Note 25) will mature in less than one year based on the carrying amount reflected in the financial statements.

The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to sources of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders.




Liquidity risk (continued)

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s financial assets and liabilities at the date of the statements of financial position based on contractual undiscounted repayment obligations.

GROUP

31/12/20131 year

or less1 to

5 yearsOver 5years Total

$000 $000 $000 $000

Financial assets:Trade and other receivables 148,063 109,802 – 257,865Other investments 305 – – 305Cash and bank balances 164,615 – – 164,615

Total undiscounted financial assets 312,983 109,802 – 422,785

Financial liabilities:Trade and other payables 188,199 5,984 – 194,183Borrowings 21,113 379 2,896 24,388Finance leases 1,722 2,797 – 4,519

Total undiscounted financial liabilities 211,034 9,160 2,896 223,090

Total net undiscounted financial assets/(liabilities) 101,949 100,642 (2,896) 199,695

GROUP

31/12/20121 year

or less1 to

5 yearsOver 5years Total

$000 $000 $000 $000

Financial assets:Trade and other receivables 154,761 115,892 – 270,653Other investments 7,427 – – 7,427Cash and bank balances 105,708 – – 105,708

Total undiscounted financial assets 267,896 115,892 – 383,788

Financial liabilities:Trade and other payables 198,029 9,555 – 207,584Borrowings 12,390 356 2,985 15,731Finance leases 768 303 – 1,071

Total undiscounted financial liabilities 211,187 10,214 2,985 224,386

Total net undiscounted financial assets/(liabilities) 56,709 105,678 (2,985) 159,402



32 FAIR VALUE OF ASSETS AND LIABILITIES

(A) Fair value hierarchy

The Group categorised fair value measurements using a fair value hierarchy that is dependent on the valuation inputs used as follows:

– Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date,

– Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and

– Level 3 – Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

(B) Assets and liabilities measured at fair value

The following table shows an analysis of each class of assets and liabilities measured at fair value at the end of the reporting period:

GROUP31/12/2013

$000Fair value measurements at the end of the reporting period using

Quoted prices in active

markets for identical

instruments

Significant observable

inputs other than quoted

prices

Significant unobservable

inputs Total(Level 1) (Level 2) (Level 3)

Recurring fair value measurements

Assets

Financial assets:Held-for-trading investments (Note 17)

- Equity instruments (quoted) 305 – – 305

Financial assets as at 31 December 2013 305 – – 305

Non-financial assets:Investment properties (Note 12)

- Commercial – – 5,192 5,192

Non-financial assets as at 31 December 2013 – – 5,192 5,192

(C) Level 2 fair value measurements

No assets and liabilities are categorised within Level 2 of the fair value hierarchy.



32 FAIR VALUE OF ASSETS AND LIABILITIES (continued)

(D) Level 3 fair value measurement

(i) Information about significant unobservable inputs used in Level 3 fair value measurements

The following table shows the information about fair value measurements using significant unobservable inputs (Level 3)

Description Fair Value at

31 December 2013 $000

Valuation techniques

Unobservableinputs

Range (weighted

average)

Recurring fair value measurements

Investment properties- Commercial 5,192 Investment Rental yield 10%

method Market

capitalisation rate

5.00% to 6.50%

(5.75%)

The rental yield is fixed at an increase of 10% over the rental of each preceding term at every tenancy renewal. There are in total 5 tenancy terms of three years each. A significant increase/(decrease) in market capitalisation rate would result in a significantly (lower)/higher fair value measurement.

The movement of investment properties measured at fair value is disclosed in Note 12.

(ii) Valuation policies and procedures

The Financial Controller (FC), who is assisted by the finance managers (collectively referred to as the “FC office”) oversees the Group’s financial reporting valuation process and is responsible for setting and documenting the Group’s valuation policies and procedures. In this regard, the FC office reports to the Group’s Audit & Risk Committee.

For all significant financial reporting valuations using valuation models and significant unobservable inputs, it is the Group’s policy to engage external valuation experts to perform the valuation. The FC office is responsible for selecting and engaging valuation experts that possess the relevant credentials and knowledge on the subject of valuation, valuation methodologies, and FRS 113 fair value measurement guidance.

For valuations performed by external valuation experts, the FC office reviews the appropriateness of the valuation methodologies and assumptions adopted. The FC office also evaluates the appropriateness and reliability of the inputs (including those developed internally by the Group) used in the valuations.

In selecting the appropriate valuation models and inputs to be adopted for each valuation that uses significant non-observable inputs, external valuation experts are requested to calibrate the valuation models and inputs to actual market transactions (which may include transactions entered into by the Group with third parties as appropriate) that are relevant to the valuation if such information are reasonably available. For valuations that are sensitive to the unobservable inputs used, external valuation experts are required, to the extent practicable to use a minimum of two valuation approaches to allow for cross-checks.

Significant changes in fair value measurements from period to period are evaluated by the FC office for reasonableness. Key drivers of the changes are identified and assessed for reasonableness against relevant information from independent sources, or internal sources if necessary and appropriate.

The FC office documents and reports its analysis and results of the external valuations to the Audit & Risk Committee on a quarterly basis. The Audit & Risk Committee performs a high-level independent review of the valuation process and results and recommends if any revisions need to be made before presenting the results to the Board of Directors for approval.



32 FAIR VALUE OF ASSETS AND LIABILITIES (continued)

(E) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

Management has determined that the carrying amounts of cash and bank balances, current trade and other receivables, current trade and other payables, loans and amounts due to/from related companies and borrowings, based on their notional amounts, reasonably approximate their fair values because these are mostly short-term in nature or that they are floating rate instruments that are repriced to market interest rates on or near the date of the statements of financial position.

(F) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not

reasonable approximation of fair value

The fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows:

GROUP COMPANy31/12/2013 31/12/2012 31/12/2013 31/12/2012

Carrying amount

Fair value

Carrying amount

Fair value

Carrying amount

Fair value

Carrying amount

Fair value

$000 $000 $000 $000 $000 $000 $000 $000

Financial assets:Loans receivable from

subsidiaries – – – – 1,823 1,622 13,823 12,302Loans receivable from

associates 88,697 78,940 71,164 63,336 – – – –Loan receivable from a

joint venture 3,098 2,757 14,493 12,899 – – – –Retention sums

(non-current) 13,219 11,765 22,582 20,098 – – – –

Financial liabilities:Retention sums

(non-current) 5,853 6,576 9,473 10,644 – – – –Finance leases 4,078 4,582 1,028 1,155 – – – –

These financial assets and financial liabilities are categorised within Level 3 of the fair value hierarchy.

Determination of fair value Loans receivable from subsidiaries, associates, a joint venture and retention sums receivables and payables as well as

obligations under finance leases above are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending or leasing arrangements at the end of the reporting period.



33 CAPITAL MANAGEMENT

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value.

The Group manages its capital structure and makes adjustment to it, in light of changes in economic conditions. In order to manage or adjust the capital structure, the Group may obtain new borrowings or reduce its borrowings. No changes were made in the objectives, policies and processes during the years ended 31 December 2013 and 2012.

The Group monitors capital using a net debt to equity ratio.

GROUP31/12/2013 31/12/2012

$000 $000

Borrowings (Note 25) 23,168 14,457Finance leases (Note 27) 4,078 1,028Less: Cash and bank balances (Note 22) (164,615) (105,708)

Net cash (137,369) (90,223)Trade and other payables (Note 26) 194,183 207,584

Net debt after trade and other payables 56,814 117,361

Equity, attributable to owners of the Company 244,158 197,508

Net debt to equity (times) 0.23 0.59

34 SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services, and the reportable operating segments are as follows:

(i) Construction

Construction and civil engineering contractor in the construction of residential, industrial and commercial buildings for both private and public sectors.

(ii) Engineering

Provides a wide spectrum of building engineering services encompassing mechanical and electrical engineering.

(iii) Building materials and equipment

Provide rental of generators, transformers and air compressors, power packages, load testing systems and metal forms; and sales of used metal forms, industrial equipment and spare parts and wholesale distribution of building materials such as tiles to the mining, manufacturing, shipbuilding, ship repair, and marine industries.

(iv) Corporate services and others

Comprises investment management and corporate activities, neither of which constitutes a separately reportable segment.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss.

Allocation basis and transfer pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment accounting policies are the same as the policies described in Note 2.28. The Group generally accounts for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.



34 SEGMENT INFORMATION (continued)

(a) Business segments

The following tables present revenue and profit information regarding industry segments for the years ended 31 December 2013 and 2012 and certain asset and liability information regarding industry segments as at 31 December 2013 and 2012:

Construction Engineering

Buildingmaterials

andequipment

Corporate services

and others Elimination Total

$000 $000 $000 $000 $000 $000

year ended 31 December 2013

Segment revenueSales to external customers 285,253 85,553 29,361 − − 400,167Inter-segment sales − 14,366 1,843 − (16,209) −

Total revenue 285,253 99,919 31,204 − (16,209) 400,167

Segment results 57,118 8,246 7,698 (5,242) − 67,820Finance costs (826)Interest income 4,681Share of results of associates and joint

ventures 946 − − − − 946

Profit before tax 72,621Income tax expense (12,517)

Profit net of tax 60,104

Segment assets 330,086 60,232 63,152 37,826 − 491,296Investments in associates 11,270 − − − − 11,270Investments in joint ventures 295 − − − − 295

Total assets 502,861

Segment liabilities 192,778 39,289 22,622 2,564 − 257,253

Other segment information:Capital expenditure 4,319 80 12,083 − − 16,482Allowance for doubtful trade receivables 565 11 478 − − 1,054Write back of allowance for doubtful trade

receivables 382 − 93 − − 475Allowance for doubtful other receivables 778 241 − − − 1,019Write back of allowance for doubtful other

receivables 294 − − − − 294Allowance for inventory obsolescence − − 150 − − 150Write back of allowance for inventory

obsolescence − − 186 − − 186Amortisation of receivables and payables (122) − − − − (122)Depreciation of property, plant & equipment 2,033 18 8,451 13 − 10,515Gain on disposal of property, plant and

equipment 84 1 809 − − 894Gain on fair value adjustment on held-for-

trading investments − 1,497

63 − − 1,560Gain on disposal of held-for-trading

investments − 507

− − − 507




(a) Business segments (continued)

Construction Engineering

Buildingmaterials

andequipment

Corporate services

and others Elimination Total

$000 $000 $000 $000 $000 $000

year ended 31 December 2012

Segment revenueSales to external customers 304,274 51,429 31,773 − − 387,476Inter-segment sales − 6,080 778 − (6,858) −

Total revenue 304,274 57,509 32,551 − (6,858) 387,476

Segment results 46,953 5,290 7,083 (5,582) − 53,744Finance costs (1,100)Interest income 3,313Share of results of associates and joint

ventures 3,084 − − − − 3,084

Profit before tax 59,041Income tax expense (9,914)

Profit net of tax 49,127

Segment assets 326,290 45,296 57,646 18,437 − 447,669Investments in associates 15,013 − − − − 15,013Investments in joint ventures 308 − − − − 308

Total assets 462,990

Segment liabilities 209,960 30,678 20,340 2,651 − 263,629

Other segment information:Capital expenditure 3,309 13 8,650 16 − 11,988Allowance for doubtful trade receivables 494 − 134 − − 628Write back of allowance for doubtful trade

receivables 89 − 45 − − 134Allowance for doubtful other receivables 178 − − − − 178Write back of allowance for doubtful other

receivables 75 − − − − 75Allowance for inventory obsolescence − − 250 − − 250Write back of allowance for inventory

obsolescence − − 343 − − 343Amortisation of receivables and payables 62 − 3 − − 65Depreciation of property, plant & equipment 1,874 39 6,974 11 − 8,898Gain on disposal of property, plant and

equipment 163 − (39) − − 124Gain on fair value adjustment on held-for-

trading investments − 118

77 − − 195Impairment loss on property, plant and

equipment 215 − − − − 215Loss on disposal of held-for-trading

investments − 12 − − − 12

Inter-segment revenue are eliminated on consolidation.




(b) Geographical segments

Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:

Revenue Non-current assets31/12/2013 31/12/2012 31/12/2013 31/12/2012

$000 $000 $000 $000

Singapore 270,377 196,045 134,029 129,468Brunei 89,555 128,272 5,169 10,710Malaysia 27,342 26,691 15,003 13,171Vietnam 3,885 26,612 1 22China 3,445 4,781 8,152 9,094Other countries 5,563 5,075 872 80

400,167 387,476 163,226 162,545

Non-current assets information presented above consist of property, plant and equipment, investment properties and trade and other receivables as presented in the statements of financial position.

Information about major customers In 2013, total revenue from four major customers, one of whom is a related party, amount to $203,639,000 arising from

services rendered by the construction and engineering segments. In 2012, total revenue from one major customer who was a related party amounted to $33,240,000 arising from services rendered by the construction segment.

35 AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements of the Company for the year ended 31 December 2013 were authorised for issue in accordance with a resolution of the directors on 18 March 2014.


statistics oF sHareHolDingsAs at 12 March 2014

Number of Fully Issued and Paid up Shares (excluding treasury shares) : 270,000,000Amount of Issued and Paid Up Shares : S$89,614,003Class of Shares : Ordinary Shares Voting Rights : 1 vote per share Treasury Shares : Nil

DISTRIBUTION OF SHAREHOLDINGS:

Size of ShareholdingsNo. of

Shareholders %No. of

Shares %

1 - 999 2 0.17 288 0.001,000 - 10,000 732 63.71 4,122,000 1.5310,001 - 1,000,000 401 34.90 30,299,494 11.221,000,001 and above 14 1.22 235,578,218 87.25

TOTAL 1,149 100.00 270,000,000 100.00

TWENTy LARGEST SHAREHOLDERS

No. Name of Shareholders No. of Shares Held %

1 UES HOLDINGS PTE. LTD. 148,473,914 54.992 UNITED ENGINEERS LIMITED 35,665,212 13.213 CHUA HOCK TONG 15,860,874 5.874 BANK OF SINGAPORE NOMINEES PTE. LTD. 8,566,000 3.175 HSBC (SINGAPORE) NOMINEES PTE. LTD. 7,103,023 2.636 DBS NOMINEES (PRIVATE) LIMITED 3,444,632 1.287 CIMB SECURITIES (SINGAPORE) PTE. LTD. 2,991,000 1.118 CITIBANK NOMINEES SINGAPORE PTE LTD 2,533,272 0.949 HENG SIEW ENG 2,230,000 0.8310 KOR YONG KOO 2,100,000 0.7811 BNP PARIBAS NOMINEES SINGAPORE PTE LTD 2,067,000 0.7712 RAFFLES NOMINEES (PTE) LIMITED 2,023,291 0.7513 OOI AH LAY @ OOI EAM BENG 1,320,000 0.4914 WAN FOOK WENG 1,200,000 0.4415 LIM GECK CHIN MAVIS 870,000 0.3216 LIM TECK CHENG 850,000 0.3117 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 741,237 0.2718 CHAN SIEW MOON ANN 600,000 0.2219 ESTATE OF MRS LIM NANCY NEE TAN NANCY, DECEASED 600,000 0.2220 MAYBANK KIM ENG SECURITIES PTE. LTD. 572,000 0.21

TOTAL 239,811,455 88.81


substantial sHareHolDersAs at 12 March 2014

Direct Interest Deemed Interest

Name No. of Shares % No. of Shares %

Chua Hock Tong 15,860,874 5.87 − −

United Engineers Limited1 35,665,212 13.21 148,473,914 54.99

UES Holdings Pte. Ltd. 148,473,914 54.99 − −

Note:1 UES Holdings Pte. Ltd. (“UES Holdings”) is a wholly-owned subsidiary of United Engineers Limited (“UEL”). Accordingly, UEL is

deemed to be interested in 148,473,914 shares held by UES Holdings.

PUBLIC FLOAT

Based on the Register of Shareholders as at 12 March 2014, and to the best knowledge of the Company, the percentage of shareholding held in the hands of public is approximately 25.71%. Accordingly, the Company complies with Rule 723 of the Listing Manual. As at that date, there were no treasury shares.


notice oF annual general meeting

NOTICE IS HEREBy GIVEN that the Fourth Annual General Meeting of UE E&C Ltd. (the “Company”) will be held on Thursday, 24 April 2014 at 3.30 p.m. at The Auditorium, 12 Ang Mo Kio Street 64, UE BizHub CENTRAL, Singapore 569088 to transact the following business:

ORDINARy BUSINESS

1. To receive and adopt the Directors’ Report and Audited Financial Statements for the financial year ended 31 December 2013 and the Independent Auditor’s Report thereon.

Resolution 1

2. To declare a First and Final tax exempt (one-tier) dividend of 5.0 cents per ordinary share for the financial year ended 31 December 2013.

Resolution 2

3. To declare a Special tax exempt (one-tier) dividend of 2.0 cents per ordinary share for the financial year ended 31 December 2013.

Resolution 3

4. To approve Directors’ Fees of S$375,082 for the financial year ended 31 December 2013. (2012: S$351,596) Resolution 4

5. To re-appoint Dr Tan Eng Liang as a Director of the Company to hold such office from the date of this Annual General Meeting until the next Annual General Meeting, pursuant to Section 153(6) of the Companies Act, Chapter 50 of Singapore. [see Explanatory Note (a)]

Resolution 5

6. To re-elect Mr Norman Ip Ka Cheung, a Director retiring by rotation pursuant to Article 91 of the Company’s Articles of Association and, being eligible, offers himself for re-election. [see Explanatory Note (b)]

Resolution 6

7. To re-elect Mr Tan Soo Kiang, a Director retiring by rotation pursuant to Article 91 of the Company’s Articles of Association and, being eligible, offers himself for re-election. [see Explanatory Note (c)]

Resolution 7

8. To re-appoint Ernst & Young LLP as Independent Auditor and to authorise the Directors to fix their remuneration.

Resolution 8

SPECIAL BUSINESS

To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions:

9. Renewal of the General Mandate for Interested Person Transactions Resolution 9

That: (i) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (“Chapter 9”)

of the Singapore Exchange Securities Trading Limited (“SGX-ST”), for the Company, its subsidiaries and associated companies that are considered to be “entities at risk” (as that term is used in Chapter 9), or any of them, to enter into any of the transactions falling within the types of Mandated Interested Person Transactions described in Appendix A of the Company’s letter to shareholders dated 9 April 2014 (the “Letter”), with any party who is of the class of Mandated Interested Persons described in Appendix A of the Letter, provided that such transactions are made on normal commercial terms and in accordance with the review procedures for Mandated Interested Person Transactions (the “IPT Mandate”);

(ii) the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

(iii) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the IPT Mandate and this Resolution. [see Explanatory Note (d)]



10. RENEWAL OF THE SHARE PURCHASE MANDATE Resolution 10

That:(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 of Singapore (the

“Companies Act”), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire ordinary shares of the Company (“Shares”) not exceeding in aggregate the Maximum Limit (as hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) market purchase(s) on the Singapore Exchange Securities Trading Limited (“SGX-ST”) and/or any other stock exchange on which the Shares may for the time being be listed and quoted (“Other Exchange”); and/or

(ii) off-market purchase(s) (if effected otherwise than on the SGX-ST or, as the case may be, Other Exchange) in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST or, as the case may be, Other Exchange as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);

(b) unless varied or revoked by the Company in General Meeting, the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the date of the passing of this Resolution and expiring on the earliest of:

(i) the date on which the next Annual General Meeting of the Company is held;

(ii) the date by which the next Annual General Meeting of the Company is required by law to be held; or

(iii) the date on which purchases and acquisitions of Shares pursuant to the Share Purchase Mandate are carried out to the full extent mandated;

(c) in this Resolution:

“Maximum Limit” means that number of Shares representing 10% of the issued Shares (excluding any Shares held as treasury shares) as at the date of the passing of this Resolution;

“Maximum Price” in relation to a Share to be purchased or acquired, means the purchase price (excluding brokerage, commission, applicable goods and services tax and other related expenses) not exceeding:

(i) in the case of a Market Purchase of a Share, 5% above the Average Closing Price; and

(ii) in the case of an Off-Market Purchase of a Share, 20% above the Average Closing Price,



where:

“Average Closing Price” is the average of the closing market prices of a Share over the last five Market Days on which the Shares were transacted on the SGX-ST or, as the case may be, Other Exchange, before the date of the Market Purchase or, as the case may be, the date of the making of the offer pursuant to an Off-Market Purchase, as deemed to be adjusted for any corporate action that occurs after the relevant five-day period;

“date of the making of the offer” means the date on which the Company makes an offer for the purchase or acquisition of Shares from shareholders, stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase; and

“Market Day” means a day on which the SGX-ST is open for trading in securities; and

(d) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this Resolution. [see Explanatory Note (e)]

NOTICE IS HEREBy GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 6 May 2014 for the purposes of ascertaining members’ entitlements to the proposed First and Final Dividend and Special Dividend (the “Proposed Dividends”) for the financial year ended 31 December 2013. Duly completed transfers received by the Company’s Share Registrar, Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, up to 5.00 p.m. on 5 May 2014 will be registered to determine entitlements to the Proposed Dividends.

Members (being depositors) whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary shares as at 5.00 p.m. on 5 May 2014 will rank for the Proposed Dividends.

The Proposed Dividends, if approved by members at the Fourth Annual General Meeting, will be paid on 12 May 2014.

By Order of the Board

Tan Ching Chek and Lo Swee OiJoint Company Secretaries

Singapore, 9 April 2014

EXPLANATORy NOTES:

(a) Dr Tan Eng Liang, if re-appointed, will continue to serve as the Chairman of the Board, Chairman of the Nominating Committee, and a member of the Audit & Risk Committee and the Remuneration Committee respectively. Dr Tan is considered by the Board of Directors as an Independent Director. For further information on Dr Tan, please refer to the “Board of Directors” section in the Annual Report 2013.

(b) Mr Norman Ip Ka Cheung, if re-elected, will continue to serve as the Chairman of the Audit & Risk Committee and a member of the Nominating Committee. Mr Ip is considered by the Board of Directors as an Independent Director. For further information on Mr Ip, please refer to the “Board of Directors” section in the Annual Report 2013.

(c) Mr Tan Soo Kiang, if re-elected, will continue to serve as the Chairman of the Remuneration Committee, and a member of the Audit & Risk Committee and the Nominating Committee respectively. Mr Tan is considered by the Board of Directors as an Independent Director. For further information on Mr Tan, please refer to the “Board of Directors” section in the Annual Report 2013.



(d) The Ordinary Resolution in Resolution 9, if passed, will renew, effective until the conclusion of the next Annual General Meeting, the IPT Mandate to enable the Company, its subsidiaries and associated companies which are considered “entities at risk” to enter in the ordinary course of business into certain types of interested person transactions with specific classes of the Company’s interested persons. Particulars of the IPT Mandate are set out in the Letter dated 9 April 2014 accompanying the Annual Report 2013.

(e) The Ordinary Resolution in Resolution 10, if passed, will renew, effective until the date on which the next Annual General Meeting is held, the Share Purchase Mandate to enable the Company to make purchases of its issued ordinary shares. The Company intends to use internal sources of funds, external borrowings, or a combination of internal resources and external borrowings, to finance purchases or acquisitions of its issued ordinary shares. For illustrative purposes only, the financial effects of an assumed purchase or acquisition by the Company, of 10% of its issued ordinary shares as at 12 March 2014, at a purchase price equivalent to the Maximum Price per share, in the case of a Market Purchase and an Off-Market Purchase, respectively, based on the audited financial statements of the Group and the Company for the financial year ended 31 December 2013, and certain other assumptions, are set out in the Letter dated 9 April 2014 accompanying the Annual Report 2013.

NOTES: 1) A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two

proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

2) If the appointer is a corporation, the instrument appointing a proxy must be under seal or the hand of its duly authorised officer or attorney.

3) The instrument appointing a proxy must be deposited at the Company’s Registered Office not less than 48 hours before the time set for the Annual General Meeting or any adjournment thereof.


UE E&C LTD.(Company Registration No. 201005048D)(Incorporated in the Republic of Singapore)

PROXY FORM

ANNUAL GENERAL MEETING

IMPORTANT:

1. For investors who have used their CPF monies to buy UE E&C Ltd. shares, the Annual Report 2013 is sent to them at the request of their CPF Agent Banks and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors, and shall be ineffective for all intents and purposes if used or purported to be used by them.

3. CPF investors who wish to attend the Fourth Annual General Meeting as OBSERVERS must submit their requests through their respective Agent Banks so that their Agent Banks may register, in the required format with the Company Secretary, by the time frame specified. (Agent Banks: Please see Note 9 on required format). Any voting instructions must also be submitted to their Agent Banks within the time frame specified to enable them to vote on the CPF investor’s behalf.

I/We (Name) , NRIC/Passport No./Co. Regn. No.:

of (Address)

being a member/members of UE E&C LTD. (the “Company”) hereby appoint:

NAME ADDRESS NRIC/PASSPORT NUMBER

PROPORTION OF SHAREHOLDINGS

NUMBER OF SHARES %

and/or (delete as appropriate)

NAME ADDRESS NRIC/PASSPORT NUMBER

PROPORTION OF SHAREHOLDINGS

NUMBER OF SHARES %

or failing the person, or either or both of the persons, referred to above, the Chairman of the Meeting, as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Fourth Annual General Meeting of the Company (the “Meeting”) to be held on Thursday, 24 April 2014 at 3.30 p.m. at The Auditorium, 12 Ang Mo Kio Street 64, UE BizHub CENTRAL, Singapore 569088 and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting.

NO. ORDINARy RESOLUTIONS FOR AGAINSTORDINARy BUSINESS

1. Adoption of Reports and Audited Financial Statements2. Declaration of a First and Final Dividend3. Declaration of a Special Dividend4. Approval of Directors’ Fees5. Re-appointment of Dr Tan Eng Liang 6. Re-election of Mr Norman Ip Ka Cheung7. Re-election of Mr Tan Soo Kiang8. Re-appointment of Ernst & Young LLP as Independent Auditor

SPECIAL BUSINESS 9. Renewal of the General Mandate for Interested Person Transactions10. Renewal of the Share Purchase Mandate

Dated this day of 2014 Total Number of Shares Held

Signature(s) of Member(s)/Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF


NOTES

1. A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number of shares. If the member has shares entered against his name in the Depository Register and registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this instrument appointing a proxy or proxies will be deemed to relate to all shares held by the member.

2. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the Meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy, to the Meeting.

5. The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 12 Ang Mo Kio Street 64,

#03-13 UE BizHub CENTRAL, Singapore 569088 not less than 48 hours before the time appointed for the Meeting.

6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.

7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

8. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

9. Agent Banks acting on the request of CPF Investors who wish to attend the Meeting as observers are requested to submit in writing, a list of details of the Investors’ names, NRIC/Passport numbers, addresses and numbers of shares held. The list, signed by an authorised signatory of the Agent Bank, should reach the Company Secretary, at the registered office of the Company not later than 48 hours before the time appointed for the Meeting.

GENERAL

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

UE E&C LTD.12 Ang Mo Kio Street 64#03-13 UE BizHub CENTRALSingapore 569088

Tel : (65) 6818 8666Fax : (65) 6818 8682

www.ueec.sg

Company Registration No : 201005048D

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