Reaching Higher - GreatearthOversea-Chinese Banking Corporation Limited Baiduri Bank Berhad...

Reaching HigherANNUAL REPORT 2011

01 Corporate Profile

08 Business Model

09 Corporate Information and Financial Calendar

10 Five-Year Financial Profile and Charts of the Group

12 Letter to Shareholders

16 Board of Directors

19 Company Management

20 Review of Operations

23 Corporate Governance

32 Financial Statements

97 Statistics of Shareholdings

98 Substantial Shareholders

99 Notice of Annual General Meeting

101 Proxy Form

An Integrated Building Solutions Provider

UE E&C Ltd., a subsidiary of Mainboard-listed United Engineers Limited, is an established provider of integrated building solutions: mechanical and electrical (M&E) engineering, construction, property development and others. Our principal engineering and construction subsidiaries have been established for more than 30 years in Singapore and have played a role in the building of many notable superstructures across the island-state. To extend a more complete proposition to our customers, we also provide power solutions; rental and supply of metal forms; and 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, China, Malaysia and Vietnam.

The Year’s Highlight

PARK CENTRAL @ AMKOur first Design, Build and Sell Scheme project, Park Central @ AMK, obtained temporary occupation permit in third quarter.


MIXED-USE DEVELOPMENT AT ONE-NORTHThe mixed-use development, with a record total contract value exceeding $260 million, achieved a high CONQUAS score of 92.5.


POWERING TO NEW PREMISESOur total power solution subsidiary, renamed UE Power & Resources Pte. Ltd., relocated to a new build-to-suit office-cum-warehouse building at Gul Street. It also increased its fleet of power generators by 16 MW in capacity.

8 UE E&C Ltd. Annual Report 2011

BUSINESSMODEL

CONSTRUCTION• DesignandBuild• CivilWorks• GeneralConstruction

M&E ENGINEERING • HighandLow-Voltage

Electrical Power Distribution• Air-Conditioningand

Mechanical Ventilation Systems

• FireProtection,Alarmand Sanitary Systems

PROPERTYDEVELOPMENTAND OTHERS• PropertyCo-development• TotalPowerSolutionsandLoad

Testing • RentalandSupplyofMetalForms

andSupplyofFlooringTiles• RentalandDistributionofIndustrial

Equipment

INTEGRATEDBUILDING

SOLUTIONS

9UE E&C Ltd. Annual Report 2011

Board of DirectorsNorman Ip Ka Cheung (Independent Chairman)Chua Hock Tong (Executive Director and Chief Executive Officer)Kwan Chiew Choi (Independent Director)Pok Soy Yoong (Independent Director)Tan Soo Kiang (Independent Director)Jackson Chevalier Yap Kit Siong (Non-Executive Director)

Audit & Risk CommitteePok Soy Yoong (Chairman)Kwan Chiew Choi (Member)Tan Soo Kiang (Member)

Nominating CommitteeKwan Chiew Choi (Chairman)Norman Ip Ka Cheung (Member)Pok Soy Yoong (Member)

Remuneration CommitteeTan Soo Kiang (Chairman)Norman Ip Ka Cheung (Member)Jackson Chevalier Yap Kit Siong (Member)

Joint Company SecretariesTan Ching Chek, LLB, ACISLo Swee Oi, ACISBSL Corporate Services Pte Ltd220 Orchard Road#05-01 Midpoint OrchardSingapore 238852Tel: (65) 6235 3388Fax:(65)62353178Website: www.bslcs.com.sg

Registered Office and Principal Place of Business12 Ang Mo Kio Street 64#03-13 UE BizHub CENTRALSingapore 569088Tel: (65) 6818 8666Fax:(65)68188682Website: www.ueec.sg

Share Registrar Boardroom Corporate & Advisory Services Pte. Ltd.50 Raffles Place#32-01 Singapore Land TowerSingapore 048623

AuditorsErnst & Young LLPPublic Accountants and Certified Public AccountantsOne Raffles QuayNorth Tower, Level 18Singapore 048583Partner-in-charge: Michael Sim Juat QueeCertified Public Accountant

(Appointed with effect from financial year ended31 December 2010)

Principal BankersOversea-Chinese Banking Corporation LimitedBaiduri Bank BerhadCitibank, N.A., Singapore BranchDBS Bank LtdThe Hongkong and Shanghai Banking Corporation LimitedUnited Overseas Bank Limited

CORPORATEINfORMATION

fINANCIAL CALENDAR

The initial public offering of the Company was sponsored by Oversea-Chinese Banking Corporation Limited (the “Issue Manager, Underwriter and Placement Agent”). The Issue Manager, Underwriter and Placement Agent assume no responsibility for the contents of this Annual Report.

Announcement of Q1 2011 Results10 May 2011Announcement of Q2 2011 Results 8 August 2011Announcement of Q3 2011 Results 8 November 2011Announcementof2011FullYearResults24 February 2012Notice of Second Annual General Meeting11 April 2012

Second Annual General Meeting 26 April 2012Ex-dividend Date2 May 2012Last Date for Registration of Transfers4 May 2012Books Closure Date 7 May 2012Dividend Payment Date17 May 2012


fIVE-YEAR fINANCIAL PROfILE Of THE GROUP

2011 2010 (Restated)1

2009(Restated)1

2008(Restated)1

2007

Consolidated income statement ($000)

Revenue 370,795 351,094 376,416 319,742 249,636

Profit before tax 75,044 39,723 29,153 3,953 7,840Income tax expense (10,365) (8,467) (3,491) (480) (325)Profit net of tax 64,679 31,256 25,662 3,473 7,515Profit attributable to owners of the Company,

net of tax 64,466 28,071 24,454 2,867 7,417

Statement of financial position ($000)

Property, plant and equipment 43,263 34,351 26,738 23,456 19,807Investment properties 5,419 7,500 10,500 10,010 10,580 Non-current investments 16,916 716 811 628 815 Other non-current assets 63,458 50,466 65,116 55,674 26,736Net current assets/(liabilities) 47,360 (7,523) (34,376) (45,164) (11,140)

176,416 85,510 68,789 44,604 46,798

Shareholders’ equity 164,683 67,627 8,441 (12,431) (9,594)Non-controlling interests 492 309 4,456 3,867 3,931 Long-term borrowings 0 0 2,379 4,095 2,743Other non-current liabilities 7,688 13,659 49,912 46,353 45,937Deferred tax liabilities 3,553 3,915 3,601 2,720 3,781

176,416 85,510 68,789 44,604 46,798

Net debt ($000) 83,750 164,399 227,749 225,046 192,367Debt to equity (times) 0.51 2.43 26.98 NM NM

Per ordinary share Earnings per ordinary share (cents)2

- Profit attributable to ordinary shareholders 25.0 14.0 12.2 1.4 3.7

Ordinary dividends3

- Firstandfinal(cents) 2.0 NA NA NA NA - Special (cents) 4.0 NA NA NA NA - Cover (times) 4.17 NA NA NA NA

Net tangible assets/(liabilities) ($)2 0.61 0.34 0.04 (0.06) (0.05)

NM: Not meaningfulNA: Not applicable

1 ThecomparativefigureshavebeenrestatedtotakeintoaccounttheretrospectiveadjustmentsarisingfromtheadoptionofINTFRS115Agreementsfor the Construction of Real Estate.

2 Calculatedbasedonthepre-invitationsharecapitalof200,000,000ordinarysharesforfinancialyears2007to2010forcomparativepurposes.3 ProposedordinarydividendsforFY2011inrespectofthepost-offeringsharecapitalof270,000,000ordinarysharesfollowingtheCompany’slistingon

SGX-STon25February2011.

v


fIVE-YEAR fINANCIAL CHARTS Of THE GROUP

GROUP REVENUE ($000)

GROUP PROFIT NET OF TAX ($000)

REVENUE BY BUSINESS SEGMENTS ($000)

REVENUE BY GEOGRAPHICAL SEGMENTS ($000)

2011

2011

2011

2010^

2010^

2010^

2009^

2009^

2009^

2008^

2008^

2008^

2007

2007

2007

319,742

3,473

1.4

249,636

7,515

3.7

351,094

31,256

14.0

370,795

64,679

25.0

376,416

25,662

12.2

EARNINGS PER ORDINARY SHARE (¢)*

^ Restated values* Calculatedbasedonthepre-invitationsharecapitalof200,000,000ordinarysharesforfinancialyears2007to2010forcomparativepurposes.

Singapore 296,962(80.1%)

Other ASEAN Countries

65,360(17.6%)

Other Asian Countries

8,473(2.3%)

Construction 318,269(85.8%)

Engineering20,007(5.4%)

Building Materials and Equipment

32,519(8.8%)


Norman Ip Chairman (left)Chua Hock Tong Chief Executive Officer (right)


Dear Shareholders,

Following its listing on the Mainboard of the Singapore Exchange Securities Trading Limited inFebruary, UE E&C Ltd. (UEEC) and its group of companies (the “Group”) further expanded itsbusiness and achieved another year of commendable performance.

TheGrouppostedrevenueof$370.8million,anincreaseof6%over2010duetohigherrevenuefrom UE BizHub EAST in Singapore, the Seria Housing in Brunei as well as adjustments arising from theadoptionofINTFRS115AgreementsfortheConstructionofRealEstate(INTFRS115)forPark Central @ AMK which obtained temporary occupation permit (TOP) in the third quarter. The Group’s attributable profit increased to $64.5 million compared with $28.1 million in 2010.

Other income increased from $2.8 million in 2010 to $5.0 million mainly due to $2.5 million gain on disposal of investment properties at Tanjong Pagar.

Share of results of associates and joint ventures reported a profit of $15.5 million compared with a lossof$0.1millionin2010,mainlyduetoadjustmentsarisingfromtheadoptionofINTFRS115forPark Central @ AMK by an associate.

Based on the financial performance for the year, the Group’s directors are pleased to propose a first and final dividend of 2 cents per ordinary share and a special dividend of 4 cents per ordinary share, amounting to $16.2 million. The proposed first and final and special cash dividends, if approved at theAnnualGeneralMeetingtobeheldon26April2012,willbepaidon17May2012.

An integrated services providerOur business comprises mechanical and electrical (M&E) engineering, construction and other related activities including property development, provision of power solutions and distribution of building materials. Together, we present a full value proposition to customers.

Post listing, the Group sets out on a growth strategy to focus mainly on large-scale engineering and construction projects, increase presence in overseas markets and expand its power solution business. The Group will continue to leverage on synergy by working closely with its parent company, United Engineers Limited (UEL) as well as other joint venture partners for development projects.

A bountiful year of project completionsIn Singapore, the Group completed M&E engineering and construction works for the mixed-use development at one-north comprising hotel and serviced suites Park Avenue Rochester, retail mall Rochester Mall and condominium The Rochester. This project, with a record total contract value exceeding $260 million, achieved a high 92.5 (out of 100) points in CONQUAS score – a national construction quality scorecard implemented by the Building and Construction Authority of Singapore (BCA).

The Group also completed the construction of Park Central @ AMK, its first Design, Build and Sell Scheme project in Ang Mo Kio which it has a development stake in.

In Vietnam, the Group also completed M&E engineering works for Marble Mountain Beach Resort in Danang.

“Post listing, the Group sets out on a growth strategy to focus mainly on large-scale engineering and construction projects, increase presence in overseas markets and expand its power solution business.”

LETTER TO SHAREHOLDERS


Leveraging on the Group’s integrated skillsThe Group best demonstrates its integrated skill sets in a development project where it undertakes a full range of services – from M&E engineering, to construction, to supply of building materials – enabling it to maximise profitability and resource allocation in a single project.

FollowingthecompletionofPark Central @ AMK, the Group launched executive condominium (EC) Austville Residences at Sengkang East Avenue/Buangkok Drive in January. The 540-unit EC was more than 80% sold as at 31 December 2011, partly boosted by the raise in combined household income ceiling for buyers implemented in the later part of the year.

On the back of a rising demand for ECs, the Group, through a joint venture, tendered and was awarded a residential land site at Pasir Ris Drive 3/Pasir Ris Link. The site will be developed into a 400-unit EC named Watercolours that is expected to launch by the second quarter of 2012.

Developing new chapters in businessesDuring the year, the Group made good progress on other fronts. The Group expanded its power solution business through increasing its fleet of power generators by 16 MW in capacity to tap into market opportunities arising from rapid urbanisation and modernisation in the region.

The Group’s subsidiary UE-IBP Building Materials Pte Ltd (“UE-IBP”) upgraded its showroom for tiles and bathroom fittings so that it could further expand into other product lines. It also became an L5 supplier registered with BCA, allowing it to bid for finishing and building products up to $13 million in contract value.

Business performance with workplace safety and health (WSH)The Group firmly believes that business performance and workplace safety and health are correlated goals as unsafe incidents can cause productivity loss which affects business performance.

Constantly striving for higher WSH standards, UE Power & Resources Pte. Ltd. (“UE Power & Resources”) received a WSH Performance Award (Silver) and United Engineers (Singapore) Private Limited (“UES”) a Safety and Health Award Recognition for Projects award for the mixed-use development at one-north at the WSH Awards. These awards are given in recognition of good workplace safety and health performance and management systems for companies, worksites and projects.

The year also saw the Group being certified bizSAFE Partner, an acknowledgement of its WSHstandards in projects and worksites as well as initiatives to bring small and medium enterprises aboardthebizSAFEprogramme.

During the year, the Group’s subsidiaries UE Power & Resources and UE-IBP obtained ISO 9001-2008 and ISO 14001-2004 certification. With these, all the Group’s principal subsidiaries are now ISO-certified.

Going forward: Strong construction demand; uncertain global economyAs at 31 December 2011, the Group’s order books based on secured contracts amounted to approximately $503 million. In view of the euro zone concerns and slower GDP growth, the Group expects 2012 to be quite challenging. Although total construction demand in Singapore for 2012 is projected tobebetween$21billionand$27billion,competition remainskeen.Theconstructionindustry is also facing a labour crunch with stricter foreign manpower quota. The Group will continue to raise productivity and put in more efforts to retain higher-skilled workforce. Under these market conditions, the Group will remain cautious in tendering for new projects, and also look to process improvements and new technology in executing projects.

LETTER TO SHAREHOLDERS


AcknowledgementsWe thank shareholders for their continued confidence and support throughout the year; we will continue to do our best to maximise shareholder value going forward. To our business associates, bankers, sub-contractors, suppliers and customers, we thank them for their continued support. Last but not least, our appreciation to the Board of Directors for their contributions and guidance, as well as the management and staff for their efforts and enthusiasm.

“The Group best demonstrates its integrated skill sets in a development project where it undertakes a full range of services – from M&E engineering, to construction, to supply of building materials – enabling it to maximise profitability and resource allocation in a single project.”

Chua Hock TongChief Executive Officer

Norman IpChairman


BOARD OfDIRECTORS


1. Norman Ip Ka Cheung, Independent Director and Non-Executive Chairman

2. Chua Hock Tong, Executive Director and Chief Executive Officer (CEO)

3. Kwan Chiew Choi, Independent Director

4. Pok Soy Yoong, Independent Director

5. Tan Soo Kiang, Independent Director

6. Jackson Chevalier Yap Kit Siong, Non-Executive Director

6 2 5 1 3 4


Norman Ip Ka CheungIndependent Director and Non-Executive ChairmanMr Norman Ip Ka Cheung was appointed to our Board of Directors on 22 December 2010. Mr Ip is the Chairman of the boards of WBL Corporation Limited and Malaysia Smelting Corporation Berhad. He is also a director of UEL, Great Eastern Holdings Limited, AIMS AMP Capital Industrial REIT Management Limited and a member of the Building and Construction Authority. 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 theLondonSchoolofEconomicsandPoliticalScience.HeisaFellowof both the Institute of Chartered Accountants in England and Wales and the Institute of Certified Public Accountants, Singapore.

Chua Hock TongExecutive Director and CEOMr Chua Hock Tong was appointed to our Board of Directors on 22 December 2010. Mr Chua is the founder of Greatearth Construction Pte Ltd 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 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. He holds a diploma in Quantity Surveying from the Royal Melbourne Institute of Technology.

Kwan Chiew ChoiIndependent DirectorMr Kwan Chiew Choi was appointed to our Board of Directors on 22 December 2010 and is also the chairman of our Nominating Committee. Mr Kwan is currently an independent non-executive commissioner on the board of commissioners of PT Bank OCBC NISP Tbk. He worked in Oversea-Chinese Banking Corporation Limited(“OCBCBank”)since1987andheldvariouspositionsbeforebecoming the head of Credit Control and Approval where he was responsible for the credit risk management of OCBC Bank’s global corporate and financial institution portfolio. He has over 30 years of experienceincorporatebankingbeforeheretiredin2007.

Mr Kwan graduated from the University of Singapore (now known as the National University of Singapore) with a Bachelor of Social Sciences (Honours) degree.

Pok Soy YoongIndependent DirectorMr Pok Soy Yoong was appointed to our Board of Directors on 22 December 2010 and is also the chairman of our Audit & Risk Committee. Mr Pok was the Head of Tax at Ernst & Young Solutions LLP when he retired from professional practice on 31 December 2008. He also served as the Chief Operating Officer (Tax) of the Ernst &YoungFarEastTaxPractices,covering15countries.

Mr Pok’s tax career spanned 32 years primarily in the areas of Singapore direct tax and international tax. He is among the leading tax experts in Singapore on complex tax transactions and issues, and is particularly noted for his leading role in the creation of the taxation framework for REITs.

Mr Pok is the author of the book entitled “Singapore Taxation”, published by Butterworths. He is also the lead technical editor and project leader of “The Law and Practice of Singapore Income Tax”, a public/private sectors collaborative venture, published by LexisNexis in 2011.

Mr Pok is currently a board member of the Inland Revenue Authority of Singapore and independent director on the boards of Mapletree Logistics Trust Management Ltd. and Perennial China Retail Trust Management Pte. Ltd. He was a non-executive member on the boards of the Tax Academy of Singapore, Ernst & Young Customs & International Trade Services Private Limited and Ernst & Young CustomsandInternationalTradeServices(FarEast)Limited.

Tan Soo KiangIndependent DirectorMr Tan Soo Kiang was appointed to our Board of Directors on 22 December 2010 and also serves as the chairman of our Remuneration Committee. Mr Tan is currently an independent director of Pertama Holdings Limited and 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.

MrTanwasawarded thePublicServiceMedal (PBM) in2007.HewasadmittedtotheSingaporeBarin1977andgraduatedfromtheUniversity of Singapore (now known as the National University of Singapore) with a Bachelor of Law (Honours) degree.

Jackson Chevalier Yap Kit SiongNon-Executive DirectorMr Jackson Chevalier Yap Kit Siong was appointed to our Board of Directors on 22 December 2010. Mr Yap is currently the Group ManagingDirectorandCEOofUEL.He joinedUEL in1997as itsChief Operating Officer and was appointed to his current position in 2001. In his role as UEL’s CEO, he has overall responsibility for leading the management team in implementing the strategic goals and directions set by the board of UEL.

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 and United Wearnes Technology Pte Ltd. Mr Yap graduated from the University of Auckland with a Bachelor of Engineering (Chemical and Materials) (Honours) degree.

Dr Tan Eng LiangIndependent Director – to be appointed at AGMDr Tan Eng Liang joined the board of UEL in 1988 and was last re-elected as a director of UEL in 2011, where he serves as Chairman of the Audit & Risk Committee and a member of the Remuneration Committee.

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, Sapphire Corporation Limited, HartawanHoldings 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 from the University of Malaya, Singapore (now known as the National University of Singapore) with a Bachelor of Science (Honours) degree. He also holds a Doctorate in Philosophy from Oxford University.

BOARD OfDIRECTORS


COMPANYMANAGEMENT

Chan Tuck LeeDeputy Chief Executive OfficerMr Chan Tuck Lee was appointed as the Group’s deputy CEO on 23 December 2010. 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 and the Singapore Green Building Council (Electrical Taskforce). Mr Chan 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.

Poon Wai GahFinancial ControllerMsPoonWaiGahwasappointedastheGroup’sFinancialControlleron23December2010.MsPoonhas 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. Ms Poon holds a Bachelor of Accountancy degree from the National University of Singapore and is a member of the Institute of Certified Public Accountants of Singapore.

Tan Kay YanGeneral Manager, Strategy and RiskMr Tan Kay Yan was appointed as the Group’s General Manager, Strategy and Risk on 23 December 2010. 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. Mr Tan 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 PohDivisional General Manager, Construction, Equipment and MaterialsMr Lee Seng Poh was appointed as the Group’s Divisional General Manager, Construction, Equipment and Materials on 23 December 2010. 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. Mr Lee graduated from the Royal Melbourne Institute of Technology with a Bachelor of Civil Engineering degree.

Tai Chee YickGeneral Manager, M&E EngineeringMr Tai Chee Yick was appointed as the Group’s General Manager, M&E Engineering on 23 December 2010. Mr Tai 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. Mr Tai 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.

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


REVIEW OfOPERATIONS

2.

M&E Engineering

UES is the principal M&E engineering subsidiary of the Group that provides high and low-voltage electrical power distribution, air-conditioning and mechanical ventilation systems as well as fire protection, alarm and sanitary systems.

During the year, UES commissioned works at UE BizHub EAST, a mixed-use development at Changi Business Park, as well as the mixed-use development at one-north. UES also continued works at the mixed-usedevelopmentat277and218OrchardRoadwhichisexpectedtocompletein2013.

In Vietnam, our subsidiary United Engineers (Vietnam) Limited completed works at Marble Mountain Beach Resort in Danang and also secured a contract for the supply and installation of low rise and external services for a large-scale integrated resort named MGM Grand Ho Tram. This project is expected to complete in December 2012.

1.

3.


1. Artist’s impression of MGM Grand Ho Tram which the Group secured a contract for the supply and installation of low rise and external services

2. Construction of Park Central @ AMK was completed during the year

3. Mixed-use development UE BizHub EAST at Changi Business Park is expected to complete by first half of 2012

4. M&E engineering works were commissioned at the mixed-use development at one-north during the year

Construction

The Group’s principal construction subsidiary Greatearth Construction Pte Ltd (“Greatearth”) provides a wide range of construction services that includes design and build; civil works; general construction for residential, industrial, commercial and institutional projects as well as infrastructural works.

During the year, Greatearth completed the construction of Park Central @ AMK and continued works at several ongoing projects. As at end of the year, Ascentia Sky was constructed up to 38th storey; UE BizHub EAST was awaiting TOP inspection and expected to complete by first half of 2012; and Austville Residences commenced foundation and excavation works.

Greatearth secured a number of new projects during the year, including the construction of a proposed 8-storey National Continuing Education & Training Campus at Paya Lebar Central (East) and the construction of Watercolours, a 400-unit EC at Pasir Ris Drive 3/Pasir Ris Link in which the Group has a minority stake in.

The Group’s construction subsidiary in Brunei, United Engineers (B) Sdn Bhd (“UEB”), completed and handed over several housing projects in Kampong Sungai Buloh, Kampong Rataie Phase 5 and Kampong Meragang. It also continued works at a housing project in Lorong Tengah Seria, Kuala Belait which is expected to complete in the middle of 2012.

UEB was awarded a number of projects including the National Housing Scheme at Kampong Rataie Phase 5A, Temburong and the Surau at Prime Minister’s Office Building Complex and the Prime Minister’s Office Building Complex.

4.


Property Development and Others

The Group’s first EC, Austville Residences, at Sengkang East Avenue/Buangkok Drive was launched in January. The 540-unit EC was more than 80% sold as at 31 December 2011, partly boosted by the raise in combined household income ceiling implemented in the later part of the year. During the year, the Group also prepared for the launch of its second EC Watercolours in second quarter of 2012.

The Group’s total power solution subsidiary UE-Tradetec (Singapore) Pte Ltd relocated to a build-to-suit office-cum-warehouse building at Gul Street 4 and is renamed UE Power & Resources Pte. Ltd. to reflect its expanded business model. During the year, UE Power & Resources increased its fleet of power generators by 16 MW in capacity to tap into market opportunities arising from rapid urbanisation and modernisation in the region.

In Singapore, UE Power & Resources continued to manage and maintain power requirements for theNationalDayParadeandSingaporeGrandPrixFormula1NightRace.Italsosuppliedloadtestingequipment and generators to various shipyards in Singapore.

UE Power & Resources’ overseas subsidiary in China, Anhui Anxin Energy Co., Ltd., delivered power to coal mines in Inner Mongolia as well as to a prominent sports event called Universiale in Shenzhen, Guangzhou.

The Group’s business of supplying tiles and sanitary wares is handled by UE-IBP. During the year, UE-IBP upgraded its showroom and expanded its product lines to include recycled and anti-bacterial as well as solar energised illumo tiles.

5.

7.

REVIEW OfOPERATIONS

5. UE Power & Resources relocated to a build-to-suit office-cum-warehouse building at Gul Street 4

6. Artist’s impression of Austville Residences at Sengkang East Avenue/Buangkok Drive which was launched in January

7. Artist’s impression of Watercolours which the Group has a minority stake and is constructing it

6.


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 references to the principles of the Code of Corporate Governance 2005 (“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 success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board.

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

Name of Directors Position in Board AppointmentNorman Ip Ka Cheung Chairman Independent ChairmanChua Hock Tong Member Executive Director and Chief Executive OfficerKwan Chiew Choi Member Independent DirectorPok Soy Yoong Member Independent DirectorTan 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 FY2011 are set out below:

TyPE OF MEETINgSBOARD OF DIRECTORS

AUDIT & RISk COMMITTEE^

REMUNERATION COMMITTEE

NOMINATINg COMMITTEE

Held Attended Held Attended Held Attended Held AttendedNorman Ip Ka Cheung 5 5 4 4* 2 2 1 1Chua Hock Tong 5 5 4 4* 2 2* 1 1*

Kwan Chiew Choi 5 5 4 4 2 1* 1 1Pok Soy Yoong 5 5 4 4 2 1* 1 1Tan Soo Kiang 5 5 4 4 2 2 1 1*

Jackson Chevalier Yap Kit Siong 5 5 4 4* 2 2 1 1*

* Attendance by invitation^ Please see section on AUDIT COMMITTEE AND INTERNAL CONTROLS

The profile of each Director and other relevant information as at the date of this report are set out on Pages 16 to 18 of the Annual Report.



The Board oversees the business affairs of the Group, sets strategic directions and approves budgets and reviews the Group’s performance. 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, Chapter 50, and the rules and regulations of the relevant regulatory bodies;

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

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 Audit & Risk Committee, the Remuneration Committee and the Nominating Committee.

Changes to regulations and accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes have an important bearing on the Company’s or Directors’ disclosure obligations, Directors are briefed either during Board meetings or at specially-convened sessions conducted by professionals. 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 attend 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. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

The Board comprises six members of whom one is Executive Director, one is Non-Executive Director and four 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 Nominating Committee is of the view that the current Directors have an appropriate mix of core competencies and a broad range of industry knowledge and the business experience to govern and contribute to the effectiveness and success of the Group. The Nominating Committee 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 the financial year ended 31 December 2011.



CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Principle 3: There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

The Company has a separate Chairman and Chief Executive Officer who are not related. There is a clear segregation of the roles and responsibilities between the Chairman and the Chief Executive Officer.

Mr Norman Ip Ka Cheung is the Chairman of the Company who is independent and non-executive. His duties 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; (v) facilitating the effective contribution of Non-Executive director; and(vi) promoting high standards of corporate governance.

The Chief Executive Officer 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 of new directors to the Board.

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

The Nominating Committee (“NC”) comprises the following Directors:

Kwan Chiew Choi – ChairmanNorman Ip Ka Cheung – MemberPok Soy Yoong – 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 of any Directors under the retirement provisions in accordance with our Articles of Association at each annual general meeting;

(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 possess 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, will evaluate the performance of the Director involved.

The NC has recommended Mr Norman Ip Ka Cheung and Mr Chua Hock Tong, who are retiring at the forthcoming AGM, to be re-elected. The Directors are retiring under Article 91 of the Company’s Articles of Association. The retiring Directors, being eligible, have offered themselves for re-election. The Board has accepted the recommendations of the NC.



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

Name of Directors Appointment Date of Initial Appointment Date of Last Re-electionNorman Ip Ka Cheung Independent Chairman 22 December 2010 28 April 2011Chua Hock Tong Executive Director and

Chief Executive Officer22 December 2010 28 April 2011

Kwan Chiew Choi Independent Director 22 December 2010 28 April 2011Pok Soy Yoong Independent Director 22 December 2010 28 April 2011Tan Soo Kiang Independent Director 22 December 2010 28 April 2011Jackson Chevalier Yap Kit Siong Non-Executive Director 22 December 2010 28 April 2011

The NC has reviewed the proposed appointment of Dr Tan Eng Liang as a director of the Company pursuant to Section 153(6) of the Companies Act, Chapter 50.

Dr Tan is also an independent director of United Engineers Limited (“UEL”), the controlling shareholder of the Company. Dr Tan’s role as an independent director of UEL is of a non-executive nature and he is not involved in the day-to-day management of UEL or accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of UEL in discharging his duties as the Company’s independent director, if appointed.

Dr Tan will abstain from participating in any discussions in relation to any interested person transactions involving the UEL Group or any matters that might give rise to a conflict of interest with the UEL Group and shall abstain from voting on any such proposals at any Board meetings.

Taking into consideration the foregoing, the NC has determined that Dr Tan’s relationship with UEL would not interfere, or be reasonably perceived to interfere, with the exercise of his independent business judgment of the best interest of the Company and its subsidiaries. On the basis of the foregoing, the NC is of the view that Dr Tan should be regarded as independent, if appointed.

As Dr Tan has the requisite experience and capabilities to assume the responsibilities as the Non-Executive and Independent Director of the Company, the NC recommended that Dr Tan be appointed as a director of the Company subject to the approval of the shareholders at the forthcoming AGM.

The Board has accepted the recommendations of the NC on the proposed appointment of Dr Tan as a director of the Company pursuant to Section 153(6) of the Companies Act, Chapter 50. The Board also concurred with the NC that Dr Tan should be regarded as an independent director, if appointed, after taking into consideration that Dr Tan’s relationship with UEL would not interfere, or be reasonably perceived to interfere, with the exercise of his independent business judgment of the best interest of the Company and its subsidiaries. The Board recommended the appointment of Dr Tan as a director of the Company subject to the approval of the shareholders at the forthcoming AGM.

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.

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, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.

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 days prior to Board and Board Committees’ meetings. This is to allow sufficient time for the Board members to obtain further explanations, where necessary, to be properly briefed and adequately prepare for 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 management and 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 appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.

Principle 9: Each company should provide clear disclosure of its remuneration policy, 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 executives, and performance.

The Remuneration Committee (“RC”) comprises the following Directors:

Tan Soo Kiang – ChairmanNorman Ip Ka Cheung – MemberJackson Chevalier Yap Kit Siong – Member

Mr Tan Soo Kiang and Mr Norman Ip Ka Cheung 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 Chief Executive Officer;(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 and committee fees. These are subject to the approval of the shareholders at the forthcoming AGM.

The following table shows the constitution (in percentage terms) of the remuneration of Directors, during FY2011, in bands of S$250,000:

REMUNERATION BANDSDIRECTORS’

FEES %

SALARy%

BONUS/PROFIT

SHARINg%

OTHER BENEFITS

%TOTAL

%Non-Executive DirectorsBelow S$250,000Norman Ip Ka Cheung 100 - - - 100Kwan Chiew Choi 100 - - - 100Pok Soy Yoong 100 - - - 100Tan Soo Kiang 100 - - - 100Jackson Chevalier Yap Kit Siong (Note) 100 - - - 100Executive DirectorS$1,500,001 to S$1,750,000Chua Hock Tong - 22 74 4 100

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

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 are set out below. Their profiles are found on Page 19 of the Annual Report.

Remuneration Bands No. of ExecutivesS$250,000 to below S$500,000 3Below S$250,000 2

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.

AUDIT COMMITTEE AND INTERNAL CONTROLS

Principle 11: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.

Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.

In line with the role of the Audit Committee to assist the Board with discharging its responsibility to develop and maintain effective systems of internal control and risk management systems, the Audit Committee is now known as the Audit & Risk Committee (“ARC”).



The ARC comprises the following Directors:

Pok Soy Yoong – ChairmanKwan Chiew Choi – MemberTan Soo Kiang – Member

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 auditors 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

auditors;(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 auditors 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 auditors and

internal auditors, and approving the remuneration and terms of engagement of the external auditors 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 auditors 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.

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 2011. The ARC has reviewed the nature and amount of non-audit fees paid to the external auditors and is of the view that the independence of the external auditors 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 Auditors of the Group for the year ending 31 December 2012.

The Group has complied with the 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. 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 may raise concerns in the event that they encounter any improper conduct within the Group.

INTERNAL AUDIT

Principle 13: The Company should establish an internal audit function that is 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 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. 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 auditors, 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 were adequate and meet the needs of the Group as at 31 December 2011. 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.

The Group has outsourced the internal audit function of the Group to PricewaterhouseCoopers LLP. They conduct regular audit of internal control systems of the Group’s companies, recommend necessary improvements and enhancements, and report to the ARC.

RISk MANAgEMENT POLICIES AND PROCESSES

The Board of Directors, assisted by the ARC, has oversight of the risk management system in the Group. The practice of risk management is undertaken by the Company’s Executive Director 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 financial risk management objectives and policies of the Group are set out in Note 33 to the financial statements.

The Board believes that the system of internal controls, including financial, operational and compliance controls and risk management systems, maintained by the Company’s Management and that was in place throughout the financial year and up to and as of the date of this report, are adequate to meet the needs of the Group in its current business environment.

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 auditors, the Board, with the concurrence of the ARC, is satisfied that the system of internal controls, including financial, operational and compliance 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.

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Companies should engage in regular, effective and fair communication with shareholders.

Principle 15: Companies should encourage greater shareholder participation at AGMs, 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.

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. Separate resolutions on each distinct issue are requisite.



At the AGM, the external auditors as well as the Directors are in attendance to answer queries from shareholders. Shareholders are given the opportunity at general meetings of the Company to air their views and query the Directors and Management on matters relating to the Group and its operations.

DEALINgS IN SECURITIES

The Group’s Internal Code of Best Practices for Dealings in Securities has been issued to its Directors and employees for compliance. Under this code, Directors and employees of the Group are not permitted to deal with 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 Company’s securities 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’s Listing Manual in respect of interested person transactions for FY2011 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’s Listing Manual)

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

Group31/12/2011

S$’000

Group31/12/2011

S$’000United Engineers Limited group (A) Contract Value1 – 660,945(B) Revenue1 – 163,399(C) Interest income – 2,014(D) Acquisition of Pioneer property 3,754 –

1 Revenue forms part of the Contract Value

USE OF PROCEEDS

As at the date of this report, the Company has utilised S$5.0 million of the initial public offering (“IPO”) proceeds for capital injection into its wholly-owned subsidiary UE Power & Resources Pte. Ltd. (formerly known as UE-Tradetec (Singapore) Pte Ltd) to expand its power solution business, and S$10.0 million for the property development project in Pasir Ris Drive 3/Pasir Ris Link.

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

33 Directors’ report

35 Statement by directors

36 Independent auditor’s report

37 Consolidated income statement

38 Consolidated statement of comprehensive income

39 Statements of financial position

40 Statements of changes in equity

43 Consolidated statement of cash flows

45 Notes to the financial statements


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 2011.

DIRECTORS

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

Norman Ip Ka Cheung (Chairman) Chua Hock Tong (Executive Director and Chief Executive Officer) Kwan Chiew Choi Pok Soy Yoong 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 as follows:

Direct interest Deemed interest1 January

201131 December

20111 January

201131 December

2011

Interest in the Company:

Ordinary SharesNorman Ip Ka Cheung – 50,000 – –Chua Hock Tong 23,791,311 15,860,874 – –Pok Soy Yoong – 20,000 – –Jackson Chevalier Yap Kit Siong – 100,000 – –

Interest in Ultimate Holding Company:

United Engineers Limited

Ordinary Stock UnitsChua Hock Tong 143,333 173,333 – –Jackson Chevalier Yap Kit Siong 393,000 543,000 – –

Unissued Ordinary Shares under OptionJackson Chevalier Yap Kit Siong 827,000 677,000 – –

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

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

There was no change in any of the above-mentioned interests between the end of the financial year and 21 January 2012.

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 at the end of the financial year.


DIRECTORS’ REPORT

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

In line with the role of the Audit Committee to assist the Board with discharging its responsibility to develop and maintain effective systems of internal control and risk management systems, the Audit Committee is now known as the Audit & Risk Committee.

The Audit & Risk Committee comprises the following Directors:

Pok Soy Yoong – Chairman Kwan Chiew Choi – MemberTan Soo Kiang – Member

The Audit & Risk Committee convened its first meeting on 28 February 2011 with full attendance from all members.

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 auditors 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 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 auditors of the Company for the financial year ending 31 December 2012 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 2011.

AUDITORS

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

On behalf of the board of directors,

NORMAN IP kA CHEUNg CHUA HOCk TONgDirector Director

16 March 2012Singapore


STATEMENT BY DIRECTORS

We, NORMAN IP KA CHEUNG 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 2011 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,

NORMAN IP kA CHEUNg CHUA HOCk TONg Director Director

16 March 2012Singapore


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 2011, 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 2011 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 Certified Public AccountantsSingapore

16 March 2012

INDEPENDENT AUDITOR’S REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011


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

(In Singapore dollars)gROUP

Note 31/12/2011

$000

31/12/2010(Restated)

$000

Revenue 4 370,795 351,094Cost of sales (284,489) (292,118)

gross profit 86,306 58,976

Other items of incomeInterest income 5 3,593 3,147Other income 6 4,957 2,771

Other items of expenseDistribution expenses (7,850) (6,876)Administrative expenses (14,792) (11,084)Finance costs 7 (1,370) (1,428)Other expenses (11,296) (5,670)Share of results of associates and joint ventures 15,496 (113)

Profit before tax 8 75,044 39,723Income tax expense 9 (10,365) (8,467)

Profit net of tax 64,679 31,256

Profit attributable to:Owners of the Company 64,466 28,071Non-controlling interests 213 3,185

64,679 31,256

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

Basic and diluted 10 25.0 14.0

CONSOLIDATED INCOME STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011



CONSOLIDATED STATEMENT OF COMPREhENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011


31/12/2011 31/12/2010(Restated)

$000 $000

Profit net of tax 64,679 31,256

Other comprehensive income:

Net effect of exchange differences arising from translation of financial statements of foreign operations 262 68

Share of other comprehensive income of associates 405 78

Other comprehensive income for the year, net of tax 667 146

Total comprehensive income for the year 65,346 31,402

Total comprehensive income attributable to:Owners of the Company 65,133 28,188Non-controlling interests 213 3,214

65,346 31,402



STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2011

(In Singapore dollars)gROUP COMPANy

Note 31/12/2011 31/12/2010 01/01/2010 31/12/2011 31/12/2010(Restated) (Restated)

$000 $000 $000 $000 $000

AssetsNon-current assetsProperty, plant and equipment 11 43,263 34,351 26,738 25 –Investment properties 12 5,419 7,500 10,500 – –Investments in subsidiaries 13 – – – 110,203 105,673Investments in associates 14 16,622 716 450 – –Investments in joint ventures 15 294 – – – –Deferred tax assets 16 127 91 135 – –Trade and other receivables 19 63,331 50,375 64,981 12,000 –Other investments – – 361 – –Total non-current assets 129,056 93,033 103,165 122,228 105,673

Current assetsInventories 18 4,545 1,884 1,769 – –Income tax receivables 10 10 10 – –Trade and other receivables 19 120,169 130,260 106,904 10,552 –Other investments 17 7,248 9,625 9,087 – –Gross amount due from

customers for contract work 20 14,747 17,994 24,035 – –Prepayments 21 230 3,911 4,894 21 1,447Property held for sale 22 – 4,266 6,619 – –Cash and bank balances 23 139,014 62,485 11,588 26,550 1,178Total current assets 285,963 230,435 164,906 37,123 2,625Total assets 415,019 323,468 268,071 159,351 108,298

Equity and liabilitiesEquityShare capital 24 138,774 106,851 12,530 138,774 106,851Retained earnings 87,248 22,782 (3,689) 18,232 (895)Other reserves 25 (61,339) (62,006) (400) – –Equity, attributable to owners

of the Company 164,683 67,627 8,441 157,006 105,956Non-controlling interests 492 309 4,456 – –Total equity 165,175 67,936 12,897 157,006 105,956

Non-current liabilitiesDeferred tax liabilities 16 3,553 3,915 3,601 – –Trade and other payables 27 7,688 13,607 49,664 – –Borrowings – – 2,379 – –Finance leases 28 – 52 248 – –Total non-current liabilities 11,241 17,574 55,892 – –

Current liabilitiesProvisions – 3 91 – –Income tax payable 9,061 9,376 3,644 – –Trade and other payables 27 188,970 184,657 157,249 2,345 2,342Borrowings 26 26,102 28,372 29,313 – –Finance leases 28 4 196 484 – –Gross amount due to customers

for contract work 20 14,466 15,354 8,501 – –Total current liabilities 238,603 237,958 199,282 2,345 2,342Total liabilities 249,844 255,532 255,174 2,345 2,342Total equity and liabilities 415,019 323,468 268,071 159,351 108,298


STATEMENTS OF ChANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011

(In Singapore dollars)Attributable to owners of the Company

Sharecapital

Retainedearnings

Other reserves

Totalreserves

Equity attributable to owners

of the Company

Non-controlling

interestsTotal

equity(Note 24) (Note 25)

gROUP $000 $000 $000 $000 $000 $000 $000

At 1 January 2011, as previously reported 106,851 40,741 (58,836) (18,095) 88,756 309 89,065

Effect of adopting INT FRS 115 – (17,959) (3,170) (21,129) (21,129) – (21,129)At 1 January 2011, restated 106,851 22,782 (62,006) (39,224) 67,627 309 67,936

Profit net of tax – 64,466 – 64,466 64,466 213 64,679

Other comprehensive incomeNet effect of exchange differences

arising from translation of financial statements of foreign operations – – 262 262 262 – 262

Share of other comprehensive income of associates – – 405 405 405 – 405

Other comprehensive income for the year, net of tax – – 667 667 667 – 667

Total comprehensive income for the year – 64,466 667 65,133 65,133 213 65,346

Contributions by and distributions to owners

Issuance of new ordinary shares 33,600 – – – 33,600 – 33,600

Share issuance expenses (1,677) – – – (1,677) – (1,677)

Dividends paid to non-controlling interests – – – – – (30) (30)

Total transactions with owners in their capacity as owners 31,923 – – – 31,923 (30) 31,893

At 31 December 2011 138,774 87,248 (61,339) 25,909 164,683 492 165,175




(In Singapore dollars)Attributable to owners of the Company

Sharecapital

Retainedearnings

Other reserves

Totalreserves


of the Company

Non-controlling

interestsTotal

equity(Note 24) (Note 25)

gROUP $000 $000 $000 $000 $000 $000 $000

At 1 January 2010, as previously reported 12,530 2,556 (400) 2,156 14,686 5,559 20,245

Effect of adopting INT FRS 115 – (6,245) – (6,245) (6,245) (1,103) (7,348)At 1 January 2010, restated 12,530 (3,689) (400) (4,089) 8,441 4,456 12,897

Profit net of tax, restated – 28,071 – 28,071 28,071 3,185 31,256

Other comprehensive incomeNet effect of exchange differences

arising from translation of financial statements of foreign operations – – 51 51 51 17 68

Share of other comprehensive income of associates – – 66 66 66 12 78

Other comprehensive income for the year, net of tax – – 117 117 117 29 146

Total comprehensive income for the year, restated – 28,071 117 28,188 28,188 3,214 31,402


Adjustment arising from Restructuring Exercise, restated (12,530) – (73,888) (73,888) (86,418) 3,659 (82,759)

Capital and subvention contributions from a related company relating to the Restructuring Exercise – – 38,158 38,158 38,158 – 38,158

Transfers of reserves arising from Restructuring Exercise – 26,100 (26,100) – – – –

Issuance of new ordinary shares 99,238 – – – 99,238 – 99,238

Dividends paid – (27,700) – (27,700) (27,700) – (27,700)

Dividends paid to non-controlling interests – – – – – (3,300) (3,300)

Total Contributions by and distributions to owners, restated 86,708 (1,600) (61,830) (63,430) 23,278 359 23,637

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

Acquisition of non-controlling interests 7,613 – – – 7,613 (7,720) (107)

Discount paid on acquisition of non-controlling interests – – 107 107 107 – 107

Total changes in ownership interests in subsidiary 7,613 – 107 107 7,720 (7,720) –

Total transactions with owners in their capacity as owners, restated 94,321 (1,600) (61,723) (63,323) 30,998 (7,361) 23,637

At 31 December 2010, restated 106,851 22,782 (62,006) (39,224) 67,627 309 67,936



(In Singapore dollars)

Sharecapital

Retainedearnings

Totalreserves


of the Company

Totalequity

(Note 24)COMPANy $000 $000 $000 $000 $000

At 1 January 2011 106,851 (895) (895) 105,956 105,956

Profit net of tax, representing total comprehensive income for the year – 19,127 19,127 19,127 19,127


Issuance of new ordinary shares 33,600 – – 33,600 33,600

Share issuance expenses (1,677) – – (1,677) (1,677)

Total transactions with owners in their capacity as owners 31,923 – – 31,923 31,923

At 31 December 2011 138,774 18,232 18,232 157,006 157,006

At 9 March 2010, date of incorporation –* – – – –*

Loss net of tax, representing total comprehensive income for the year – (895) (895) (895) (895)


Issuance of new ordinary shares 99,238 – – 99,238 99,238

Total contributions by and distributions to owners 99,238 – – 99,238 99,238

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

Acquisition of non-controlling interests 7,613 – – 7,613 7,613

Total changes in ownership interests in subsidiary 7,613 – – 7,613 7,613

Total transactions with owners in their capacity as owners 106,851 – – 106,851 106,851

At 31 December 2010 106,851 (895) (895) 105,956 105,956

* Amount less than $1,000.



CONSOLIDATED STATEMENT OF CASh FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011


31/12/2011

$000


$000

Cash flows from operating activitiesProfit before tax 75,044 39,723

Adjustments:Allowance for doubtful trade receivables 40 101Write back of allowance for doubtful trade receivables (121) (66)Allowance for doubtful other receivables 3,489 302Allowance for inventory obsolescence 61 247Write back of allowance for inventory obsolescence (60) (194)Amortisation of receivables and payables (58) 389Depreciation of property, plant and equipment (Note 11) 5,412 4,344Dividend income from investment securities (196) (152)Gain on disposal of property, plant and equipment (437) (207)Gain on disposal of investment properties (2,500) –Gain on disposal of available-for-sale investment – (869)Gain on fair value adjustment on investment properties (1,214) (500)Loss/(Gain) on fair value adjustment on held-for-trading investments 2,377 (539)Finance costs 1,370 1,428Interest income (3,593) (3,147)Share of results of associates and joint ventures (15,496) 113

Operating cash flows before changes in working capital 64,118 40,973

Property held for sale - Development expenditure – (4,264) - Proceeds from progress billings – 7,102Increase in inventories (2,544) (179)Decrease in gross amount due from customers for contract work 4,334 6,970(Decrease)/Increase in gross amount due to customers for contract work (888) 6,853(Increase)/Decrease in trade and other receivables and prepayments (3,519) 15,321(Decrease)/Increase in trade and other payables and provisions (2,272) 9,054

Cash flows from operations 59,229 81,830Interest received 185 36Interest paid (1,370) (1,801)Income tax paid (8,229) (2,039)

Net cash flows from operating activities 49,815 78,026


CONSOLIDATED STATEMENT OF CASh FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011


31/12/2011

$000


$000

Cash flows from investing activitiesAcquisition of a subsidiary arising from Restructuring Exercise – (2,700)Purchase of property, plant and equipment (Note 11) (17,339) (15,059)Proceeds from disposal of property, plant and equipment 2,551 2,212Proceeds from disposal of investment properties, net 10,000 3,500Proceeds from disposal of available-for-sale investments – 1,230Dividends received from investment securities 196 152Investment in an associate – (300)Investment in a joint venture (300) –Loans to associates (3,119) (17,443)Loans to a joint venture (10,369) –Repayment of loans to associates 15,737 –

Net cash flows used in investing activities (2,643) (28,408)

Cash flows from financing activitiesDividends paid – (27,700)Dividends paid to non-controlling interests (30) (3,300)Contribution from holding companies – 36,392Proceeds from issuance of new ordinary shares 33,600 –Share issuance expenses (1,677) –Proceeds from/(Repayment of) trust receipts and bills payable 434 (370)Repayment of obligations under finance leases (244) (485)Proceeds from bank loans 400 16,500Repayment of bank loans (400) (27,500)(Decrease)/Increase in revolving bank loans (3,006) 3,001

Net cash flows from/(used in) financing activities 29,077 (3,462)

Net increase in cash and cash equivalents 76,249 46,156Cash and cash equivalents at the beginning of year 50,680 4,542Effect of exchange rate changes on cash and cash equivalents 1 (18)

Cash and cash equivalents at the end of year (Note 23) 126,930 50,680



NOTES TO ThE FINANCIAL STATEMENTS 31 DECEMBER 2011

1 CORPORATE INFORMATION

The Company was incorporated in the Republic of Singapore on 9 March 2010 as a public company, limited by shares under the name of Ljubica Limited with an issued and paid up share capital of $2 comprising 2 ordinary shares. On 1 December 2010, the Company changed its name to UE E&C Ltd.

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 UE E&C Ltd. is United Engineers Limited (“UEL”) which is incorporated in Singapore.

On 25 February 2011, the Company was admitted to the official list of Singapore Exchange Securities Trading Limited. The Company issued 70,000,000 new ordinary shares at $0.48 per share in connection with its public offering. The net proceeds arising from this amounted to approximately $28,700,000.

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 2011.

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, except for the adoption of INT FRS 115 Agreements for the Construction of Real Estate on 1 January 2011.

INT FRS 115 clarifies when revenue and related expenses from a sale of real estate unit should be recognised if an agreement between a developer and a buyer is reached before the construction of real estate is completed. INT FRS 115 determines that such contracts which do not qualify as construction contracts in accordance with FRS 11 Construction Contracts can only be accounted for using the percentage of completion (“POC”) method if the entity continuously transfers to the buyer control and the significant risks and rewards of ownership of the work in progress in its current state as construction progresses.

The Group’s previous accounting policy for all pre-completion property sales was to recognise revenue using the percentage of completion method as construction progresses. The Group has considered the application of INT FRS 115 and concluded that certain ‘pre-completion’ sale contracts were not, in substance, construction contracts, and the legal terms are such that the construction does not represent the continuous transfer of work in progress to the purchaser. Consequently, the completed contract method of revenue recognition has been applied to these contracts.

The change in accounting policy has been applied retrospectively. The impact on the Group’s current financial year’s amounts reported as a result of this adoption is as follows:



2 SUMMARy OF SIgNIFICANT ACCOUNTINg POLICIES (continued)

2.2 Changes in accounting policies (continued)

Consolidated Income StatementgROUP

31/12/2011$000

Increase in revenue 56,427Increase in cost of sales (42,943)Increase in share of results of associates 9,950Increase in income tax expense (2,307)Increase in profit attributable to:Owners of the Company 21,127

Increase in earnings per ordinary share (basic and fully diluted) (cents) 8.2

Consolidated Statement of Financial PositiongROUP

31/12/2011$000

Increase in investments in associates 9,950Increase in gross amount due from customers for contract work 13,484Decrease in prepayments (2,307)Increase in retained earnings 21,127

The retrospective impact on the Group’s prior years’ amounts reported as a result of the adoption is disclosed in Note 37.

2.3 Standards issued but not yet effective

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

Description

Effective for annual periods beginning

on or after

Amendments to FRS 107 Disclosures – Transfers of Financial Assets 1 July 2011Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets 1 January 2012Amendments to FRS 1 Presentation of Items of Other Comprehensive Income 1 July 2012Revised FRS 19 Employee Benefits 1 January 2013Revised FRS 27 Separate Financial Statements 1 January 2013Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2013FRS 110 Consolidated Financial Statements 1 January 2013FRS 111 Joint Arrangements 1 January 2013FRS 112 Disclosure of Interests in Other Entities 1 January 2013FRS 113 Fair Value Measurements 1 January 2013

Except for the Amendments to FRS 1 and FRS 112, the directors expect that the adoption of the 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 the Amendments to FRS 1 and FRS 112 are described below.




2.3 Standards issued but not yet effective (continued)

Amendments to FRS 1 Presentation of Items of Other Comprehensive Income

The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income (“OCI”) is effective for financial periods beginning on or after 1 July 2012.

The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to Income Statement at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentations of items that are already recognised in OCI, the Group does not expect any impact on its financial position or performance upon adoption of this standard.

FRS 112 Disclosure of Interests in Other Entities

FRS 112 is effective for financial periods beginning on or after 1 January 2013.

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. The Group is currently determining the impact of the disclosure requirements. As this is a disclosure standard, it will not have any impact to the financial position and financial performance of the Group when implemented in 2013.

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.

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.




2.4 Basis of consolidation and business combinations (continued)

(B) Business combinations

Business combinations (other than combinations involving entities or businesses under common control which are accounted for by applying the pooling of interest 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 be 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)

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.

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. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.

Business combinations involving entities or businesses under common control are accounted for by applying the

pooling of interest method. The assets and liabilities of the combining entities or businesses are reflected at their existing carrying amounts in the combined financial statements. The retained earnings and other reserves recognised in the combined financial statements are the retained earnings and other reserves of the combining entities or businesses immediately before the combination.

Any difference between the consideration paid and the share capital of the acquired entity or the net tangible asset

amount of the acquired business is reflected within equity as merger reserve or deficit. The combined profit and loss account reflects the results of the combining entities or businesses for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities or businesses had always been combined since the date the entities or businesses had come under common control.




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 owner’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 Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific 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 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 investment property under construction

Where investment 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 in Singapore 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 accrue 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 Group’s consolidated financial statements are presented in Singapore dollars, 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.




2.8 Foreign currencies (continued)

(a) Transactions and balances (continued)

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 determined.

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 Singapore dollars 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:

• Wherethedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwillorofanassetorliabilityinatransactionthat is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• Inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiariesandassociates,wherethetiming 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:

• Wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofanasset 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

• Inrespectofdeductibletemporarydifferencesassociatedwithinvestmentsinsubsidiariesandassociates,deferredtax 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/salestaxincurredonapurchaseofassetsorservicesisnotrecoverablefromthe 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.

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

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the income statement, in which case the increase is recognised in the income statement. A revaluation deficit is recognised in income statement, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.




2.10 Property, plant and equipment (continued)

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.

Leases with unexpired terms of over 100 years are classified as long leaseholds; those under 100 years are classified as leaseholds.

No depreciation is provided on freehold/long leasehold land as it has an unlimited and long useful life respectively.

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

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

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 each financial year-end, 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, which reflects market conditions at the end of the reporting period. 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 Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at 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.




2.12 Impairment of non-financial assets (continued)

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell 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 cash generating unit 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 to sell, 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 in those expense categories consistent with the function of the impaired asset; 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.

2.13 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. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

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.




2.13 Subsidiaries, associates and joint ventures (continued)

Associate (continued) The Group’s share of the profit or loss of its associates is shown on the face of 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 associate. 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.

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 an impairment loss with respect to the Group’s net investment in the joint ventures.

The Group determines at each end of the 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 income statement. 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 venture 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 an 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 any retained investment at its fair value. Any difference between the carrying amount of the former joint venture upon loss of joint venture 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.




2.14 Investments

Investments are classified as financial assets at fair value through profit or loss, held-to-maturity investments or available-for-sale financial assets, as appropriate.

The accounting policies for the aforementioned categories of financial assets are 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 to 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 held for trading are classified as financial assets at fair value through profit or loss. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling 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.

Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are not classified in any of the two preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the income statement. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the income statement as a reclassification adjustment when the financial asset is derecognised.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.




2.16 Financial assets (continued)

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.

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 the end of each reporting period 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.

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has 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 assets 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 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.




2.17 Impairment of financial assets (continued)

Available-for-sale financial assets

In the case of equity investments classified as available-for-sale, objective evidence of impairment include (i) significant financial difficulty of the issuer or obligor, (ii) information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in equity instrument may not be recovered; and (iii) a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its acquisition cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from other comprehensive income and recognised in profit or loss. Reversals of impairment losses in respect of equity instruments are not recognised in profit or loss; increase in their fair value after impairment is recognised directly in other comprehensive income.

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 proportion of total contract costs (as defined below) incurred to date and the estimated costs to complete.

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 are capable of being 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. Costs that relate directly to a specific contract comprise: site labour costs (including site supervision); costs of materials used in construction; depreciation of equipment used on the contract; costs of design, and technical assistance that is directly related to the contract.

The Group’s contracts are typically negotiated for the construction of a single asset or a group of assets which are closely interrelated or interdependent in terms of their design, technology and function. In certain circumstances, the percentage of completion method is applied to the separately identifiable components of a single contract or to a group of contracts together in order to reflect the substance of a contract or a group of contracts.




2.18 Construction contracts (continued)

Assets covered by a single contract are treated separately when:

- The separate proposals have been submitted for each asset;- Each asset has been subject to separate negotiation and the contractor and customer have been able to accept or

reject that part of the contract relating to each asset; and- The costs and revenues of each asset can be identified.

A group of contracts are treated as a single construction contract when:

- The group of contracts is negotiated as a single package; - The contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit

margin; and- The contracts are performed concurrently or in a continuous sequence.

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 are properties acquired or being constructed for sale in the ordinary course of business, rather than to be held for the Group’s own use, rental or capital appreciation.

Development properties held for sale are stated at cost plus estimated profits to-date less progress billings. 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.

Developments are 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 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 billing to purchasers of residential units for sale are shown as a deduction from the cost of the development properties held for sale.

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.




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 financial liabilities depends on their classification as follows: Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Subsequent to initial recognition, financial liabilities 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 liabilities are recognised in profit or loss.

The Group has not designated any financial liabilities upon initial recognition at fair value through profit or loss.

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 the 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 or 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 at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

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 36, 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.




2.29 Related parties (continued)

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 could 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.

Assessment of allowance for doubtful receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for doubtful receivables. In assessing the allowance for receivables, the Group takes into account the duration of the settlement agreement and whether any subsequent payments were in default.

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, deferred tax liabilities and deferred tax assets as at 31 December 2011 was $9,061,000 (2010: $9,376,000), $3,553,000 (2010: $3,915,000) and $127,000 (2010: $91,000) respectively.



3 SIgNIFICANT ACCOUNTINg JUDgMENTS AND ESTIMATES (continued) 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.

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 2011 was $31,811,000 (2010: $27,039,000). 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% (2010: 1%) variance in the Group’s profit for the financial year.

Construction contracts

The Group recognises contract revenue to the extent of contract costs incurred where it is probable those costs will be recoverable or based on the stage of completion method. 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. An estimation of recoverable variation works amounted to $276,000 (2010: $13,641,000) was taken into consideration in arriving at the estimated revenue of construction contracts. Any shortfall in recovery of this estimation will impact the results of the Group by the same quantum.

The gross amount due from customers for contract work was $14,747,000 (2010: $17,994,000).

The gross amount due to customers for contract work was $14,466,000 (2010: $15,354,000).

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 $1,192,000 (2010: $945,000).

Revaluation of investment properties

The Group’s investment properties, with a carrying amount of $5,419,000 as at 31 December 2011 (2010: $7,500,000) 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.



4 REVENUE

gROUP31/12/2011 31/12/2010

(Restated)$000 $000

Revenue from construction and engineering contracts 338,102 317,673Rental of equipment and related service income 25,268 20,144Rental income from investment properties (Note 12) 162 352Sale of properties – 6,878Sale of goods 7,263 6,047

370,795 351,094

5 INTEREST INCOME

gROUP31/12/2011 31/12/2010

$000 $000

Interest income from loans and receivables 3,593 3,147

6 OTHER INCOMEgROUP

31/12/2011 31/12/2010$000 $000

Dividend income from investment securities 196 152Forfeiture of deposit 32 –Gain on disposal of property, plant and equipment 437 207Gain on disposal of investment properties 2,500 –Gain on disposal of available-for-sale investment – 869Gain on fair value adjustment on investment properties (Note 12) 1,214 500Gain on fair value adjustment on held-for-trading investments – 539Gain on disposal of scrap 21 114Management fees – 107Rental income from premises 547 273Other sundry income 10 10

4,957 2,771

7 FINANCE COSTS

gROUP31/12/2011 31/12/2010

$000 $000

Interest expense on: - Bank loans and bank overdrafts 1,361 1,365 - Finance leases 9 35 - Loans and amounts due to:

Holding company – 67 Related companies – 293

1,370 1,760Less: Interest expense capitalised in: Property held for sale (Note 22) – (332)

Total finance costs 1,370 1,428



8 PROFIT BEFORE TAX

The following items have been included in arriving at profit before tax:gROUP

31/12/2011 31/12/2010$000 $000

Audit fees: - Auditors of the Company (224) (112) - Other auditors (37) (27)

Non-audit fees: - Auditors of the Company (83) (56) - Other auditors (13) (13)

Total audit and non-audit fees (357) (208)

Allowance for doubtful trade receivables (Note 19) (40) (101)Write back of allowance for doubtful trade receivables (Note 19) 121 66Allowance for doubtful other receivables (Note 19) (3,489) (302)Allowance for inventory obsolescence (Note 18) (61) (247)Write back of allowance for inventory obsolescence (Note 18) 60 194Amortisation of receivables and payables 58 (389)Depreciation of property, plant and equipment (Note 11) (5,412) (4,344)Direct operating expenses arising from investment properties (Note 12) (23) (45)Foreign exchange loss, net (23) (426)Legal fees (62) (63)Listing expenses (871)* (895)*

Loss on fair value adjustment on held-for-trading investments (2,377) –Management fees and consultancy services (642) (1,739)Operating lease expense (Note 30) (1,849) (800)Staff costs (including directors’ remuneration) - Salaries, wages, bonuses and other costs (30,224) (24,629) - Central Provident Fund and other defined contribution plans (2,208) (1,553) - Grant income from Jobs Credit Scheme – 71

* Includes $124,000 (2010: $106,000) fees in relation to audit services in connection with the IPO.

During the financial year ended 31 December 2009, the Singapore Finance Minister announced the introduction of a Jobs Credit Scheme (“Scheme”). Under this Scheme, the Group received a 12% cash grant on the first $2,500 of each month’s wages for each employee on their Central Provident Fund payroll. The Government extended the Scheme with another two payments at stepped-down rates of 6% and 3% in March and June 2010 respectively. During the financial year ended 31 December 2010, the Group received grant income of $71,000 under the Scheme.



9 INCOME TAX EXPENSE Major components of income tax expense

The major components of income tax expense for the years ended 31 December 2011 and 2010 are:

gROUP31/12/2011 31/12/2010

(Restated)$000 $000

Consolidated income statement:

Current taxation: - current year 10,806 7,608 - (over)/under provision in respect of prior years (43) 107

10,763 7,715Deferred taxation: - origination and reversal of temporary differences (Note 16) 688 752 - over provision in respect of prior years (Note 16) (1,086) –

Income tax expense recognised in the income statement 10,365 8,467

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 2011 and 2010 are as follows:

gROUP31/12/2011 31/12/2010

(Restated)$000 $000

Profit before tax 75,044 39,723

Tax at Singapore statutory tax rate of 17% 12,757 6,753Adjustments for tax effect of:Expenses not deductible for tax purposes 1,183 2,209Income not subject to taxation (542) (383)Singapore statutory income exemption (106) (54)Impact of different tax rates applicable to profits in the

countries where the Group operates 41 (407)Effect of reduction in tax rate 47 –Deferred tax assets not recognised 896 382Benefits from previously unrecognised tax losses (186) (163)Tax benefit from Productivity and Innovation Credit (90) –(Over)/Under provision in respect of prior years (1,129) 107Share of results of associates (2,634) 19Others 128 4

Income tax expense recognised in the income statement 10,365 8,467 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 2011, the Group qualifies for the tax benefits as prescribed in the PIC scheme allowing a claim amounting to $90,000.

The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.



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 258,333,333 outstanding during the financial year.

For financial year ended 31 December 2010, basic earnings per share is calculated by dividing net profit attributable to owners of the Company by the pre-invitation share capital of 200,000,000 ordinary shares.

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 2011 and 2010:

gROUP31/12/2011 31/12/2010

(Restated)

Profit for the year attributable to owners of the Company used in computation of basic and diluted earnings per share ($000) 64,466 28,071

Weighted average number of ordinary shares /Pre-invitation share capital for computation of basic and diluted earnings per share (000) 258,333 200,000

11 PROPERTy, PLANT AND EQUIPMENT

Leasehold land and buildings

Capital work-in-progress Metal forms

Plant and machinery

Motor vehicles and other assets Total

gROUP $000 $000 $000 $000 $000 $000

CostAt 1 January 2010 553 – 4,374 47,675 4,276 56,878Additions 2,375 3,856 72 8,229 527 15,059Disposals – – (558) (2,563) (847) (3,968)Exchange differences – – – (262) (21) (283)

At 31 December 2010 and 1 January 2011 2,928 3,856 3,888 53,079 3,935 67,686

Additions 3,858 374 142 12,067 898 17,339Disposals – – (225) (2,863) (260) (3,348)Reclassification 4,230 (4,230) – – – –Exchange differences – – – 433 17 450

At 31 December 2011 11,016 – 3,805 62,716 4,590 82,127



11 PROPERTy, PLANT AND EQUIPMENT (continued)

Leasehold land and buildings

Capital work-in-progress Metal forms

Plant and machinery

Motor vehicles and other assets Total

gROUP $000 $000 $000 $000 $000 $000

Accumulated depreciation

At 1 January 2010 514 – 4,151 22,195 3,280 30,140Charge for the year 39 – 200 4,611 407 5,257Disposals – – (558) (679) (726) (1,963)Exchange differences – – – (87) (12) (99)

At 31 December 2010 and 1 January 2011 553 – 3,793 26,040 2,949 33,335

Charge for the year 543 – 91 5,465 477 6,576Disposals – – (225) (771) (238) (1,234)Exchange differences – – – 171 16 187

At 31 December 2011 1,096 – 3,659 30,905 3,204 38,864

Net carrying amountAt 31 December 2010 2,375 3,856 95 27,039 986 34,351

At 31 December 2011 9,920 – 146 31,811 1,386 43,263

Assets held under finance leases The carrying amount of office equipment, motor vehicles and plant and machinery held under finance leases as at 31 December

2011 was $6,000 (2010: $815,000).

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

and other assetsCOMPANy $000

CostAt 31 December 2010 and 1 January 2011 –Additions 32 At 31 December 2011 32

Accumulated depreciationAt 31 December 2010 and 1 January 2011 –Charge for the year 7

At 31 December 2011 7

Net carrying amountAt 31 December 2010 –

At 31 December 2011 25

gROUP31/12/2011 31/12/2010

$000 $000

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

Depreciation for the financial year 6,576 5,257Current financial year’s depreciation charged to construction projects (1,164) (913)

Charged to the income statement (Note 8) 5,412 4,344



12 INVESTMENT PROPERTIES

gROUP31/12/2011 31/12/2010

$000 $000

At 1 January 7,500 10,500Disposals (7,500) (3,500)Transfer from property held for sale (Note 22) 4,205 –

Gain on fair value adjustment recognised in the income statement (Note 6) 1,214 500

At 31 December 5,419 7,500

Consolidated income statement:

Rental income from investment properties (Note 4): - Minimum lease payments 162 352

Direct operating expenses (including repairs and maintenance) (Note 8) arising from: - Rental generating properties (23) (45)

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

Description and location Existing use Tenure Unexpired lease term31/12/2011 31/12/2010

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

93 years 94 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

78 years 79 years

3-storey shophouses with attic at Nos. 99 and 101 Tanjong Pagar Road, Singapore

Shops and offices 99 years leasehold from 19/03/1992

–* 80 years

* On 30 June 2011, the Group disposed of its investment property at Nos. 99 and 101 Tanjong Pagar Road at net proceeds of $10,000,000.

Valuation of investment properties

Investment properties are stated at their fair values as at the end of the financial year based on accredited independent professional valuations.

Valuation of investment property located in Malaysia was carried out by Henry Butcher Malaysia (Sabah) Sdn Bhd as at 31 December 2011.

Valuation of investment property located in Singapore was carried out by Knight Frank Pte Ltd as at 31 December 2010.

The valuations are based on the income method that makes reference to estimated market rental values and equivalent yields.



13 INVESTMENTS IN SUBSIDIARIES

COMPANy31/12/2011

$00031/12/2010

$000

Unquoted equity shares at cost 110,203 105,673

The subsidiaries as at 31 December are as follows:

Name of company Principal activities(Place of business)1

Percentage of equity heldby the group

31/12/2011%

31/12/2010%

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*

Maxdin Pte Ltd Property investment 100 100

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

UE Power & Resources Pte Ltd (formerly known as UE-Tradetec (Singapore) Pte Ltd)

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 –

Incorporated in Malaysia3

GE Construction Sdn Bhd Building contractors and property developer (Malaysia)

100 100

Quality Edition Sdn Bhd Property investment (Malaysia)

100 –

Incorporated in Brunei3

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*

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.* Direct subsidiaries of UE E&C Ltd.



14 INVESTMENTS IN ASSOCIATES

gROUP31/12/2011 31/12/2010 01/01/2010

(Restated) (Restated)$000 $000 $000

Unquoted equity shares at cost 800 800 800Share of post acquisition reserves 15,822 (84) (350)

16,622 716 450

The associates as at 31 December are as follows:

Name of companyPrincipal activities(Place of business)1

Percentageof equity held

31/12/2011%

31/12/2010%

Held through subsidiaries

Incorporated in Singapore

Greatearth Developments Pte Ltd 2 Real estate development and investment holding 50 50

MaxLee Development Pte Ltd 2 Property development and investment 30 30

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

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

gROUP31/12/2011 31/12/2010

(Restated)01/01/2010

(Restated)$000 $000 $000

Assets and liabilities:Current assets 270,566 351,511 182,493Non-current assets 34,778 29,935 27,492

Total assets 305,344 381,446 209,985

Current liabilities 41,256 161,250 21,877Non-current liabilities 230,456 218,381 180,645

Total liabilities 271,712 379,631 202,522

Results:Revenue 335,302 2,961 4,120

Profit/(loss) for the year 31,009 (242) 585



15 INVESTMENTS IN JOINT VENTURES

gROUP31/12/2011 31/12/2010

$000 $000

Unquoted equity shares at cost 300 –Share of post acquisition reserves (6) –

294 –

The joint ventures as at 31 December are as follows:

Name of companyPrincipal activities(Place of business)1

Percentageof equity held

31/12/2011%

31/12/2010%

Held through a subsidiary

Incorporated in Singapore

HUGE Development Pte Ltd Real estate developers 30 –

1 Place of business in Singapore unless otherwise stated.

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

gROUP31/12/2011 31/12/2010

$000 $000

Assets and liabilities:Current assets/Total assets 11,049 –

Current liabilities/Total liabilities 10,755 –

Income and expenses:Expenses (6) –



16 DEFERRED TAX

Movement in deferred tax liabilities/(assets):

gROUP31/12/2011 31/12/2010

(Restated)01/01/2010

(Restated)$000 $000 $000

At 1 January 3,824 3,466 2,595Charged to the income statement (Note 9) - current year 688 752 873 - over provision in respect of prior years (1,086) – (2)Effect arising from Restructuring Exercise – (1,245) –Effect on adjustments arising on adoption of INT FRS 115 – 851 –At 31 December 3,426 3,824 3,466

The deferred taxation balance comprises:

Deferred tax liabilitiesUnremitted offshore income 99 31 –Excess of net book value over the tax written down

value of property, plant and equipment 3,102 2,809 1,386Fair value adjustment on held-for-trading investments – 51 1,244Fair value adjustment on investment properties 352 1,013 971Other items – 11 –

3,553 3,915 3,601

Deferred tax assetsProvisions (127) (91) (121)Other items – – (14)

(127) (91) (135)3,426 3,824 3,466

Unrecognised tax losses and capital allowances The Group has unabsorbed tax losses of approximately $789,000 (2010: $1,719,000) and unutilised capital allowances of

approximately $7,752,000 (2010: $744,000) for the financial year ended 31 December 2011 that are available for set-off 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 (2010: Nil) has been recognised for taxes that would be payable on the

undistributed earnings of the Group’s overseas subsidiaries.

The Group has determined that undistributed earnings of its subsidiaries will not be distributed in the foreseeable future. Such temporary differences arising principally from a Chinese subsidiary for which no deferred tax liability has been recognised in 2011 amounted to approximately $677,000. The deferred tax liability is estimated to be $85,000. In 2010, no temporary differences arising for the undistributed earnings of the subsidiary as the subsidiary is in a net deficit reserves which are not available for distribution.

Tax consquences of proposed dividends There are no income tax consequences (2010: Nil) attached to the dividends to the shareholders proposed by the Company but

not recognised as a liability in the financial statements (Note 31).



17 OTHER INVESTMENTS

gROUP 31/12/2011 31/12/2010

$000 $000

Current:Held-for-trading investments Quoted equity shares 7,248 9,625

18 INVENTORIES

gROUP31/12/2011 31/12/2010

$000 $000

Statement of financial position:Inventories, at lower of cost and net realisable valueTrading inventories 4,545 1,884

Inventories are stated after deducting allowance of 384 423

Consolidated income statement:Inventories recognised as an expense in cost of sales 6,360 6,071

Inclusive of the following charge/(credit) (Note 8): - Allowance for inventory obsolescence 61 247 - Write back of allowance for inventory obsolescence (60) (194)



19 TRADE AND OTHER RECEIVABLES

gROUP COMPANy31/12/2011 31/12/2010 31/12/2011 31/12/2010

$000 $000 $000 $000

Non-current:Loans receivable from subsidiaries – – 12,000 –Loans receivable from associates 32,185 30,162 – –Loans receivable from joint ventures 10,369 – – –Retention sums 20,777 20,213 – –

63,331 50,375 12,000 –

Current:Trade receivables 47,736 37,436 – –Amounts due from subsidiaries – – 552 –Amounts due from related companies 22,998 15,845 – –Amounts due from associates – 7,752 – –Amounts due from joint ventures 11 – – –Retention sums 37,226 36,649 – –Allowance for doubtful trade receivables (201) (286) – –

107,770 97,396 552 –

Other receivables:

Claims/expenses recoverable 5,260 6,919 – –Deposits 1,859 2,654 – –Loans receivable from associates 8,363 22,233 – –Dividends receivable from subsidiaries – – 10,000 –Sundry and other receivables 2,272 2,924 – –Allowance for doubtful other receivables (5,355) (1,866) – –

12,399 32,864 10,000 –

Trade and other receivables (current) 120,169 130,260 10,552 –

Trade and other receivables (current and non-current) 183,500 180,635 22,552 –

Add:Cash and bank balances (Note 23) 139,014 62,485 26,550 1,178

Total loans and receivables 322,514 243,120 49,102 1,178

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

which represent their fair values on initial recognition.

Retention sumsRetention sums relate to construction contracts in progress.

Loans receivable from subsidiaries, associates and joint ventures Loans receivable from subsidiaries, associates and joint venture are unsecured and are subject to effective interest rate fixed at

6.50% per annum.

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

on demand and are to be settled in cash.



19 TRADE AND OTHER RECEIVABLES (continued)

Receivables that are past due but not impaired The Group has trade and other receivables amounted to $15,861,000 (2010: $12,566,000) 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:

gROUP31/12/2011 31/12/2010

$000 $000

Trade and other receivables past due:Less than 30 days 7,076 1,26730 to 60 days 796 1,35461 to 90 days 367 1,02091 to 120 days 408 177More than 120 days 7,214 8,748

15,861 12,566 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:

gROUP31/12/2011 31/12/2010

$000 $000

Trade and other receivables – nominal amounts 7,977 6,329Less: Allowance for doubtful receivables (5,556) (2,152)

2,421 4,177 Movements in allowance accounts:

gROUPTrade Receivables Other Receivables

31/12/2011 31/12/2010 31/12/2011 31/12/2010$000 $000 $000 $000

At 1 January (286) (348) (1,866) (1,580)Charge for the year (40) (101) (3,489) (302)Written off 9 95 – 16Written back 121 66 – –Exchange differences (5) 2 – –

At 31 December (201) (286) (5,355) (1,866)

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

gROUP31/12/2011 31/12/2010 01/01/2010

(Restated) (Restated)$000 $000 $000

Aggregate amount of costs incurred and recognised profits (less recognised losses) to-date 457,014 839,715 627,615

Less: Progress billings (456,733) (837,075) (612,081)

281 2,640 15,534

Presented as:Gross amount due from customers for contract work 14,747 17,994 24,035Gross amount due to customers for contract work (14,466) (15,354) (8,501)

281 2,640 15,534

Retention sums on construction contract included in trade receivables 28,267 47,372 43,745

21 PREPAyMENTS

gROUP COMPANy31/12/2011 31/12/2010 01/01/2010 31/12/2011 31/12/2010

(Restated)$000 $000 $000 $000 $000

Advance payment to sub-contractor for materials – 52 4,689 – –

Prepaid listing expenses – 1,447 – – 1,447Prepaid tax – 2,307 – – –Other prepaid expenses 230 105 205 21 –

230 3,911 4,894 21 1,447

Prepaid listing expenses relate to payments for professional fees directly attributable to the Company’s offering of securities subsequent to 31 December 2010.

Prepaid tax relates to tax effect on adjustments arising on adoption of INT FRS 115.

22 PROPERTy HELD FOR SALE

gROUP31/12/2011 31/12/2010

$000 $000

Aggregate amount of costs incurred and recognised profits (less recognised losses) to-date 29,705 29,705Less: Progress billings (25,439) (25,439)Exchange differences (61) –Transfer to investment properties (Note 12)* (4,205) –

As at 31 December – 4,266

Interest capitalised during the year (Note 7) – 332

Effective interest rate per annum (%) –6.35% to

9.40%

* During the financial year ended 31 December 2011, all unsold units at Megalong Shopping Mall were transferred to investment properties at cost. The investment properties were subsequently measured at fair value.



22 PROPERTy HELD FOR SALE (continued)

The Group uses the percentage of completion method for recognising revenue from partly completed projects. Had the completed contract method been adopted, the impact on the financial statements of the Group will be as follows:

gROUP31/12/2011 31/12/2010

$000 $000

Increase/(Decrease) in:Opening balance of retained earnings – (3,247)Revenue recognised for the financial year – (6,779)Construction costs recognised for the financial year – (11,706)Profit for the financial year – 4,927Carrying value of property held for sale: - beginning of financial year – (3,247) - end of financial year – 1,680

The property held for sale held by the Group relates to 294 units acquired through the provision of construction services on the development of Megalong Shopping Mall in Malaysia.

23 CASH AND CASH EQUIVALENTS

gROUP COMPANy31/12/2011 31/12/2010 31/12/2011 31/12/2010

$000 $000 $000 $000

Cash and bank balances:Cash and bank balances 20,994 52,485 530 1,178Fixed deposits 118,020 10,000 26,020 –

139,014 62,485 26,550 1,178

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 0.03% to 0.47% (2010: 0.04% to 7.75%).

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

gROUP

31/12/2011 31/12/2010$000 $000

Cash and bank balances 139,014 62,485Bank overdrafts (Note 26) (12,084) (11,805)

Cash and cash equivalents 126,930 50,680



24 SHARE CAPITAL

gROUP31/12/2011 31/12/2010

No. of shares

000 $000

No. of shares

000 $000

Issued and fully paid ordinary shares

At 1 January1 200,000 106,851 11,000 12,530Adjustment arising from Restructuring Exercise – – (11,000) (12,530)Issuance of ordinary shares2 70,000 31,923 276,209 99,238Acquisition of non-controlling interests – – 23,791 7,613Consolidation of shares – – (100,000) –

At 31 December 270,000 138,774 200,000 106,851

COMPANy31/12/2011 31/12/2010

No. of shares

000 $000

No. of shares

000 $000

Issued and fully paid ordinary shares

At 9 March, date of incorporation – – – –*

At 1 January 200,000 106,851 – –Issuance of ordinary shares2 70,000 31,923 276,209 99,238Acquisition of non-controlling interests – – 23,791 7,613Consolidation of shares – – (100,000) –

At 31 December 270,000 138,774 200,000 106,851

* Amount less than $1,000.1 Applying the pooling of interest method of accounting share capital and number of shares for the Group represents the aggregate

paid up capital and number of shares of its subsidiary companies.2 On 25 February 2011, the Company issued 70,000,000 new ordinary shares arising from initial public offering. The resultant

proceeds is net of share issuance expenses.

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.

As of the date of incorporation, the issued and paid-up ordinary share capital was $2.00 comprising two shares. As of 31 December 2010, the issued and paid-up ordinary share capital increased to 300,000,000 ordinary shares on completion of Restructuring Exercise.

On 11 February 2011, the Company undertook a share consolidation of every three shares into two shares, which reduced the

total number of shares issued by the Company from 300,000,000 ordinary shares to 200,000,000 ordinary shares.

Arising from the share consolidation, the Company adjusted the total number of shares issued from 300,000,000 ordinary shares to 200,000,000 ordinary shares as at 31 December 2010.

Following the Company’s initial public offering of 70,000,000 shares, representing approximately 25.9% of the Company’s enlarged post-offering share capital of 270,000,000 ordinary shares, the Company was listed on the Mainboard of the SGX-ST on 25 February 2011.



25 OTHER RESERVES

gROUP31/12/2011 31/12/2010 01/01/2010

(Restated) $000 $000 $000

Foreign currency translation reserve 323 61 11Share of other comprehensive income/(expenses) of associates, net of tax 61 (344) (411)Merger deficit (61,723) (61,723) –

(61,339) (62,006) (400)

(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.

gROUP31/12/2011 31/12/2010 01/01/2010

$000 $000 $000

At 1 January 61 11 101Net effect of exchange differences arising from translation

of financial statements of foreign operation 262 50 (90)

At 31 December 323 61 11

(b) Share of other comprehensive income/(expenses) of associates, net of tax

Share of other comprehensive income/(expenses) of associates relate to share of associates’ surplus/(deficit) in hedging reserve.

gROUP31/12/2011 31/12/2010 01/01/2010

$000 $000 $000

At 1 January (344) (411) (318)Share of other comprehensive income/(expenses) of associates 405 67 (93)

At 31 December 61 (344) (411)

(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.

26 BORROWINgS

gROUP31/12/2011 31/12/2010

$000 $000

Current:Bank overdrafts (Note 23) 12,084 11,805Trust receipts and bills payable: - unsecured 4,997 4,580Bank loans (unsecured) 9,021 11,987

Total borrowings 26,102 28,372



26 BORROWINgS (continued)

Bank overdrafts Bank overdrafts are repayable on demand and bear effective interest rates ranging from 5.88% to 9.10% (2010: 5.88% to 8.80%)

per annum. Bank overdrafts of a subsidiary amounted to approximately $11,066,000 for the financial year ended 31 December 2011 (2010: $10,021,000) was secured by way of assignment of proceeds from projects, subordination of advances from a related company in favour of the bankers and endorsement of insurance policies in favour of one of the banks and guaranteed by a related company.

Trust receipts and bills payable Trust receipts and bills payable are unsecured, bear effective interest rates ranging from 1.37% to 2.45% (2010: 1.55% to 2.11%)

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

Bank loans Bank loans bear interest at floating interest rates ranging from 2.70% to 8.30% (2010: 2.99% to 7.25%) per annum.

27 TRADE AND OTHER PAyABLES

gROUP COMPANy31/12/2011 31/12/2010 31/12/2011 31/12/2010

$000 $000 $000 $000

Non-current:Retention sums and accrued job cost 7,688 13,607 – –

Current:Trade payables 150,213 150,239 19 –Retention sums 7,026 7,897 – –

157,239 158,136 19 –Other payables:

Accrued staff cost 7,834 5,456 1,621 –Accrued job cost 8,524 7,088 – –Advance from customers 5,689 1,460 – –Other accruals 3,198 6,874 398 2,342Other payables 2,113 2,296 12 –Deposits 133 – – –Retention monies and deposits 475 501 – –Central Provident Fund and other defined

contribution schemes 944 357 93 –Amounts due to holding company 13 63 3 –Amounts due to related companies 2,550 2,317 199 –Amounts due to associates 49 – – –Interest payables 81 46 – –Sundry payables 128 63 – –

31,731 26,521 2,326 2,342

Trade and other payables (current) 188,970 184,657 2,345 2,342

Trade and other payables (current and non-current) 196,658 198,264 2,345 2,342 Add:Borrowings (Note 26) 26,102 28,372 – –Finance leases (Note 28) 4 248 – –

Total financial liabilities carried at amortised cost 222,764 226,884 2,345 2,342



27 TRADE AND OTHER PAyABLES (continued)

Retention sums and accrued job cost 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 accrued job cost relates to costs accrued for projects applying the percentage of completion method, which are not expected to be paid within the next 12 months.

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 six months.

Amounts due to holding company Amounts due to holding company are unsecured, non-trade in nature, repayable on demand, and to be settled in cash. The

effective interest rate is fixed at 6.50% per annum for 2011 (2010: 6.50%).

Amounts due to related companies Amounts due to related companies are unsecured, non-trade in nature, bear effective interest fixed at 6.50% per annum for 2011

(2010: 6.50%), repayable on demand, and are to be settled in cash.

28 FINANCE LEASES

The Group has finance leases for certain items of office equipment, motor vehicles and 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:

gROUP31/12/2011

$00031/12/2010

$000Minimum

leasepayments

Present value of

payments

Minimumlease

payments

Present value of

payments

Not later than one year 6 4 229 196Later than one year but not later than five years – – 58 52More than 5 years – – – –

Total minimum lease payments 6 4 287 248Less: Amounts representing finance charges (2) – (39) –

Present value of minimum lease payments 4 4 248 248

The maturity of the finance leases for years ended 31 December 2011 and 2010 are by year 2012. The average discount rate per annum implicit in the leases for 2011 are 6.9% to 11.4% (2010: 2.5% to 11.4%).

29 FUTURE CAPITAL COMMITMENTS

gROUP31/12/2011

$00031/12/2010

$000

Capital expenditure contracted for as at the end of the reporting period but not recognised in the financial statements – 743



30 OPERATINg LEASE COMMITMENTS

As lessee

The Group has entered into commercial property leases for its office premises and certain office equipment that are non-cancellable within a year. 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 in 2011 amounted to $1,849,000 (2010: $800,000). 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:

gROUP31/12/2011 31/12/2010

$000 $000

Not later than one year 1,860 1,762Later than one year but not later than five years 1,583 3,207

3,443 4,969

As lessor

The Group has entered into commercial properties leases on its warehouse and investment properties (Note 12). All leases include a clause to enable revision of the rental charge on an annual basis based on prevailing market condition. One of the non-cancellable leases has remaining lease terms of 1 to 2 years, and will be renewed for a further term of 1 year upon expiry.

Future minimum rental receivable under non-cancellable operating leases at the end of the reporting period are as follows:

gROUP31/12/2011 31/12/2010

$000 $000

Not later than one year 506 751Later than one year but not later than five years 906 1,279After five years 2,107 2,375

3,519 4,405

31 DIVIDENDS PAID

The following dividends were paid:

gROUP31/12/2011 31/12/2010

$000 $000

Declared and paid during the year:

Dividends on ordinary shares:Interim tax exempt (one-tier) dividend of Nil (2010: $22.00) per ordinary share – 22,000Interim tax exempt (one-tier) dividend of Nil (2010: $1.80) per ordinary share – 9,000

– 31,000

The dividends declared and paid were to the existing shareholders prior to the Restructuring Exercise.

Proposed but not recognised as a liability as at 31 December 2011:

The directors have proposed a First and Final one-tier tax exempt dividend of 2 cents per ordinary share and a Special one-tier tax exempt dividend of 4 cents per ordinary share, amounting to a total dividend of $16,200,000. The proposed First and Final and Special dividends, if approved by members at the forthcoming Annual General Meeting, will be paid on 17 May 2012.



32 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 year ended 31 December 2011.

(a) Sale and purchase of goods and services

gROUP31/12/2011 31/12/2010

(Restated)$000 $000

Revenue from construction and engineering contracts: - related companies 144,182 163,140 - associates 72,200 34,784

Rental of equipment and related service income from related companies 11 12

Rental income from premises from related companies 3 20

Interest income: - related companies 237 8 - associates 3,122 3,106

Interest expense: - holding company – (67) - related companies – (293)

Management fees and consultancy services expenses: - holding company – (807) - related companies (642) (932)

Rental expenses: - holding company (734) (139) - related companies – (13)

Dividends paid: - holding company – (9,000) - related companies – (18,700)

Other purchases: - holding company (23) – - related companies (924) (1,105)

(b) Compensation of key management executives

gROUP31/12/2011 31/12/2010

$000 $000

Short-term employee benefits 3,045 2,826Central Provident Fund 48 28

Total compensation paid to key management executives 3,093 2,854

Comprise amounts paid to: - Directors of the Company 1,561 1,911 - Other key management executives 1,532 943

3,093 2,854

The remuneration of key management personnel is determined by the Directors having regards to the performance of individuals and market trends.

Directors’ fees amounted to $279,000 (2010: $15,000).



33 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.

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.

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 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:

gROUP31/12/2011 31/12/2010

$000% oftotal $000

% oftotal

By countrySingapore 147,449 81 149,270 83Brunei 33,196 18 27,049 15Malaysia 5 – 1,899 1China 2,749 1 2,256 1Vietnam 101 – 161 –

183,500 100 180,635 100

By industry sectorsConstruction 164,948 90 162,424 90Engineering 6,316 3 7,389 4Building materials and equipment 12,236 7 10,822 6

183,500 100 180,635 100

At the end of the reporting period, approximately:

- 47% (2010: 34%) of the Group’s trade receivables were due from 3 major customers who are sub-contractors in Singapore and Government body in Brunei.

- 40% (2010: 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.



33 FINANCIAL RISk MANAgEMENT OBJECTIVES AND POLICIES (continued) 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 impaired Information 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 2011 if the quoted equity instruments listed in the SGX-ST had been 5%, higher/lower with all other variables

held constant, the Group’s profit net of tax would have been $300,000 (2010: $399,000) 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 1% (2010: 1%) 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”) and Vietnamese Dong (“VND”) in its cash and bank balances, trade receivables, trade payables, overdrafts and 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 2011, 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.



33 FINANCIAL RISk MANAgEMENT OBJECTIVES AND POLICIES (continued)

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 and

VND exchange rate against SGD for the year ended 31 December 2011, with all other variables held constant.

gROUPProfit net of tax

31/12/2011$000

31/12/2010$000

USD/SGD – strengthened 5% 118 -32 – weakened 5% -118 32

VND/SGD – strengthened 5% -1 18 – weakened 5% 1 -18

Interest rate risk

Interest rate 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 interest rates. The Group’s interest rate exposure relates primarily from their loans and borrowings. The Group’s loans at floating rate to related parties form a natural hedge for its non-current and current floating rate bank loans. Majority of the Group’s financial assets and liabilities are at floating rates and are contractually repriced at intervals of 1, 2, 3 or 6 months (2010: 1, 2, 3 or 6 months) from the date of the statements of financial position.

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 2011, if SGD interest rates had been 75 basis points lower/higher with all other variables held constant, the

Group’s profit net of tax would have been $67,000 (2010: $64,000) 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 2011 approximately 100% (2010: 100%) of the Group’s borrowings (Note 26) 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.



33 FINANCIAL RISk MANAgEMENT OBJECTIVES AND POLICIES (continued)

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.

31/12/20111 yearor less

1 to5 years

Over 5years Total

$000 $000 $000 $000

Financial assets:Trade and other receivables 122,923 66,229 – 189,152Other investments 7,248 – – 7,248Cash and bank balances 139,014 – – 139,014

Total undiscounted financial assets 269,185 66,229 – 335,414

Financial liabilities:Trade and other payables 188,970 7,688 – 196,658Borrowings 26,102 – – 26,102Finance leases 6 – – 6

Total undiscounted financial liabilities 215,078 7,688 – 222,766

Total net undiscounted financial assets 54,107 58,541 – 112,648

31/12/20101 yearor less

1 to5 years

Over 5years Total

$000 $000 $000 $000

Financial assets:Trade and other receivables 133,275 54,506 – 187,781Other investments 9,625 – – 9,625Cash and bank balances 62,485 – – 62,485

Total undiscounted financial assets 205,385 54,506 – 259,891

Financial liabilities:Trade and other payables 184,657 13,607 – 198,264Borrowings 28,372 – – 28,372Finance leases 229 58 – 287

Total undiscounted financial liabilities 213,258 13,665 – 226,923

Total net undiscounted financial (liabilities)/assets (7,873) 40,841 – 32,968



34 FAIR VALUE OF FINANCIAL INSTRUMENTS

(A) Fair value of financial instruments that are carried at fair value

The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy:

31/12/2011$000

Quoted prices in active markets

for identical instruments

Significant other observable inputs

Significantunobservable

inputs Total(Level 1) (Level 2) (Level 3)

Financial assets:Held-for-trading investments

(Note 17) - Equity instruments (quoted) 7,248 – – 7,248

At 31 December 2011 7,248 – – 7,248

31/12/2010$000

Quoted prices in active markets

for identical instruments

Significant other observable inputs

Significant unobservable

inputs Total(Level 1) (Level 2) (Level 3)

Financial assets:Held-for-trading investments

(Note 17) - Equity instruments (quoted) 9,625 – – 9,625

At 31 December 2010 9,625 – – 9,625

Fair value hierarchy The Group classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in

making the measurements. The fair value hierarchy has the following levels:

• Level1–Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities

• Level2–InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly (i.e. as prices) or indirectly (i.e. derived from prices), and

• Level3–Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs)

Determination of fair value Quoted equity instruments (Note 17): Fair value is determined directly by reference to the published market bid price at the

date of statements of financial position.

(B) 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 holding company and 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.



34 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

(C) Fair value of financial instrument 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:

gROUP31/12/2011 31/12/2010

Carrying amount

Fairvalue

Carrying amount

Fair value

$000 $000 $000 $000

Financial assets:Loans receivable from associates 27,945 24,871 27,845 24,782Loans receivable from joint ventures 10,263 9,134 – –Retention sums 20,777 18,491 20,213 17,989

Financial liabilities:Retention sums 7,688 8,638 13,607 15,289Finance leases 4 4 248 278

Determination of fair value Obligations under retention sums and 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 statements of financial position.

35 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 may make 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 2011 and 2010.

The Group monitors capital using debt to equity ratio.

gROUP31/12/2011 31/12/2010

(Restated)$000 $000

Borrowings (Note 26) 26,102 28,372Finance leases (Note 28) 4 248Less : Cash and bank balances (Note 23) (139,014) (62,485)

Net cash (112,908) (33,865)Trade and other payables (Note 27) 196,658 198,264

Net debt after trade and other payables 83,750 164,399

Equity, attributable to owners of the Company 164,683 67,627

Debt to equity (times) 0.51 2.43



36 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.

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.



36 SEgMENT INFORMATION (continued)

(a) Business segments

(i) The following tables present revenue and profit information regarding industry segments for the years ended 31 December 2011 and 2010 and certain asset and liability information regarding industry segments as at 31 December 2011 and 2010:

Construction Engineering

Buildingmaterials and

equipment

Corporate services and

others Elimination Total$000 $000 $000 $000 $000 $000

year ended 31 December 2011

Segment revenueSales to external customers 318,269 20,007 32,519 − − 370,795Inter-segment sales 1,918 32,080 1,655 − (35,653) −

Total revenue 320,187 52,087 34,174 − (35,653) 370,795

Segment results 52,631 6,049 5,041 (6,396) − 57,325Finance costs (1,370)Interest income 3,593Share of results of associates

and joint ventures 15,496 − − − − 15,496

Profit before tax 75,044Income tax expense (10,365)

Profit net of tax 64,679

Segment assets 276,078 36,751 58,677 26,597 − 398,103Investments in associates 16,622 − − − − 16,622Investments in joint ventures 294 − − − − 294

Total assets 415,019

Segment liabilities 188,885 33,359 25,255 2,345 − 249,844

Other segment information:Capital expenditure 660 84 16,563 32 − 17,339Allowance for doubtful

trade receivables − − 40 − − 40Write back of allowance for

doubtful trade receivables − 92 29 − − 121Allowance for doubtful

other receivables 3,489 − − − − 3,489Allowance for inventory obsolescence − − 61 − − 61Write back of allowance for

inventory obsolescence − − 60 − − 60Amortisation of receivables

and payables (60) − 2 − − (58)Depreciation of property,

plant & equipment 193 16 5,196 7 − 5,412Gain on disposal of property,

plant and equipment 28 − 409 − − 437Gain on disposal of

investment properties 2,500 − − − − 2,500Gain on fair value adjustment

on investment properties 1,214 − − − − 1,214Loss on fair value adjustment on

held-for-trading investments − 2,377

− − − 2,377




(a) Business segments (continued)

Construction Engineering

Buildingmaterials and

equipment

Corporate services and

others Elimination Total$000 $000 $000 $000 $000 $000

year ended 31 December 2010 (Restated)

Segment revenueSales to external customers 293,718 31,215 26,161 − − 351,094Inter-segment sales 3,975 34,237 3,584 − (41,796) −

Total revenue 297,693 65,452 29,745 − (41,796) 351,094

Segment results 28,538 4,633 5,841 (895) − 38,117Finance costs (1,428)Interest income 3,147

Share of results of associates (113) − − − − (113)

Profit before tax 39,723Income tax expense (8,467)

Profit net of tax 31,256

Segment assets 234,061 37,077 48,989 2,625 − 322,752Investment in associates 716 − − − − 716

Total assets 323,468

Segment liabilities 205,349 27,480 20,361 2,342 − 255,532

Other segment information:Capital expenditure 985 6 14,068 − − 15,059Allowance for doubtful

trade receivables − 101 − − − 101Write back of allowance for

doubtful trade receivables − 53 13 − − 66Allowance for doubtful

other receivables 302 − − − − 302Allowance for inventory obsolescence − − 247 − − 247Write back of allowance for

inventory obsolescence − − 194 − − 194Amortisation of receivables

and payables 389 − − − − 389Depreciation of property,

plant & equipment 200 15 4,129 − − 4,344Gain on disposal of property,

plant and equipment 178 − 29 − − 207Gain on disposal of available-

for-sale investment − − 869 − − 869Gain on fair value adjustment

on investment properties 500 − − − − 500Gain on fair value adjustment on

held-for-trading investments − 509 30 − − 539




(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 assets31/12/2011 31/12/2010 31/12/2011 31/12/2010

(Restated)$000 $000 $000 $000

Singapore 296,962 281,360 93,747 81,610Other ASEAN Countries 65,360 61,531 11,822 4,341Other Asian Countries 8,473 8,203 6,444 6,275

370,795 351,094 112,013 92,226

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 Revenue from four major customers amount to $216,382,000 (2010: $197,924,000) arising from construction service

rendered by the construction segment. These four customers are related parties within the United Engineers Ltd Group.

37 PRIOR PERIOD ADJUSTMENTS

As disclosed in Note 2, the Group has adopted INT FRS 115 Agreements for the Construction of Real Estate. The 2010 comparative figures have been restated to take into account the retrospective adjustments arising from the adoption of INT FRS 115 Agreements for the Construction of Real Estate.

The prior year adjustments for FY2010 and FY2009 are related to the reversal of progressive profit recognised for residential units sold for Park Central @ AMK. The profit was recognised when the project obtained TOP in Q3 2011.

The effects of the prior years’ adjustments on the financial statements are disclosed below.

Consolidated Income StatementgROUP

Previously reported Adjustments Restated

$000 $000 $000

31/12/2010Revenue 381,853 (30,759) 351,094Cost of sales (314,310) 22,192 (292,118)Share of results of associates 6,557 (6,670) (113)Income tax expense (9,923) 1,456 (8,467)Profit attributable to:Owners of the Company 39,785 (11,714) 28,071Non-controlling interests 5,252 (2,067) 3,185

Earnings per ordinary share (basic and fully diluted) (cents) 19.9* (5.9)* 14.0*

* Calculated based on the pre-invitation share capital of 200,000,000 ordinary shares.



37 PRIOR PERIOD ADJUSTMENTS (continued)

Consolidated Statement of Comprehensive Income

gROUPPreviously

reported Adjustments Restated$000 $000 $000

31/12/2010Profit net of tax 45,037 (13,781) 31,256Total comprehensive income for the year, net of tax 45,183 (13,781) 31,402Total comprehensive income attributable to:Owners of the Company 39,902 (11,714) 28,188Non-controlling interests 5,281 (2,067) 3,214

Consolidated Statement of Financial PositiongROUP


$000 $000 $000

31/12/2010Investments in associates 10,667 (9,951) 716Gross amount due from customers for contract work 31,479 (13,485) 17,994Prepayments 1,604 2,307 3,911Retained earnings 40,741 (17,959) 22,782Other reserves (58,836) (3,170) (62,006)

01/01/2010Investments in associates 3,731 (3,281) 450Gross amount due from customers for contract work 28,953 (4,918) 24,035Retained earnings 2,556 (6,245) (3,689)Other reserves (400) – (400)Non-controlling interests 5,559 (1,103) 4,456Deferred tax liabilities 4,452 (851) 3,601

Consolidated Statement of Cash FlowsgROUP


$000 $000 $000

31/12/2010Profit before tax 54,960 (15,237) 39,723Share of results of associates (6,557) 6,670 113Gross amount due from customers for contract work (1,597) 8,567 6,970

38 EVENTS AFTER DATE OF STATEMENT OF FINANCIAL POSITION

On 5 January 2012, the Company incorporated a 70%-owned subsidiary, Quality Engineering Pte Ltd which is held through Greatearth Holding Pte Ltd, a wholly-owned subsidiary of the Company. The initial issued and paid-up share capital of the subsidiary is $500,000.

39 AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements of the Company for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of the directors on 16 March 2012.


STATISTICS OF ShAREhOLDINGSAS AT 12 MARCH 2012

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 0 0.00 0 0.001,000 – 10,000 874 60.03 4,972,000 1.8410,001 – 1,000,000 567 38.94 41,823,000 15.491,000,001 and above 15 1.03 223,205,000 82.67

TOTAL 1,456 100.00 270,000,000 100.00

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 4,703,000 1.745 UOB KAY HIAN PTE LTD 2,762,000 1.026 2G CAPITAL PTE LTD 2,542,000 0.947 HSBC (SINGAPORE) NOMINEES PTE LTD 2,230,000 0.838 OCBC SECURITIES PRIVATE LTD 2,079,000 0.779 CITIBANK CONSUMER NOMINEES PTE LTD 2,000,000 0.7410 LIM TECK MENG JOSHUA (LIN DEMING JOSHUA) 1,443,000 0.5311 CITIBANK NOMINEES SINGAPORE PTE LTD 1,228,000 0.4512 KOR YONG KOO 1,200,000 0.4413 HONG LEONG FINANCE NOMINEES PTE LTD 1,009,000 0.3714 LIM TECK CHENG 1,008,000 0.3715 DBS VICKERS SECURITIES (S) PTE LTD 1,001,000 0.3716 LAU LIAT PHEOW 1,000,000 0.3717 WONG LAK SENG 900,000 0.3318 MAYBANK KIM ENG SECURITIES PTE LTD 877,000 0.3219 ASDEW ACQUISITIONS PTE LTD 829,000 0.3120 PHILLIP SECURITIES PTE LTD 753,000 0.28

227,564,000 84.25


SUBSTANTIAL ShAREhOLDERSAS AT 12 MARCH 2012

Name Direct Interest Deemed InterestNo. 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 2012, and to the best knowledge of the Company, the percentage of shareholding held in the hands of public is approximately 25.72%. Accordingly, the Company complies with Rule 723 of the Listing Manual.


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBy gIVEN that the Second Annual General Meeting of UE E&C Ltd. (the “Company”) will be held on Thursday, 26 April 2012 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 2011 and the Independent Auditors’ Report thereon.

Resolution 1

2. To declare a first and final tax exempt (one-tier) dividend of 2.0 cents per ordinary share for the financial year ended 31 December 2011.

Resolution 2

3. To declare a special tax exempt (one-tier) dividend of 4.0 cents per ordinary share for the financial year ended 31 December 2011.

Resolution 3

4. To approve Directors’ Fees of S$279,000 for the financial year ended 31 December 2011. (2010: S$15,000) [see Explanatory Note (a)]

Resolution 4

5. To re-elect the following Directors, each of whom retires by rotation pursuant to Article 91 of the Company’s Articles of Association and, being eligible, offers himself for re-election: (i) Mr Norman Ip Ka Cheung(ii) Mr Chua Hock Tong

Resolution 5Resolution 6

6. To re-appoint Ernst & Young LLP as Independent Auditors and to authorise the Directors to fix their remuneration.

Resolution 7

7. To transact any other ordinary business which may properly be transacted at an Annual General Meeting. Resolution 8

SPECIAL BUSINESS

To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions:

8. “That: Resolution 9(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 11 April 2012 (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 (b)]

9. “That Dr Tan Eng Liang be and is hereby appointed as a Director of the Company to hold such office from the date of this Annual General Meeting until the next Annual General Meeting of the Company, pursuant to Section 153(6) of the Companies Act, Chapter 50 of Singapore.” [see Explanatory Note (c)]

Resolution 10


NOTICE IS HEREBy gIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 7 May 2012 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 2011. 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 4 May 2012 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 4 May 2012 will rank for the proposed Dividends.

The proposed Dividends, if approved by members at the Second Annual General Meeting, will be paid on 17 May 2012.

By Order of the Board

Tan Ching Chek and Lo Swee OiJoint Company Secretaries

Singapore, 11 April 2012

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.

EXPLANATORy NOTES:

(a) A sum of S$15,000 was recommended and approved at last year’s Annual General Meeting as Directors’ Fees for the financial period from 9 March 2010 (being the date of the Company’s incorporation) up to 31 December 2010 in recognition of the Directors’ time spent towards the Company’s preparation for its listing on the SGX-ST.

(b) 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 Company’s letter to shareholders dated 11 April 2012 accompanying the Annual Report 2011.

(c) The ordinary resolution in Resolution 10, if passed, will give effect to the appointment of Dr Tan Eng Liang, age 74, as an additional Director of the Company pursuant to Section 153(6) of the Companies Act, Chapter 50 of Singapore. Both the Nominating Committee and the Board of Directors have recommended the appointment of Dr Tan Eng Liang as a Director of the Company. Dr Tan Eng Liang will be an independent Director of the Company upon his appointment. The recommendation of the Nominating Committee and the Board of Directors can be found on page 26 of the Company’s Annual Report 2011, and the profile of Dr Tan Eng Liang can be found on page 18 of the Company’s Annual Report 2011.

NOTICE OF ANNUAL GENERAL MEETING

UE E&C LTD.(Company Registration No. 201005048D)(Incorporated in the Republic of Singapore)

PROXy FORM

ANNUAL gENERAL MEETINg

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 Second Annual General Meeting of the Company (the “Meeting”) to be held on Thursday, 26 April 2012 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 AgAINST

ORDINARy BUSINESS

1. Adoption of Reports and Audited Financial Statements

2. Declaration of a First and Final Dividend

3. Declaration of a Special Dividend

4. Approval of Directors’ Fees

5. Re-election of Mr Norman Ip Ka Cheung

6. Re-election of Mr Chua Hock Tong

7. Re-appointment of Auditors

8. Any other business

SPECIAL BUSINESS

9. Renewal of the General Mandate for Interested Person Transactions

10. Appointment of Dr Tan Eng Liang as a Director of the Company

Dated this ___________ day of ____________________ 2012

______________________________________Signature(s) of Member(s)/Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF

Total Number of Shares Held

IMPORTANT:

1. For investors who have used their CPF monies to buy UE E&C Ltd. shares, this Annual Report 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 Second 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.

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

UE

E&

C LTD

. AN

NU

AL R

EP

OR

T 2011

R

EA

CH

ING

HIG

HE

R

Reaching Higher - GreatearthOversea-Chinese Banking Corporation Limited Baiduri Bank Berhad...

Documents

Transcript of Reaching Higher - GreatearthOversea-Chinese Banking Corporation Limited Baiduri Bank Berhad...